The European Union has asked China to voluntarily cap the share of Chinese-made hybrid vehicles in the bloc at about 15% of the market, and has threatened to impose higher tariffs if Beijing refuses, according to Chinese business outlet Huxiu. The request, first reported by the Financial Times, came a day after European Commission President Ursula von der Leyen used her annual State of the Union address on September 16 to warn that a “China shock” was causing deindustrialisation in Europe and to promise that Brussels would use “all tools available” to rebalance trade relations.
“If they don't restrict exports to our market, we will restrict ourselves,” an EU official told the Financial Times. “This is about stopping deindustrialisation. We must act. This is about trade control.” The proposed cap of around 15% compares with a current Chinese share of more than one-third of the EU market in the hybrid segment, the report said. Brussels is said to want a voluntary export restraint modelled on the 1986 arrangement with Japan, which limited Japanese car exports until 1999 and pushed Toyota and Nissan to invest in Europe.
Plug-in hybrids found a tariff gap
Since October 30, 2024, the EU has imposed five-year anti-subsidy duties on Chinese-made battery-electric vehicles (BEVs) that, together with the existing 10% import tariff, pushed total tariff costs as high as 45.3%. Plug-in hybrids (PHEVs), however, still face only the 10% tariff, opening a gap that Chinese automakers have exploited. Dataforce figures cited by Huxiu show Chinese brands took more than 13% of the combined hybrid market in the EU, EFTA countries and Britain in November 2025, and nearly 14% of European PHEV sales for the full year, up from 3% in 2024, with Chinese PHEV volumes surging 645% year on year while the overall European PHEV market grew 33% to about 1.273 million cars.
The momentum has accelerated into 2026. In the first quarter, Chinese car exporters shipped 438,400 vehicles to Europe, up 84.7% year on year, of which 106,000 were plug-in hybrids, up 152.4%, according to Huxiu. By April, Chinese brands held nearly 29% of the European PHEV market; by June this reached 34%, a record, led by BYD and Chery. In July, about a third of all newly registered plug-in hybrids in Europe came from Chinese brands, with Chery’s Jaecoo line among the main sellers, while imports of Chinese hybrids into Europe rose from 3,800 units in October 2024 to 50,000 in July 2026.
Pressure builds on both sides
The surge has alarmed Brussels. European Commission industry chief Stéphane Séjourné has repeatedly questioned why plug-in hybrids should be treated differently from battery-electric vehicles, and, according to Huxiu citing German newspaper Handelsblatt, the EU is developing a “new trade weapon” targeting hybrid cars. Volkswagen is among the European manufacturers calling for punitive tariffs on imported hybrids, and Germany’s vice chancellor and finance minister, Klingbeil, said at the VW headquarters in Wolfsburg on September 17 that the EU should tighten rules and levy tariffs on Chinese-made plug-in hybrids. Italy’s auto parts association ANFIA has gone further, proposing a cap of 8% on Chinese brands’ EU market share with an 80% tariff on any excess.
Beijing has pushed back. Foreign ministry spokesman Guo Jiakun said on September 18 that China-EU economic ties were mutually beneficial, not a zero-sum game, and urged Europe to honour market-opening and free-trade commitments and follow WTO rules. He said China would take “necessary measures” to protect the legitimate rights of Chinese companies.
Chinese automakers are meanwhile shifting production closer to their customers. BYD is building plants in Hungary and Turkey, Chery has chosen Spain, and Geely agreed in July to buy 34% of Ford’s Valencia plant. Such moves would put vehicles outside the scope of tariffs aimed at Chinese-made imports, while allowing brands to keep selling in Europe. EU Trade Commissioner Maroš Šefčovič, who is leading the talks to narrow the trade deficit, said he hoped for tangible results before October and planned to visit China in the second week of October.
