EU to cap hybrid car imports at 350,000 a year

The European Union will limit imports of hybrid vehicles to 350,000 cars a year under a safeguard measure that could take effect as soon as Dec. 1, Bloomberg News reported Sunday, citing a document outlining the plan. The cap is aimed mainly at the fast rise in Chinese hybrids. It is the first concrete detail of a provisional deal that EU trade chief Maros Sefcovic reached in Beijing last week with Chinese Commerce Minister Wang Wentao.bloomberg+2

According to the document, the 350,000-car limit applies in the first year and rises 6% a year from the second year. The measures will last four years, and both sides will commit to World Trade Organization rules during that time. To meet the WTO's non-discrimination principle, the cap covers all hybrid imports, not only those from China. China's quota will be no smaller than that of any other supplier.moneycontrol+1

From 800,000 to fewer cars

Before the document surfaced, Bloomberg reported that Sefcovic had told European officials the mechanism would cut hybrid shipments into the bloc to about 400,000 a year, down from roughly 800,000 expected in 2026. He also said safeguards would probably take the form of tariff-rate quotas, which charge a levy on imports above a set volume. A European Commission spokesperson declined to comment.bloomberglinea

Chinese-made cars made up about a quarter of hybrid sales in Europe in August. Sales have grown in part because hybrids are not covered by the EU tariffs on Chinese electric vehicles that took effect in 2024. Automakers such as Chery have sharply increased shipments to Europe as demand at home has weakened. The restrictions could help European manufacturers such as Volkswagen and Stellantis ↘ 2.23%, which face lower-priced competition.tradingview+1

A test case for wider trade imbalances

Sefcovic called the trade deficit, which tops €1 billion a day, "unsustainable" and said it "demands a credible path toward rebalancing," according to Bloomberg. China's Commerce Ministry said both sides had reaffirmed their commitment to "properly manage differences in accordance with WTO rules" and to make trade more balanced. Officials see hybrids as a test case that could be applied to other sectors with imbalances. Sefcovic said he would meet Wang again in January, ahead of another round of talks planned for March.bloomberglinea

The European auto industry lobby ACEA welcomed the provisional agreement. Director General Sigrid de Vries warned that "an abrupt and sudden destabilization of the market in Europe, together with price wars reflecting the current market situation in China, would be very damaging to the European economy as a whole".bloomberglinea

EU leaders will meet in Brussels on Thursday and Friday to discuss the hybrid plan and wider measures against subsidized, low-cost Chinese goods.moneycontrol+1