EU Tariffs on Chinese EVs: BYD Grows, SAIC Struggles, and Western Makers Relocate

However, this headline decline masks a key split: the drop was driven almost entirely by Western brands shifting production out of China . European OEMs' share of BEV imports from China fell from 38% in 2024 to 23% in Q1 2026, while Tesla's fell from 26% to 19% over the same period .

In contrast, Chinese brands' imports continued to grow. Chinese OEMs now account for more than half (54%) of all BEVs shipped from China to Europe, up from 35% before the tariffs . In May 2026, combined sales of Chinese automakers (SAIC, BYD, Geely, Chery, and Li Auto) in 31 major European countries reached 138,410 units, giving them a 12.0% market share—surpassing Japanese brands for the first time .

Divergent Outcomes: BYD Doubles Down, SAIC Struggles

The tariff structure created a clear winners-and-losers dynamic among Chinese brands:

SAIC/MG suffered the largest sales drop among China-built BEVs due to its high tariff rate . BYD, with a much lower rate, was able to absorb the tariff and still undercut European rivals on price .

How Western Automakers Responded

Western carmakers chose relocation over absorption. Tesla shifted its Berlin production to serve the EU market, while Volvo (EX30) and BMW moved key models from China to European plants . This relocation drove the entire decline in the headline China-built EV share.

T&E also warns that if the EU weakens its 2030/2035 car CO₂ targets (as proposed by MEP Salini), Chinese brands' EV market share could rise to 30% by 2035, compared to 15% under the current Commission proposal . This suggests tariffs alone are insufficient without accompanying emissions regulations.

Chinese Brands' Multi-Pronged Response

Chinese automakers have pursued four distinct strategies in response:

1. Onshoring Production to Europe

Chinese brands have announced 10 planned production facilities since September 2023, located in Turkey, Hungary, and Spain . BYD is building a €4 billion plant in Hungary and aims to produce all EVs for Europe locally by 2028 . It has also entered talks with Stellantis to acquire underutilized EU factories . SAIC (MG) is setting up local production to bypass its 35.3% tariff .

Despite this onshoring push, T&E expects 60% of Chinese-brand EV sales in Europe will still come from Made-in-China imports in 2035, with volumes rising from 350,000 units (2025) to 850,000 .

2. Shifting to Plug-In Hybrids (PHEVs)

PHEVs were initially exempt from additional tariffs, facing only the standard 10% import duty. Chinese brands' share of the EU PHEV market jumped from 3% (2024) to 13% (2026) . Made-in-China PHEVs rose from 37% to 60% of total PHEV imports into the EU . BYD's Seal U plug-in hybrid SUV became Europe's best-selling model in its category in 2025 . The EU is now preparing tariffs on Chinese PHEVs as well .

3. Keeping Prices Low

Chinese-brand BEVs remain 21% cheaper on average than EU-made equivalents despite the tariffs . Some models saw further price cuts post-tariff: BYD Seal U -9%, MG4 -7% . Chinese brands absorbed the duties to maintain market share rather than passing costs to consumers.

4. Lobbying and Brand Positioning

BYD has applied for membership in the European Automobile Manufacturers' Association (ACEA) to gain influence over tariff and regulatory policy . This would give BYD a direct seat at the table where EU emissions standards, charging infrastructure, and tariff frameworks are debated.

A Critical Gap: Battery Imports

T&E flags that Chinese battery imports—facing virtually no tariffs—increased seven-fold, from approximately $4 billion (2020) to nearly $30 billion (2025) . European manufacturers account for less than a quarter of EU battery production. T&E calls for a 20% tariff on Chinese batteries, which they project would increase EU-made BEV prices by only 2.8% .

Summary Assessment

The EU tariffs achieved their intended primary target: forcing Western automakers to localize EV production in Europe . Tesla, Volvo, and BMW now produce key models in Europe rather than importing them from China.

However, the tariffs failed to stop Chinese brands' advance. BYD leveraged its lower tariff rate to maintain exports and is building a European production base. SAIC was hit harder and is racing to onshore. Chinese OEMs now dominate the import channel, accounting for 54% of China-to-EU BEV flows . The tariffs reshaped who builds what and where, but they did not halt the structural shift toward Chinese brands in the European EV market.