EU, China Strike Hybrid Car Trade Deal to Halve Exports

Beijing/Brussels — The European Union and China have reached a landmark trade understanding that could cut Chinese exports of hybrid cars to Europe by more than half over the next four years. EU Trade Commissioner Maroš Šefčovič announced the EU-China trade deal on October 9 after two days of negotiations in Beijing with Chinese Commerce Minister Wang Wentao, describing it as a crucial first step toward rebalancing the trade deficit that now exceeds €1 billion a day.

FAKTA

• The deal: a “shared understanding” to moderate Chinese exports of hybrid and plug-in hybrid cars to the EU — the first time Beijing has accepted voluntary export restraint without a prior trade dispute.
• The scale: shipments could fall by more than half over four years, several million fewer vehicles for Europe.
• Rare earths: China will keep fast-tracking export licences for rare earths and permanent magnets through a “green channel”, materials vital to European manufacturing.
• EU market access: Beijing agreed to cut import duties on nearly €4 billion worth of EU exports — including car parts, olive oil and footwear — saving at least €225 million in duties.
• Next steps: EU leaders review the package at a Brussels summit; Šefčovič meets Wang Wentao again in January and March 2027.

Why the EU-China trade deal matters now

European carmakers have watched Chinese hybrid and plug-in hybrid imports surge while prices fall. Imports of plug-in hybrids into the EU rose 86 percent in the year to September while prices dropped 20 percent, and more than half of those vehicles now come from China. Šefčovič warned the export wave threatened entire industrial sectors and thousands of European jobs. Shares of European carmakers rose after the announcement, though industry groups cautioned it was too early to judge its effect on unfair competition.

Trust gaps remain

Speakers at POLITICO’s European Resilience Summit in Brussels welcomed the deal but flagged deep disputes. Belgian lawmaker Kathleen Van Brempt warned that China’s industrial subsidies — found by an OECD study to be up to eight times higher than elsewhere — remain a serious concern. Linlin Liang of the China Chamber of Commerce to the EU called the deal balanced and credited decades of innovation investment rather than subsidies alone. Businesses also raised concerns over the EU’s proposed Industrial Accelerator Act and its “Made in Europe” preference; Bayer’s Holger Weintritt urged Brussels to rely on trustworthy partnerships rather than isolate Europe.

What happens next

The enforcement mechanism for the export moderation remains undisclosed; Šefčovič said the arrangements comply with WTO rules and will be presented to EU leaders first. Both sides will keep studying price undertakings as an alternative to tariffs in the EU’s anti-subsidy probe into Chinese electric vehicles, alongside medical-device market access and the EU’s foreign-subsidy screening rules. Beijing has warned it could respond if the agreed steps stall, while Chinese firms still want to invest in Europe, provided returns justify it. Follow our English news coverage for updates as the Brussels summit approaches.