China and the European Union have reached an interim agreement that could reduce Chinese hybrid and plug-in hybrid vehicle exports to Europe by more than half over the next four years.
European Trade Commissioner Maroš Šefcovic announced the understanding last week after two days of negotiations in Beijing with Chinese Commerce Minister Wang Wentao.
He said the arrangement would moderate Chinese hybrid exports, potentially preventing several million vehicles from entering the European market over four years.
However, the projected reduction is measured against anticipated export volumes without restrictions, rather than current shipments. Actual exports could therefore continue growing, albeit at a slower pace.
Details of how the restrictions would be implemented, including potential export quotas, have not been disclosed.
China’s Ministry of Commerce confirmed that both sides had reached a common understanding on trade issues but did not explicitly endorse the 50% reduction figure.
The negotiations follow a sharp increase in Chinese electrified vehicle imports that has intensified competitive pressure on European manufacturers.
Figures from the European Automobile Manufacturers’ Association (ACEA) show that Chinese brands accounted for 25% of Europe’s plug-in hybrid market in the first half of 2026, compared with just 2% in 2024.
Their share of the conventional hybrid market also climbed from 2% to 14% over the same period.
ACEA welcomed the agreement as a step towards easing trade tensions but said it was awaiting the full details.
Beyond vehicle exports, the negotiations covered improved access for European products to China’s market and measures to ease Chinese export licensing for rare earth materials used by European industries.
The agreement comes amid a wider trade dispute that has already seen the EU impose additional tariffs on Chinese-made battery-electric vehicles.
Both sides plan further ministerial discussions in January, followed by another round of formal talks in March 2027.
The interim understanding leaves unresolved how any export limits would be enforced and whether they would materially slow the expansion of Chinese brands in Europe.
