The European Union is considering a major shift in trade policy that could significantly benefit Chinese electric vehicle (EV) manufacturers. According to reports, EU officials are weighing a plan to replace the current import tariffs on Chinese EVs—which can be as high as 35%—with a minimum price system.
Under the proposed framework, Chinese automakers would submit plans outlining minimum import prices, annual volume limits, and future investments in the European region. These submissions would be assessed by the European Commission. The move is viewed by investors as supportive of sales growth and profit margins for Chinese EV companies in the lucrative European market, which has a population of over 600 million.
The existing tariffs were imposed in 2024 following a year-long EU investigation that concluded Chinese carmakers benefited from unfair state subsidies. The potential policy shift comes as the EU seeks to stabilize trade relations with key partners amid escalating tensions with the United States, while also balancing pressure to protect its domestic automotive industry.
Analysts see the development as broadly constructive. "Overall, this should be positive for developing better ties between the EU and Chinese automakers," said Eugene Hsiao of Macquarie Capital. Morgan Stanley analysts noted, "While awaiting details, we tend to read it as constructive for Chinese EV’s sales expansion in Europe." Key players expected to benefit include BYD, SAIC, and Geely, which together accounted for a significant portion of the 579,000 battery electric vehicles China exported to Europe in the first 11 months of 2025.
The news triggered a rally in shares of major Chinese EV makers. BYD's stock jumped as much as 4.8% in Hong Kong trading, while Xpeng advanced 5.3% and SAIC rose up to 3.6%. Nio's stock also rose over 2%, continuing a recovery. The company recently reported delivering 48,135 vehicles in December, a 54.6% year-over-year increase.
