The European Union’s decision to impose heavy tariffs on Chinese electric vehicles (EVs) in October 2024 was intended to safeguard the region’s automotive industry and counteract what it views as unfair subsidies provided by the Chinese government. However, instead of stalling Chinese automakers, the move has triggered a rapid shift in strategy. By capitalizing on hybrids, which face fewer trade barriers, Chinese brands are finding a way to maintain — and even expand — their presence in Europe.
Key Takeaways
- EU tariffs on Chinese EVs reach as high as 45.3%, adding thousands of euros to retail prices.
- Hybrids remain only partially covered by the tariff system, offering a loophole.
- BYD registered 20,000 plug-in hybrids in the EU in the first half of 2025, tripling its 2024 tally.
- MG and Lynk & Co also sharply increased PHEV imports while cutting back on EV shipments.
- Analysts note Chinese carmakers are adjusting quickly to protect profitability in Europe.
Why Hybrids Offer a Loophole
Hybrids occupy a unique position in the European tariff system. Unlike fully electric vehicles, which are heavily taxed upon import, hybrids are subject to significantly lower duties. This makes them both attractive for automakers and appealing to European buyers who continue to value efficiency without committing entirely to electric mobility.
The result is clear: Chinese automakers are flooding the market with plug-in hybrids (PHEVs). Dataforce reports show that BYD alone registered 20,000 PHEVs in the EU during the first half of 2025, more than triple its total imports for the whole of 2024. MG and Lynk & Co have followed the same path, increasing hybrid volumes while reducing their EV shipments.
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Tariffs That Reshape the Market
The numbers highlight just how dramatic the tariff impact has been. Every BYD EV sold in Germany faces a base 10% duty plus an additional 17% levy, bringing the total tariff to 27%. For the brand’s popular Atto 3 SUV, this adds around €10,000 ($11,600) to the price tag.
In contrast, the plug-in hybrid BYD Seal U is subject only to the 10% base duty. With a starting price of €39,999 ($46,600), that means an additional cost of just €3,999 ($4,600) — a fraction of the penalty imposed on EVs.
The situation is even more severe for SAIC’s MG brand, which faces EU tariffs as high as 45.3% on EV imports. As a result, MG’s EV sales have dropped by 60% across Europe in the first six months of 2025. To counter this, the company has significantly ramped up hybrid registrations, with strong results from the MG HS, MG ZS, and MG 3 models.
Expert Perspectives on Chinese Strategy
According to Beatrix Keim, director of the Center Automotive Research in Germany, the shift was inevitable:
“It was only a matter of time before the Chinese manufacturers changed their strategy after the introduction of the special tariffs in order to increase their profitability in Europe.”
This pragmatic approach allows Chinese automakers to stay competitive while avoiding the steep penalties that threaten the appeal of their EVs.
European Response
The European Commission is reportedly aware of the loophole being used by Chinese brands but has chosen not to act for now. Instead, the EU hopes that dialogue with Chinese automakers will provide a more balanced path forward, even as those companies accelerate their expansion across Europe.
By focusing on hybrids, Chinese manufacturers are not only adapting to regulatory challenges but also capitalizing on consumer trends. For many European buyers, hybrids remain an attractive middle ground between combustion and full electrification.
Market Dynamics at a Glance
| Brand | EV Tariff Impact | Hybrid Strategy | Market Effect |
|---|---|---|---|
| BYD | 27% tariffs on EVs in Germany (≈€10,000 added on Atto 3) | Boosted PHEV sales, 20,000 units in H1 2025 | Tripled 2024 total in just six months |
| MG (SAIC) | Up to 45.3% tariffs on EVs | Strong focus on MG HS, ZS, and MG 3 hybrids | 60% drop in EV sales, offset by higher PHEV demand |
| Lynk & Co | Affected by EV duties | Increased hybrid imports | More PHEVs registered than ever before |
The Bigger Picture
What was designed as a barrier to Chinese competition has, at least in the short term, created an unintended opening. The EU tariffs on EVs have accelerated the growth of Chinese hybrids in the European market. These vehicles, with lower costs and reduced tariff exposure, give brands like BYD and MG a strong foothold at a time when European automakers are struggling to balance electrification with affordability.
Looking Ahead
The Chinese carmaker hybrid strategy is a clear demonstration of how global manufacturers can pivot rapidly to regulatory challenges. While European policymakers may eventually address the loophole, Chinese brands are already gaining ground in a segment that blends consumer demand with tariff advantages.
For now, hybrids are proving to be more than just a transitional technology — they are a powerful tool in the geopolitical contest shaping Europe’s automotive market.
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