Europe and China are one step closer to resolving their dispute over electric vehicles – a dispute that’s seen subsidised Chinese EVs hit with huge EU tariffs.
The European Commission has published new guidance under which Chinese-made EV makers would set minimum prices for their vehicles, potentially replacing the tariff system currently in place.
Tariffs on imported Chinese EVs were introduced in October 2024 and have seen producers subject to levies of up to 35.3 per cent, creating trade tension between Brussels and Beijing.
Both sides have been negotiating since, and Monday’s ‘guidance document’ shows a meeting point is possible where Chinese producers would be allowed to submit price offers for EV exports.
While China was pushing for broad, minimum pricing, the EU says, that due to wide variations in EVs, specific pricing is needed for each configuration and model ‘to remove the injurious effects of the subsidisation’.
Chinese EV manufacturer plans for ‘future investment’ within the EU would also be taken into account the document says.
Chinese car makers – such as BYD, SAIC and Geely – would limit the number of electric vehicle they import and also pledge minimum prices in order to be exempt from the EU’s 35 per cent tariffs.
However, the EU will require any offered prices to remove the harmful effects of China’s subsidies and be equivalent to duties, as well as minimising cross-compensation.
‘Each price undertaking offer is subject to the same legal criteria and the European Commission will conduct each assessment in an objective and fair manner, following the principle of non-discrimination and in accordance with WTO rules,’ the Commission’s statement said.
The move towards an agreement comes after Volkswagen volunteered to limit shipments of its Cupra Tavascan EV – built in its factory in Hefei, China – and to set an undisclosed minimum price for its cars in Europe.
The petition was made by Volkswagen Anhui, which is a joint venture with JAC. They made the offer because the tariffs of 20.7 per cent are ‘serious threat’ to its business, the company said.
The EU’s reported decision to review the tariffs based on the company’s arguments has led to a wider look at reviewing similar requests from other car makers.
The Chinese Chamber of Commerce said: ‘This is conducive not only to ensuring the healthy development of China-EU economic and trade relations, but also to safeguarding the rules-based international trade order’.
Beijing wants automakers with factories in China to negotiate as a bloc with the European Commission and not submit their own offers.
While guidance signals approval is far from guaranteed and could take months to iron out, and the EU has already stipulated that submissions will be subject to a thorough internal analysis before further steps can be taken.
Chinese car makers haven’t seen the tariffs make too much of a dent in sales, with Chinese car brands increase volumes by 111 per cent in May 2025 alone.
And following the EU’s guidance document, Cui Dongshu, secretary-general of the China Passenger Car Association, projected Chinese EV exports to the EU will maintain an average annual growth rate of around 20 per cent between 2026 and 2028, despite potential short-term fluctuations.
