China, EU reach framework for EV price minimums

The EU and China have agreed on a framework to resolve their year-long dispute over electric vehicle (EV) imports into the bloc, with the European Commission (EC) publishing guidance on 12 January that allows Chinese automakers to submit minimum price offers. The system, if implemented, would replace tariffs reaching as high as 45.3% imposed by Brussels in October 2024 following an anti-subsidy investigation.

The guidance document instructs Chinese EV makers including BYD, Geely and SAIC on making price undertakings for individual vehicle models. Minimum import prices must be set at levels “appropriate to remove the injurious effects of the subsidization”, with the EC assessing each offer individually according to WTO rules. The local investment plans of Chinese EV makers will also be factored into evaluations.

China’s Ministry of Commerce hailed the development as a significant breakthrough that demonstrates the two parties’ ability to cooperate effectively. “The progress fully reflects the spirit of dialogue and the outcomes of consultations between China and the EU. It shows that both China and the EU have the ability and willingness to properly resolve differences through consultation,” it said in a statement. “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.”

Even under the current tariff regime, Chinese EVs have risen quickly in European markets. In 2025, the country’s automakers captured over 10% of Europe’s EV market; China-made cars in general rose to 6% of EU sales in the first half from 5% in the same period of 2024. Chinese brands typically priced their vehicles at or just below established European models rather than competing on cost, with most automakers absorbing the tariffs to maintain margins. Cui Dongshu, secretary-general of the China Passenger Car Association, projects Chinese EV exports to the EU will maintain 20% average annual growth between 2026 and 2028.

Some economists have indicated that the minimum price system functions better as a concession to China than an attempt to protect the bloc’s automakers. “Chinese producers would increase profitability per vehicle sold, and the minimum price would provide more stable protection for EU manufacturers by directly limiting the lowest prices,” said Hayuk Salar of E-mobility Eurasia. Koen De Leus, Chief Strategist at BNP Paribas Fortis Belgium, noted that while consumers benefit from lower prices than tariffs would impose, the shift encourages “Chinese dominance” as Chinese EV makers maintain substantially lower production costs.

At the same time, European automakjers’ heavy dependence on China for EV batteries and other components creates a structural vulnerability that pricing mechanisms may not be able to address in isolation. Most attempts to establish a European supply chain for batteries have failed; most notably Northvolt which declared its second bankruptcy in March 2025. Volvo Cars’ former joint venture with Northvolt, Novo Energy—later acquired by Volvo Cars for an effective sum of zero SEK—was put on indefinite hold in January 2026 due to a lack of suitable and willing technology partners.

The price minimum agreement arrives as Chinese EV giant BYD gears up to open its debut European plant in Debrecen, Hungary, early in the year. Additional plants—seen as a mechanism for circumventing tariffs and building local brand presence—are currently in the works for Turkey and possibly Spain. Consultancy AlixPartners forecasts Chinese automakers will double their European market share to approximately 10% by 2030..