Following intensive negotiations, China and the European Union have reached an understanding regarding the trade of hybrid vehicles, a move designed to align with World Trade Organisation (WTO) rules and potentially avoid the imposition of additional tariffs. Chinese media outlet Caixin reported that the agreement was announced on October 9 in a joint statement following the second plenary meeting of the China-EU trade and investment consultation mechanism.
EU and China Signal De-escalation in Hybrid Auto Trade Dispute
While specific measures have not yet been disclosed, Maroš Šefčovič, the European Commission’s Commissioner for Trade and Economic Security, indicated that the agreement aims to manage the rapid growth of Chinese hybrid vehicle exports to Europe. Šefčovič noted that over the next four years, the volume of Chinese hybrid vehicle exports to the EU is expected to be more than half lower than previously projected – a reduction involving millions of units. He clarified that this 50% reduction is based on the Commission’s internal forecasts and does not imply an immediate halving of current export levels.
The Commissioner stated that he must first report the negotiation outcomes to the President of the European Commission and leaders of member states before finalising and publishing the specific implementation details. He confirmed, however, that both sides have reached a clear consensus on the execution methodology, pending the completion of necessary European procedural requirements.
The surge in Chinese hybrid vehicle exports has become a focal point for the European automotive industry. Data from the China Passenger Car Association (CPCA) reveals that in the first eight months of 2026, China exported 1.56 million complete vehicles to the EU. This total included 630,000 electric vehicles (EVs), 490,000 plug-in hybrid electric vehicles (PHEVs), and 270,000 hybrid electric vehicles (HEVs), representing year-on-year growth rates of 49%, 179%, and 142%, respectively.
According to the European Automobile Manufacturers’ Association (ACEA), Chinese brands captured a 14% share of the European hybrid market in the first half of 2026, with their share of the plug-in hybrid segment reaching as high as 25%. For context, Chinese brands held only a 2% market share in these segments in 2024.
Industry groups have largely welcomed the development. Hildegard Müller, President of the German Association of the Automotive Industry (VDA), described the consensus as a “positive signal,” emphasising the importance of dialogue in resolving trade challenges and creating a stable institutional environment for businesses. Similarly, the China Chamber of Commerce to the EU (CCCEU) expressed hope that the arrangement would provide a clear and stable compliance framework for Chinese enterprises operating in Europe, thereby reducing market uncertainty.
Liu Miao
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Liu Miao covers NEVs and batteries at CNC to contribute to the energy transition, in spare time he loves driving his EV around.
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