EU, China Begin Talks To Replace EV Tariffs With Minimum Prices

The European Union (EU) and China have started negotiations that could establish minimum prices for Chinese-manufactured electric vehicles, according to news agency Reuters. This initiative aims to resolve tensions by replacing the EU's current tariff system on Chinese EVs.

China's Ministry of Commerce has said that these discussions will commence immediately.

The EU implemented increased tariffs on Chinese-built EVs in October 2024, adding 17 per cent for BYD vehicles and 35.3 per cent for SAIC models on top of standard import duties. 

A minimum price agreement would likely supersede these tariff measures.

This development comes amid broader global trade tensions, with US President Donald Trump imposing significant tariffs worldwide, including 125 per cent on Chinese products and 20 per cent on EU goods. These US tariffs were temporarily suspended for 90 days, as announced on April 9.

Hildegard Müller, President of German automotive association VDA, criticised the US approach on April 2, stating that the tariffs "represent the US's departure from the rules-based global trading order -- and thus a departure from the foundation for global value creation and corresponding growth and prosperity in many regions of the world. The announced measures also represent a massive burden and challenge for both companies and the global supply chains of the automotive industry."

Current EV Trade Landscape

China exported over 50,000 battery electric vehicles to the EU during January and February 2025, according to customs data. Meanwhile, plug-in hybrid vehicles, which aren't subject to EU tariffs, saw exports surge by 892 per cent to 25,900 units in the same period.

Chinese manufacturers like BYD captured 8 per cent of the EU's battery electric vehicle market in 2023, though this growth has slowed following the EU's 2024 tariff implementation. In contrast, EU exports to China totaled just 11,499 battery electric vehicles in 2023, with little expectation for improvement.

Some Chinese companies are adapting by establishing production facilities within the EU. BYD is expected to begin building a manufacturing plant in Hungary later this year.

Likely Impact Of Minimum Pricing

Introducing price floors for Chinese-manufactured EVs could help level the competitive landscape by preventing Chinese manufacturers from undercutting European producers.

However, the approach raises concerns about potentially higher vehicle prices for consumers, which could slow electric vehicle adoption rates.

European automakers, including Volkswagen and Stellantis, continue to struggle against China's significant cost advantages, which are partially attributed to state subsidies that can make EU production 30-40 per cent more expensive.