Shares of Chinese electric vehicle makers rose on Tuesday after the European Commission announced it is considering a minimum price system to replace import tariffs, a move investors view as supportive of margins and sales growth in the region.
BYD Inc. shares jumped as much as 4.8% in Hong Kong trading. Xpeng Inc. advanced 5.3%, while SAIC Motor Corp.’s Shanghai-listed shares rose as much as 3.6%.
The rally followed confirmation that the European Union is reassessing the tariff regime imposed on Chinese-made electric vehicles in 2024.
EU considers shift from tariffs to pricing framework
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Under the plan outlined by the European Union on Monday, Chinese exporters would submit proposals covering minimum import prices, annual volume limits, and future investments in the region.
These submissions would then be assessed by the European Commission. If adopted, the framework would replace tariffs on Chinese EVs that currently range as high as 35%.
The proposed system could reshape how Chinese automakers access the European market.
The existing tariffs were introduced after a year-long investigation in which the EU accused Chinese carmakers of benefiting from unfair state subsidies.
Those levies also apply to China-made vehicles sold by non-Chinese brands, including Tesla Inc.
“Overall, this should be positive for developing better ties between the EU and Chinese automakers, and allow European manufacturers like Volkswagen to use China as an EV export hub,” said Eugene Hsiao, head of China equity strategy at Macquarie Capital Ltd, in a Bloomberg report.
Hsiao noted, however, that minimum pricing would need to be flexible to accommodate different vehicle models and categories.
He added that the changes could be mixed for Chinese automakers, given the ongoing push to localize production in Europe to avoid trade barriers.
Implications for Chinese automakers and Europe
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The potential policy shift comes as the EU balances competing priorities.
On one hand, it is seeking to stabilize trade relations with key partners as tensions with the United States intensify, following President Donald Trump’s threats to seek control of Greenland.
On the other hand, European policymakers remain under pressure to protect the region’s domestic automotive industry from intensifying competition by Chinese manufacturers offering more affordable electric vehicles.
While details of the proposal have yet to be finalized, analysts see the development as broadly constructive for Chinese EV makers’ expansion in Europe.
“While awaiting details, we tend to read it as constructive for Chinese EV’s sales expansion in Europe,” Morgan Stanley analysts wrote in a note. “Key players — like BYD, SAIC, and Geely — shall benefit.”
Chinese automakers have already been gaining traction in the region.
In the first 11 months of 2025, China exported 579,000 battery electric vehicles to Europe.
BYD, SAIC, and Zhejiang Geely Holding Group Co. each accounted for roughly 10% to 15% of those exports, according to Morgan Stanley estimates.
Trade tensions and market dynamics
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Pricing remains a key factor underpinning Chinese competitiveness.
The average price of China-made EVs sold in Europe last year was around 25,000 euros ($29,140), compared with an overall average import price of about 30,000 euros for battery EVs, Morgan Stanley said.
The earlier tariff dispute triggered retaliatory measures from Beijing, which targeted European industries including dairy, pork, and brandy.
Since then, negotiations between Brussels and Beijing have continued in an effort to avoid a broader trade conflict.
