The EU is considering widening its tariffs on Chinese electric vehicles to include hybrid vehicles, in an attempt to finally get an upper hand in the EV market. The move would extend the bloc’s existing anti-subsidy measures beyond battery-only models, broadening the range of cars which receive tariffs. Yet, the underlying truth is that tariffs have not worked so far: Chinese-made cars have even gained ground in Europe, with a record high — 12.8% — of the continent’s EV market share.

This worrying figure shows that protectionist measures alone can’t be a substitute for industrial policy. Instead, a shake-up of the market ecosystem in Europe is needed to boost innovation and competitiveness, while defending its industrial sector against China.

In October 2024, the European Commission imposed definitive countervailing duties on imports of Chinese battery electric vehicles after an anti-subsidy investigation. The tariff rates varied by company — 17% for BYD, 18.8% for Geely, and up to 35.3% for SAIC. The aim was to reduce the price advantage of Chinese EVs and buy time for Europe’s industry to adjust. Nevertheless, these tariffs failed in their goals as Beijing’s cars are still more affordable. Chinese manufacturers have been able to absorb the duties by cutting margins, and still sell at prices European producers struggle to match. In many cases, consumer prices weren’t affected at all by tariffs.

For instance, Reuters reported that BYD launched its Dolphin Surf in Europe at between €22,990 and €24,990, with promotional discounts bringing the price as low as €19,990. That is a price point with which few EV European models can compete: the Citroën ë-C3 starts around €23,300, the Renault 5 E-Tech is marketed from €25,995, and the Volkswagen ID.3 is listed around €32,905. That affordability matters because Europe is experiencing a broader squeeze on household purchasing power. In a context of progressive impoverishment, where consumers are more price-sensitive and credit is more expensive, people can’t “buy European” if they don’t have the money.

This tariff regime is not only a result of China’s capacity to adapt, but also due to the weakness of Europe’s economic ecosystem. High energy prices, regulation-heavy production costs, and weaker competitiveness structurally raise the floor price of cars made in Europe. Protectionist measures without a serious shake-up of Europe’s internal market dynamics — to unleash innovation and competitiveness, and allow for the rise of new companies beyond legacy carmakers — will simply not work.

Due in part to the longtime lack of industrial policy at the EU level, many European carmakers are dependent on Chinese supply chains, particularly in batteries and battery materials. Europe could build capacity, but a transition period would be complex as Chinese players are also deeply embedded in the continent’s battery build-out.

Here again, Europe’s loss of purchasing power plays a role, as China is German carmakers’ most lucrative market, even if they are currently losing market share. German executives may understand the long-term strategic risk, but they prefer not to risk their short-term position in China for a hypothetical industrial revival in Europe in which they do not seem to believe.

Altogether, it creates a vulnerability to European protectionist measures, as China could weaponize this market and supply chain dependence.

This explains why Brussels is simultaneously exploring alternatives to tariffs, including the idea of minimum price undertakings that would allow some Chinese exporters to avoid duties. It may help European carmakers in the short term by stopping Chinese brands from competing purely on price, but it could still hurt them in the long run as it gives Beijing’s companies a smoother way to build their sales networks across Europe.

Chinese manufacturers have built “tariff-proof” routes into Europe by expanding production in third countries such as Morocco, where Chinese battery and EV supply-chain firms have started manufacturing specifically to serve European demand and reduce exposure to Brussels tariffs. That could also weaken the impact of any minimum-price agreements if those rules apply mainly to China-made vehicles.

Beijing’s brands have already built distribution, recognition, and momentum in Europe’s EV market. Increasing tariffs or extending them to Chinese hybrids may slow the trend at the margins, but without restoring European economic competitiveness, trade protectionism alone is unlikely to save the continent’s industrial capacity.

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Miquel Vila is a political consultant specialising in international affairs. He is also the executive director of the Catalonia Global Institute.

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