ANALYSIS
Europe chose the electric car. Who builds it?
16 October 2026 — Europe
Series “Europe's choices” · 2 of 4
In brief
- In August 2026 Chinese brands held 11.7% of new car registrations in Europe, up from 7.1% a year earlier.
- Since 2024 the EU has imposed duties of up to 35.3% on Chinese electric cars, but not on hybrids: Chinese hybrid exports to the EU rose from about 3,800 cars a month (October 2024) to about 50,000 (July 2026).
- After the 9 October understanding with Beijing, the EU is preparing a cap of 350,000 Chinese hybrids a year, possibly from December. For Brussels it is half of what would have arrived; for Beijing it is 16% more than in 2025.
- On 15-16 October EU leaders took no decision on the cap, but asked for trade defence instruments to be strengthened “urgently”, without naming China.
- The ban on selling petrol and diesel cars from 2035 is under review.
- Northvolt, Europe's battery champion, went bankrupt in 2025; European car suppliers announced 104,000 job cuts in two years.
- The EU spends 2.2% of GDP on research, a share that has not moved in ten years; China has reached 2.8%.
On 9 October Trade Commissioner Maroš Šefčovič came back from Beijing with a “shared understanding”: China is to slow its exports of hybrid cars to Europe (Eunews, 9/10/2026). Three days later the numbers came out: a cap of 350,000 Chinese hybrids a year, plug-ins included, rising by 6% a year for four years and possibly starting as early as December (euperspectives, 13/10/2026).
The same number can be read two ways. For the Commission, without a cap 800,000 Chinese hybrids would have arrived this year: exports are halved. For Beijing, 302,000 arrived in 2025: the cap leaves room for 16% growth (euperspectives, cited). On 16 October China's Commerce Ministry called the understanding “reciprocal and mutually beneficial”, reached under WTO rules and the principle of non-discrimination, and said the idea that “European pressure worked” was “groundless” (Chinese Commerce Ministry via The Paper, 16/10/2026).
EU leaders, meeting in Brussels on 15 and 16 October, took no decision on the cap, which the Commission can launch on its own. China is not named in the conclusions: they refer to “global macroeconomic imbalances” and call for the EU toolbox to be “urgently” strengthened with new instruments (European Council, conclusions of 16/10/2026). According to officials quoted by Euronews, over lunch the leaders called for safeguards with quotas and tariffs for chemicals and machinery as well. “The competition must be fair,” said German Chancellor Friedrich Merz. “The toolbox will be bigger” (Euronews, 16/10/2026). Hybrids thus become the test case for a tougher trade policy towards China.
Meanwhile the numbers keep running: in August Chinese brands sold almost 98,000 cars in Europe, 11.7% of the market, against 7.1% a year earlier (ChinaEVHome on Dataforce data, 24/9/2026). This is the second piece in the series on the choices of Europe's leaders.
The choice: a date without a road
In 2023 the Union decided by law that from 2035 new cars must emit no CO2: in practice, the end of the petrol and diesel engine (Regulation (EU) 2023/851). Part of the industry wanted freedom of technology; under German pressure, only engines running on synthetic fuels were spared (Euronews, 28/3/2023).
The problem was not the direction but what was missing to get there. The heart of an electric car is the battery, and the supply chain for batteries and raw materials is largely Chinese. Sweden's Northvolt, Europe's most ambitious attempt, went bankrupt in March 2025 (E&E News). And in the 9 October understanding Beijing also promised to keep easing export licences for rare earths and magnets (The Next Web, 12/10/2026): a sign of who depends on whom.
In December 2025 the Commission proposed a change of course: a 90% cut in emissions instead of 100%, with hybrids and combustion engines still on sale after 2035 (Automotive World). Member states are divided; the European Parliament votes in November (Council of the EU, 15/6/2026).
The defence: duties on one door, the other left open
Since October 2024 the Union has applied anti-subsidy duties to electric cars made in China, on top of the ordinary 10% duty:
| Manufacturer | Extra duty on electric cars |
|---|---|
| BYD | 17% |
| Geely | 18.8% |
| SAIC (MG) | 35.3% |
Source: New Mobility, 22/6/2026. Since January 2026 manufacturers can offer a minimum price and a volume cap instead (Caixin, 13/1/2026).
But the duties only hit fully electric cars, and Chinese manufacturers shifted to hybrids. Their hybrid exports to the EU rose from about 3,800 cars in October 2024 to about 50,000 in July 2026 (EUobserver, 5/10/2026). In the first half of 2026 Chinese brands held 28.3% of the European plug-in hybrid market, according to Dataforce (New Mobility, cited). For Volkswagen's chief executive, Oliver Blume, the duties work, but “not with hybrids” (The Next Web, 27/7/2026).
This contradicts a common reading: the Chinese did not get in only thanks to the electric mandate. They also got in, more and more, through the hybrid door.
What trade law says
The 2024 duties are lawful: WTO rules allow duties against state subsidies, decided after an investigation (Implementing Regulation (EU) 2024/2754). But that investigation did not cover hybrids, as Šefčovič himself acknowledged (Diplomacy and Law, 9/10/2026).
For hybrids there were two roads. The first was for Beijing to rein in its own exports: a “voluntary restraint”, the tool Japan used in the 1980s to limit its own cars, and which the WTO has banned since 1994 (Agreement on Safeguards, Art. 11). Brussels chose the second: a “safeguard”, that is, a cap set by the EU itself. The rules allow it, on three conditions: proving serious injury to European industry, applying the cap to all countries of origin rather than one, and limiting it in time. Country quotas can be agreed with the main suppliers (Art. 5), and that appears to be the road taken with Beijing.
Formally, then, the cap covers hybrids from every source, Japanese or Korean ones included, but the quotas for other suppliers have not yet been set. At first it would apply provisionally for 200 days; then member states would vote by qualified majority. Chinese-brand cars assembled inside the EU, for example in Hungary, stay out of the count (euperspectives, cited). The legal text is not yet public: it remains to be seen how the Commission will prove serious injury.
The factories arrive, the technology stays in China
Chinese manufacturers now also produce in Europe, partly to avoid the duties. Chery will start in Barcelona, in the former Nissan plant, between late 2026 and early 2027; Leapmotor will produce in Spain with Stellantis; SAIC is planning a plant in Galicia (Reuters via MarketScreener, 2/6/2026). And cars assembled in Europe stay outside the cap. The factories create jobs, but design, software and batteries stay with those who developed them.
Meanwhile the European supply chain is shrinking: car suppliers announced 54,000 job cuts in 2024 and 50,000 in 2025, against about 7,000 hires (CLEPA via Just Auto, 19/1/2026).
A lag that goes back further
Duties defend a market, but they do not create an industry. And the gap with China opened well before 2023. In 2024 the Union spent 2.2% of GDP on research, almost the same share as ten years earlier and far from the 3% target (Eurostat, 4/12/2025). In 2025 China reached 2.8%, above the average of the rich OECD countries (South China Morning Post, 30/9/2026).
There is another side too. Protecting oneself is not a European whim: for decades China forced foreign carmakers to produce only in joint ventures with a Chinese partner, and lifted the requirement only in 2022 (Gasgoo, 2021). Protecting oneself is not a sign of weakness. It becomes one when it is the only thing one knows how to do.
What worked
The duties on electric cars curbed imports where they were applied, as European carmakers themselves admit. And electric cars now sell: in August 2026 they were 29.2% of European registrations (ChinaEVHome on ACEA data, cited). The market moved in the direction decided in 2023; what was missing were the tools to make sure Europeans gained from it.
Our assessment
Betting on electric was not a mistake: the world is going that way, and China understood it first. The mistake was setting the destination without building the road. Europe did not secure batteries, raw materials and software; it closed the electric door and left the hybrid door open for two years; and now it closes it with a cap that buys time, not competitiveness. That time is only useful if it is used. Yet for ten years Europe has not raised its research spending, and at the October summit the leaders “urgently” asked for new defensive instruments, while for cars they stopped at a package simplifying the rules. Without an industry able to invent, duties and caps become an admission of weakness, not a strategy. It is the same plot as energy: right goals, wrong dependencies.
What to watch
- The legal text of the safeguard: how the Commission will prove serious injury, the quotas for Japan, Korea and other suppliers, the start date.
- Beijing's response: the Commerce Ministry warns the EU “not to underestimate” China's determination to defend its interests.
- The new trade defence instruments the leaders asked for, and whether they will be ready by the end of the year; the automotive package, which the leaders want concluded by December.
- The European Parliament's vote on 2035, in November, and the start of Chinese production in Spain.
Sources: Eunews, 9/10/2026 · euperspectives, 13/10/2026 · Chinese Commerce Ministry via The Paper, 16/10/2026 · European Council, conclusions of 16/10/2026 · Euronews, 16/10/2026 · ChinaEVHome on Dataforce data, 24/9/2026 · Regulation (EU) 2023/851 · Euronews, 28/3/2023 · E&E News · The Next Web, 12/10/2026 · Automotive World · Council of the EU, 15/6/2026 · New Mobility, 22/6/2026 · Caixin, 13/1/2026 · EUobserver, 5/10/2026 · The Next Web, 27/7/2026 · Diplomacy and Law, 9/10/2026 · Agreement on Safeguards, Art. 11 · Reuters via MarketScreener, 2/6/2026 · CLEPA via Just Auto, 19/1/2026 · Eurostat, 4/12/2025 · South China Morning Post, 30/9/2026 · Gasgoo, 2021
Related pieces: Europe stopped depending on Moscow. Who does it depend on now? · The Euro-Russian market that worried Washington: what the numbers say