Automotive News Europe — 2026-02-11
Automotive Industry
Major Chinese automakers will be next to knock on Brussels’ door after Volkswagen Group secured a breakthrough EU tariff reprieve for its China-made Cupra Tavascan SUV, industry insiders and analysts said.
The European Commission this week approved a request by VW to exempt the Tavascan from import tariffs in exchange for an agreed minimum price and a sales quota, following months of intense discussions that led to the first exemption since the European Union introduced tariffs against China-based EV makers in 2024.
Chinese automakers are now looking at applying for similar deals for EV models they want to ship to Europe, according to the China Chamber of Commerce to the EU.
While many automakers were eager to apply, some were weighing up the benefits of doing so, wary of the disclosure and paperwork required for approval, said one person with knowledge of the matter.
Under EU rules, automakers can negotiate tariff exemptions for individual electric models imported from China.
“We see this as positive for both Chinese and foreign EV makers in China in order to leverage the efficient cost basis locally,” said Eugene Hsiao, head of China equity strategy at Macquarie Capital, about the VW deal, although he acknowledged that approvals would likely take time as they appeared to be handled on a model-by-model basis.
The all-electric Tavascan had been subject to an extra 20.7 percent tariff since the EU imposed fresh duties on Chinese-made EVs in 2024, on top of an existing 10 percent levy. The higher tariffs have hit VW’s Seat/Cupra division hard, nearly wiping out its operating profit in the first nine months of last year.
It was notable that the first exemption from the tariffs went to a European company — the Cupra brand’s CEO had previously warned that the tariffs jeopardized the model’s future in Europe.
The Commission did not give details on the agreed quota and minimum price for the model, citing confidentiality. It said VW had agreed to commitments related to EV investment projects in the EU in its effort to secure the tariff exemption, without giving further details.
Minimum pricing ‘should make Chinese cars less attractive’
The shift to the minimum pricing system shows how adept Chinese automakers have been at navigating the EV tariffs thus far, said Julian Litzinger, an automotive analyst with Dataforce.
“When the original tariffs were introduced, it was expected that Chinese cars would become more expensive and therefore less attractive in the European market,” he said. Instead, Chinese carmakers made do with leaner profit margins and sold more internal combustion and hybrid models, which are not impacted by the tariff, Litzinger said.
The minimum pricing model “should make Chinese cars less attractive by ensuring their prices are comparable to those of European cars in the same category. For European brands manufacturing cars in China, this is good news,” he said.
BMW’s joint venture in China, which produces the electric Mini, incurs a tariff of 21.3 percent.
Europe is an increasingly important market for Chinese automakers desperate to export more cars due to oversupply at home — the outgrowth of a brutal, years-long price war. Data released on Feb. 11 showed China’s car sales in January fell at the fastest pace in nearly two years.
Chinese EV makers are also effectively shut out of the world’s second- and third-largest auto markets, the U.S. and India, and sell very few cars in Japan, the next largest.
For Beijing, the tariffs of up to 35.3 percent on EVs are the biggest source of trade tensions with the EU. China warned on Feb. 11 of possible investigations into French wines if the French government pushed for tariffs on Chinese goods.
Brussels, meanwhile, wants to protect the European auto industry from a surge of cheap imports from the likes of BYD, SAIC’s MG Motor and others.
Collective solution unlikely for China automakers
While China has sought a collective deal between its automakers and the EU, the bilateral nature of VW’s deal is another sign that a collective option looks unlikely.
The China Chamber of Commerce to the EU held a meeting with automakers about how to negotiate with the EU about minimum pricing at the end of last month, two people familiar with the matter said.
The European Commission last month set out the conditions under which China-based EV makers could replace EU tariffs with commitments to sell at minimum prices and said it would take into account Chinese EV investments in the bloc.
That price undertaking scheme was prompted by VW’s decision to negotiate directly with the EU, the people said. VW started making proposals to the EU last year, before the January guidelines were published, one of them said.
“VW has been losing market share in China in recent years but has been making a bigger push to localize their EV design and manufacturing,” said Macquarie’s Hsiao. “The export angle into Europe provides an additional market opportunity for their China-made EVs.”
VW is considering building the next Tavascan in Europe instead of China in future, German business paper Handelsblatt reported on Feb. 11, citing company sources and internal production plans.
A Cupra spokesperson said the Tavascan production line in China was benefiting from synergies and global partnerships. “As for future plans, we cannot comment on our global plant utilization strategy,” the spokesperson added.