Chinese Automakers Evade European Penalties Through Utilization of a Loophole
In a significant shift in the European automotive market, Chinese plug-in hybrid models are making a strong impact, offering a price advantage over their counterparts from Volkswagen and Toyota. Models like the MG HS, priced around 28,000 euros, are proving to be attractive alternatives.
This development comes amidst the EU Commission's hesitation to impose new tariffs on plug-in hybrids due to the need for another anti-subsidy procedure. However, the Commission has imposed tariffs of up to 45% on Chinese electric vehicles, effective October last year, due to suspected market manipulation via subsidies.
At the IAA in Munich, BYD, a Chinese automaker, presented the plug-in hybrid sedan "Seal 6", which is seen as a potential new export strategy for Chinese automakers. The Seal 6, along with other plug-in hybrid vehicles, are not subject to these tariff regulations, offering a means for Chinese automakers to avoid them.
BYD has registered significant growth in the EU market, with a 20,000% increase in plug-in hybrid vehicle registrations in the first half of 2025 compared to the previous year. This growth surpasses the total sales of 2024, demonstrating a strong consumer interest in these vehicles. MG and Lynk & Co also see an increase in plug-in registrations in the EU, albeit not to the extent of BYD.
Lynk & Co's first E-model, the Seal 6, had a weak start in the EU market with only 486 units sold in the first half of 2025. Despite this, the consequences of these tariff differences are seen in the sales figures, with MG recording strong declines in pure electric vehicles while plug-in and hybrid models gain significantly.
The success of these Chinese plug-in hybrid models has not gone unnoticed. Individual EU parliamentarians like Michael Bloss (Greens) are calling for the punitive tariffs to also be extended to plug-ins. Some experts warn of an impending price war with Chinese manufacturers securing market share and recognition to later switch customers to electric vehicles more easily.
In response, discussions about minimum prices and full production sites in Europe are being considered as potential solutions. Experts see this as a deliberate adaptation of the Chinese strategy to European market conditions.
However, it's important to note that SAIC's tariffs for electric vehicles are higher than BYD's, exceeding 45%. This suggests that while plug-in hybrid vehicles offer a strategic advantage, the tariff landscape for electric vehicles remains complex.
In conclusion, the rise of Chinese plug-in hybrid models in the EU market is a significant development. As these vehicles continue to gain popularity, it will be interesting to see how the market responds and how the EU Commission addresses this trend.
