In a stunning bureaucratic backfire, tariffs on Chinese electric cars pushed Chinese brands towards plug-in hybrid and petrol/diesel-powered vehicles and actually grew the market for those models even faster.
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Sales figures for the European market reveal that the very measures put in place to protect local automakers may have had the opposite effect.
The European Union (EU) imposed tariffs of up to 35 per cent on Chinese EVs in 2024, in a move designed to protect European brands and halt the growth of Chinese electric vehicles.
Early signs suggested that the move was a success; the tariffs, introduced provisionally in July 2024 and formally introduced in November of that year, saw sales of Chinese cars grow by just 13 per cent.
Figures tabled by financial analysts, Jeffries, suggest that rather than pushing Chinese brands to establish European production, brands simply moved their focus away from EVs and towards plug-in hybrid (PHEV) and internal combustion (ICE) vehicles.
Chinese vehicle sales are expected to hit 700,000 units in the UK and EU in 2025, up from 408,000 in 2024. Industry sources suggest that fewer than 20,000 of those will come from European assembly plants.
“The European Union decision to target a specific technology in imposing extra tariffs for Chinese automakers was ill-fated,” according to Philippe Houchois, managing director at Jefferies.
Imported vehicles still attract a 10 per cent import levy, regardless of being petrol, hybrid, plug-in hybrid, or electric powered.
On cars that don't attract that 35 per cent EV tariff, that small additional duty has been easily offset by Chinese brands building cars in China, with Jefferies estimating production costs in China to be 20 to 30 per cent lower than those in Europe.
Even Chinese-built EVs, which incur both the 10 per cent import levy and the 35 per cent tariff, have been able to hold ground, with European market conditions allowing a high margin while still remaining competitive.
Europe’s selective protection levy, aimed directly at Chinese-built EVs, rather than the US approach of applying tariffs to all Chinese-sourced vehicles, led to a shift in the way Chinese brands structured their line-ups.
From January to October 2025, electric vehicles represented around 34 per cent of overall sales. Over the same period in 2024, the mix was a higher 44 per cent.
To avoid a sales slump from the higher tariffs, Chinese brands instead put their efforts behind ICE, mild-hybrid, hybrid and plug-in hybrid models, which avoid the higher EV tariff.
In a perfect storm of conditions, China’s home market price wars continue to push the cost of production within China lower, and factories running below capacity in China mean the cost of absorbing the EU levy is lower than that of setting up new production facilities within Europe, using European supply chains.
“Only if the EU would impose a significant local content threshold below which all Chinese imports pay a substantial extra tariff, no matter their powertrains, would Chinese OEMs be forced to open plants in Europe,” Houchois said of the market conditions.
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Kez Casey migrated from behind spare parts counters to writing about cars over ten years ago. Raised by a family of automotive workers, Kez grew up in workshops and panel shops before making the switch to reviews and road tests for The Motor Report, Drive and CarAdvice.
