In response to the EU’s recent increase in tariffs on Chinese electric vehicles, leading manufacturers like BYD, SAIC, and Geely have significantly ramped up their export of hybrid vehicles to Europe. This strategic move aims to enhance their presence in the competitive European automotive market.
Chinese electric vehicle (EV) giants have discovered a clever workaround to the EU’s heightened tariffs on electric cars, allowing them to continue capturing market share in Europe. By focusing on hybrid exports, which remain untaxed by these tariffs, companies such as BYD, Geely, and state-owned SAIC are positioning themselves advantageously. Hybrid vehicles combine electric batteries and traditional internal combustion engines, appealing to a diverse range of consumers.
Additionally, several Chinese manufacturers are relocating their assembly and production facilities to Europe. This shift not only helps them reduce operational costs but also mitigates the impact of tariffs on their products.
The influx of Chinese hybrids is set to challenge established Japanese and European brands like Toyota, Honda, and Nissan, who are already experiencing declining sales as a consequence. Renowned European automotive brands, including Volkswagen, are feeling the effects as well.
According to the China Passenger Car Association (CPCA), China exported approximately 65,800 hybrid vehicles to Europe between July and October of this year—over three times the amount exported during the same timeframe last year.
BYD has introduced hybrid models such as the SEAL U DM-i, which marks its entry into the European hybrid market, as well as the Song Plus DM-i. Geely also offers a range of plug-in hybrid electric vehicles (PHEVs), including the Galaxy Starship 7, as well as mild hybrid options like the Geely Azkarra. Mild hybrids typically feature a small electric motor that assists the traditional engine.
Meanwhile, SAIC provides various hybrids, including the MG6 PHEV, the Roewe Erx5 Super Hybrid Edition SUV, the MG3 HEV, and the MG EHS Plug-in Hybrid, further expanding its hybrid lineup.
The EU’s recent tariff adjustments on Chinese electric vehicle manufacturers come amid allegations that the Chinese government has been subsidizing these companies. This strategy enables Chinese manufacturers to sell their vehicles at significantly discounted prices in Europe, putting pressure on local producers. The EU has implemented tariffs of 17% on BYD, 35.3% on SAIC, and 18.8% on Geely, as part of its efforts to protect domestic auto makers.
While this strategy of pivoting toward hybrid vehicles may serve as a viable short-term solution, it raises concerns about the possibility of new EU tariffs targeting hybrids if they begin to adversely affect European producers.
What Makes Chinese Hybrid Vehicles Attractive in the EU?
The surging popularity of Chinese hybrid vehicles in the EU can largely be attributed to their affordability. Amidst the ongoing European cost of living crisis and rising interest rates, consumers are increasingly seeking budget-friendly options. Chinese hybrids often come with a wider array of features and boast more modern, appealing designs, raising their profile among European consumers.
In addition, several Chinese hybrid brands have made significant strides in enhancing their reliability, safety ratings, and overall quality, further bolstering their reputation in the European market.
For many consumers, hybrids present an appealing transition from traditional combustion engines to fully electric vehicles. Offering a more affordable alternative to EVs while maintaining the familiarity of gasoline-powered engines, hybrids can ease the transition for those wary of electric models. Notably, in several countries, hybrid vehicles may qualify for tax incentives, making them even more enticing.
Photo credit & article inspired by: Euronews
