EU Sets Price Floors to Resolve Dispute over Chinese EV Imports

The European Union (EU) and China appear to be moving toward a dispute resolution over the Chinese Electric Vehicles (EV) imports. Initially, the EU initiated an investigation into Chinese car makers, accusing China of unfair subsidies to undercut competitors. The EU also raised #tariffs varying from 7.8% to 35.3% on #EV made in China.

As per the recent announcements made by both sides, it seems a resolution might be in sight. The EU would impose a minimum import price to counteract any subsidies, while encouraging investments by Chinese car makers to localize their manufacturing in Europe.

Under the deal, China will get better access to the EU market in exchange for investment and technology transfer. In the 1990s, the situation was reversed, and China would open its huge domestic market to European car makers, only after securing foreign direct investments (#FDI) and technology transfer via the formation of joint ventures (JV).

Many analysts believe that the meteoric rise of the Chinese EV industry came about after the setting up of the Tesla factory in Shanghai. The USA did not support EV as much as China. Elon Musk saw the huge potential of the Chinese market, while China welcome the state-of-the-art EV technology.

In addition, China controls the supply and production of several #CriticalMinerals that go into the manufacturing of rechargeable batteries, making Chinese suppliers an indispensable partner to achieve #EnergyTransition.

The Chinese Ministry of Commerce stated that the move would support ‘the healthy development of China-EU trade’ and uphold the rules-based global trading system under the WTO.

The breakthrough came after a proposed JV between Germany’s Volkswagen and a Chinese company. Volkswagen has been in talks with many Chinese auto makers, such BAIC, SAIC, Xiaomi, XPeng, but Chery appears currently to be the most suitable match. According to statistics, Chinese-made EV made up 6% of auto sales in the EU during the first half of 2025.

Drilling down, Chinese car maker BYD surpassed Tesla in Germany and the UK in 2025. Another Chinese auto maker, Geely, also made significant inroads into the EU. Huawei and Xiaomi are other Chinese brands eyeing the EU markets for their #EV. Over the past few years, Chinese car makers have set up facilities in Morocco, Spain, and Hungary, to name a few, in order to be closer to the key European market.