China EV makers rise as EU mulls minimum price to replace tariff
The minimum pricing will need to be flexible in order to accommodate different model types and vehicle categories
[HONG KONG] BYD and other Chinese electric vehicle (EV) makers rose on Tuesday (Jan 13) after the European Commission said that it’s considering a minimum price system to replace import tariffs, a move that would bode well for the manufacturers’ product margins and sales growth.
BYD shares jumped as much as 4.8 per cent in Hong Kong trading, Xpeng gained 5.3 per cent and Saic Motor’s Shanghai-traded shares added as much as 3.6 per cent.
Under the plan, outlined by the EU on Monday, Chinese exporters would submit a proposal on minimum import prices, annual volume limits, and future investments in the region for the commission to assess. The new regime would replace tariffs on Chinese EVs imposed in 2024 that range up to 35 per cent.
“Overall, this should be positive for developing better ties between the EU and Chinese automakers, and allow European manufacturers like Volkswagen to use China as an EV export hub,” said Eugene Hsiao, head of China equity strategy at Macquarie Capital.
The agreement has been long in the making and is likely to replace the current anti-subsidy tariffs placed on China-made EVs, including vehicles made by non-Chinese brands such as Tesla. The minimum pricing will need to be flexible in order to accommodate different model types and vehicle categories. It could be mixed news for Chinese automakers as there is already a major push to localise in Europe to avoid tariffs, Hsiao said.
The move comes as the EU looks to shore up trade relations with other partners as tensions with the US worsen, following US President Donald Trump’s threats to seek control of Greenland. At the same time, the EU is under pressure to protect its domestic automotive industry, which faces competition from Chinese rivals selling affordable EVs in more and more markets around the world, not just in Europe.
“While awaiting details, we tend to read it as constructive for Chinese EV’s sales expansion in Europe,” Morgan Stanley analysts wrote in a note. “Key players – such as BYD, Saic, and Geely – shall benefit.”
China exported 579,000 battery EVs to Europe in the first 11 months of 2025, with BYD, Saic and Zhejiang Geely Holding Group each accounting for roughly 10 to 15 per cent. The average price of China-made EVs sold in Europe was around 25,000 euros (S$37,517) last year, compared to the overall average of battery EVs imports at roughly 30,000 euros, according to Morgan Stanley estimates.
After a year-long investigation, the EU imposed the additional tariffs on Chinese-made EVs, accusing carmakers of gaining an unfair advantage from subsidies at home. China responded by targeting European industries, including dairy, pork and brandy. Negotiations between Beijing and Brussels have continued since then to avoid a full-blown trade war. BLOOMBERG
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