EU tariffs push Western firms out as BYD advances
The European Union’s tariffs on electric vehicles from China have altered the market in unexpected ways. A recent analysis by Transport & Environment (T&E) indicates that while imports of Chinese-made EVs have decreased, the decline stems largely from Western automakers reducing production in China. Meanwhile, Chinese brands such as BYD are expanding their presence, using new strategies to maintain competitiveness in Europe despite the tariffs.
Western brands retreat, Chinese brands advance
In early 2026, electric vehicles manufactured in China held 17% of the EU market, a drop from their 22% peak in 2024. The change aligns with the introduction of tariffs, though the impact varies by manufacturer. Data from T&E shows that Western companies like Tesla, BMW, and Volvo have scaled back production in China, leading to fewer exports to Europe. Their share of Chinese-made EV imports fell from 38% in 2024 to 23% in the first quarter of 2026. Tesla’s contribution alone declined from 26% to 19%.
Chinese automakers have capitalized on this shift. They now account for over half of all battery-electric vehicle imports from China into the EU. The tariffs, which differ by company, have produced uneven results. SAIC, facing a 35% duty in addition to the 10% base tariff, saw its imports nearly halve between 2023 and 2025. BYD, subject to a 17% tariff, more than doubled its shipments to Europe during the same period.
Even with the added costs, Chinese-branded EVs remain 21% cheaper than European models. This price gap has prompted Chinese automakers to speed up plans for local production. Since the EU began its anti-subsidy investigation in September 2023, these companies have announced 10 new manufacturing sites in Europe. The move reflects a long-term commitment to the region’s expanding EV market.
For consumers, the tariffs have not significantly increased the cost of Chinese EVs. The primary effect has been on supply, with Western brands retreating while Chinese competitors expand their operations.
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Hybrids and batteries: The loopholes in the system
Chinese automakers have also adjusted by focusing on plug-in hybrids, a segment with less restrictive tariffs. T&E’s data shows that these brands now hold 13% of the EU’s plug-in hybrid market, up from just 3% in 2024. The approach allows them to maintain a presence in Europe while avoiding the steepest duties on fully electric models.
Battery imports tell a different story. Lithium-ion batteries from China face minimal tariffs, and imports have surged. Since 2020, shipments have increased sevenfold. Less than a quarter of the batteries produced in the EU come from European manufacturers, leaving the industry exposed to cheaper Asian imports. The report highlights that European battery makers are struggling to compete on both cost and technology.
Lucien Mathieu, T&E’s Cars Director, stated that the tariffs had partially achieved their objectives. “Western carmakers moved production to Europe, and Chinese manufacturers started to establish local operations,” he said. However, he noted that European companies still lag in EV and battery technology. While the EU’s CO₂ standards for cars are essential for driving adoption, stronger measures may be needed to develop a domestic battery supply chain.
T&E has proposed raising tariffs on Chinese batteries to 20%, a change it estimates would increase the price of EU-made EVs by just 2.8%. The group also calls on Germany to support two EU initiatives—the Industrial Accelerator Act and the Clean Corporate Vehicles Regulation—to strengthen demand for European-made EVs and batteries. Both measures aim to create a more stable market for domestic producers, though their future remains uncertain. The European Commission has suggested weakening fleet emission targets, a proposal opposed by seven member states but backed by Germany, Italy, and the Czech Republic.
The tariffs were intended to protect European automakers. Instead, they have revealed weaknesses in the continent’s EV and battery industries. Chinese brands are adapting quickly, while Western companies work to relocate production. The EU’s approach has slowed the influx of Chinese EVs but has not halted it.
