Earlier this month, simmering trade tensions between the EU and China ease as the two sides reached an agreement in Beijing limiting hybrid car exports from China to an annual quota of 350,000 units. After the European Union imposed tariffs on fully electric cars from China in 2024, hybrid imports surged. The quota would result in more than a halving of the 800,000 hybrid cars expected to be sold this year, a figure which may soon exceed a million if unchecked.
The quota would likely shift China’s product mix towards the premium segment to maximise the value of the 350,000 hybrid cars allowed per year, a cap which can rise by only 6 per cent a year during the four-year agreement.
Europe’s challenge goes beyond hybrids to all electric vehicles. Unlike the earlier mass-market Japanese and Korean imports which largely complemented the premium German brands, Europe can expect high-end EVs from China offered at a fraction of the price of their European counterparts, while potentially delivering superior features and performance.