EU could impose tariffs on plug-in hybrids from China

The European Union is considering adding Chinese-built plug-in hybrids (PHEVs) to its elevated tariff structure for EVs from the country after sales of the drivetrain soared in recent months, according to a report.

The European Commission, the main executive body of the EU, is preparing proposals for similar ‘countervailing’ tariffs on PHEVs for member states to vote on “in the coming weeks”, according to the report from Germany’s Handelsblatt newspaper. The European Commission didn’t comment on the story.

Registrations of PHEVs rose 28% to 364,067 within the EU in the four months to the end of April, according to data from car maker association ACEA. 

Much of that increase has come from Chinese car makers including BYD and MG after they pivoted to PHEV drivetrains following the imposition of additional tariffs on their EVs starting in 2024.

Chinese plug-in hybrids accounted for 21% of the EU market for the drivetrain to the end of April, up from 7% in the same period the year before, according to Dataforce figures quoted by Automotive News Europe.

The BYD Seal U was Europe’s best-selling PHEV outright, according to the figures.

European car makers are struggling to compete against the Chinese brands, which have built up formidable expertise and scale in electrified drivetrains thanks in part to generous state subsidies. The EU imposed additional tariffs of up to 35% on China-built EVs from October 2024, depending on car maker, describing them as “anti-subsidy measures” designed to level the playing field. 

The EU could roll over the same tariffs for plug-in hybrids, a move that’s likely to slow growth of the drivetrain among Chinese players and promote more hybrid sales.

Any imposition of additional tariffs on PHEVs into the EU could prompt Chinese makers to focus more on the UK market, which has so far chosen not to follow the EU in erecting tariff barriers and is now Europe’s largest market for Chinese cars. 

The Chinese dominate PHEV sales in the UK currently, taking 44% of the market to the end of April, up from 14% last year after increasing sales by 144%, according to figures from the SMMT. The UK’s top three PHEVs are all Chinese, led by the Jaecoo 7 and followed by the Seal U and the Chery Tiggo 8.