Auto Manufacturers BYD and Chery Introduce Hybrid Vehicles to Evade Tariffs in Europe
The European Union's punishing tariffs on automobiles, imposed on the U.S. and extending to some Chinese brands, are taking a toll on both the EU and China's auto industries. In response, Chinese automakers are strategically diversifying their offerings, focusing on plug-in hybrid electric vehicles (PHEVs) and traditional internal combustion engine (ICE) vehicles alongside battery-electric vehicles (BEVs).
This tactic is proving effective, as Chinese brands are rapidly growing in the European Union. In the first half of 2025, they nearly doubled their market share, outselling major traditional European brands like Ford and almost matching Mercedes-Benz.
While companies like BYD aggressively push BEVs, other Chinese brands such as Jaecoo and Omoda have substantial sales in ICE and PHEV models. Only about 29% of their sales are plug-in hybrids, and a majority (63%) are still traditional ICE vehicles.
The emphasis on PHEVs is a clear tactic to counteract potential trade barriers or tariffs on BEVs. According to industry analysis, Chinese automakers are responding to tariff threats by focusing on PHEVs to sustain their expansion in Europe.
Popular models like the BYD Seal U and Volkswagen Tiguan are among the top-selling PHEVs in Europe as of June 2025. BYD, for instance, sold 3,269 PHEVs in the EU markets in March, with this number more than doubling to 4,633 in March 2025 compared to the previous year. Chery, another Chinese automaker, sold 310 BEVs in the EU in March 2025, with PHEV sales more than doubling those numbers.
The tariffs imposed by the European Union on Chinese BEVs are up to 45.3% on top of the EU's standard 10% import duty. Despite the significant increase in BEV sales, BYD's PHEV sales nearly match them from a standing start in March 2025. This is a significant increase since the European Union introduced tariffs against automakers whose battery-electric vehicles were deemed unfairly subsidized by the Chinese state last summer.
The current trend for Chinese automakers in the European Union is a strategic focus on increasing sales of PHEVs and traditional ICE vehicles alongside BEVs. This approach allows them to maintain strong growth while mitigating tariff impacts associated with BEVs. The increased focus on hybrids by Chinese automakers may be temporary, as both the EU and China are currently negotiating to relax some tariffs.
Didi Bostock, membership editor for Rho Motion, stated that it was only a matter of time before manufacturers found a way around the EU tariffs, and they have done so through hybrids. The slowing demand by European consumers for battery-electric vehicles is reflected in Stellantis' joint venture partner Leapmotor offering a gas-generator extended-range electric vehicle powertrain option for its new C10 midsize SUV.
In conclusion, to avoid or lessen the impact of tariff barriers on BEVs in the EU, Chinese automakers are strategically prioritizing plug-in hybrids and maintaining ICE offerings while continuing to invest heavily and grow BEV sales. This hybrid-heavy portfolio enables them to sidestep tariffs on purely battery-electric vehicles and boost overall sales performance.
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[2] Bostock, D. (2025). Chinese Automakers in Europe: A Growing Presence. Rho Motion. [online] Available at: https://www.rho-motion.com/chinese-automakers-in-europe-a-growing-presence/ [Accessed 15 June 2025].
[3] Zhang, L. (2025). Chinese Automakers' Response to EU Tariffs: A Focus on Plug-in Hybrids. Autoblog. [online] Available at: https://www.autoblog.com/2025/06/15/chinese-automakers-eu-tariffs-plug-in-hybrids/ [Accessed 15 June 2025].
[4] European Automobile Manufacturers Association (ACEA). (2025). Market Share of Chinese Brands in Europe. [online] Available at: https://www.acea.be/acea-statistics/market-share/market-share-of-chinese-brands-in-europe/ [Accessed 15 June 2025].
- The increasing emphasis on plug-in hybrid electric vehicles (PHEVs) by Chinese automakers is a strategic move to avoid or lessen the impact of tariff barriers on battery-electric vehicles (BEVs) in the European Union Market.
- As a result of tariffs imposed by the European Union on BEVs, which are significantly higher than the standard 10% import duty, Chinese automakers like BYD and Chery are seeing nearly as much success with PHEV sales as they are with BEV sales.
- The finance sector, technology, and the automotive industry are all being affected by this strategic focus on PHEVs as Chinese brands like BYD, Jaecoo, and Omoda continue to invest heavily in growing their PHEV sales alongside their BEV and traditional ICE vehicle offerings in Europe.
