EU and China reach deal on hybrid vehicle trade, Beijing says

China's Ministry of Commerce said on Monday that Beijing and the European Union have reached an agreement on hybrid vehicle trade, following what it described as intensive consultations aimed at resolving disputes between the two trading partners. The announcement marks the latest step in a months-long effort to manage tensions over Chinese vehicle exports to Europe.

Under the arrangement, China's hybrid vehicle export allowance will rise from its 2025 level, and Chinese exporters are to receive treatment equal to that given to other trading partners. Beijing said the deal would shield Chinese companies from discriminatory measures and help sustain steady growth in exports.

On battery electric vehicles, the ministry said the two sides achieved a "soft landing" in January in the EU's anti-subsidy investigation. Brussels will keep reviewing proposals submitted by individual manufacturers to meet minimum export prices, a mechanism intended to prevent further trade friction.

The hybrid understanding was reached after European Trade Commissioner Maros Sefcovic and Chinese Commerce Minister Wang Wentao held the second regular meeting under the China-EU Trade and Investment Consultation Mechanism in Beijing, with the arrangement framed within the World Trade Organization. Speaking to journalists after that meeting, Sefcovic said he appreciated Beijing's engagement but cautioned that the process was "far from the end," calling it a crucial first step in rebalancing and warning the EU would use its tools where dialogue cannot deliver.

European automakers are pressing regulators for support as competition from Chinese manufacturers intensifies. Stellantis CEO Antonio Filosa urged European regulators to introduce incentives for carmakers producing vehicles in the region, telling CNBC ahead of the Paris Motor Show that the goal is a level playing field built on "Made in Europe" rules that reward and protect companies designing and engineering cars locally, according to the network. Separately, Geely Automobile Holdings said it has entered the Canadian market and plans to begin vehicle sales there in 2027 as part of its global expansion.

The EU's continuing review of manufacturer proposals on minimum export prices will determine how individual Chinese electric vehicle makers are treated going forward, while Beijing's hybrid export allowance increase sets a new baseline for shipments from this year's level.