Volkswagen urges EU to extend China tariffs to plug-in hybrid cars

Volkswagen targets a gap in EU trade measures

Volkswagen CEO Oliver Blume is pressing the European Union to extend its existing trade protections against Chinese-made battery-electric cars to plug-in hybrids. The demand comes as Chinese manufacturers rapidly expand in a vehicle segment that is not covered by the additional countervailing duties introduced in October 2024.

According to Industrie Magazin, those duties range from 7.8% to 35.3%, depending on the manufacturer. The rate is 17.0% for BYD, 18.8% for Geely and 35.3% for SAIC. They followed an EU anti-subsidy investigation that found China’s battery-electric vehicle value chain benefited from state support and threatened economic injury to European producers. Plug-in hybrids remain outside the measure. Dataforce figures cited by the publication show that Chinese brands captured about 28% of Europe’s plug-in hybrid market in the first half of 2026. Their share across all powertrains was approximately 9.5%.

Trade imbalance sharpens the industry debate

Reuters reported in June, citing Handelsblatt and sources in EU and industry circles, that the EU was preparing possible additional countervailing duties on plug-in hybrid imports from China. No formal European Commission decision had been published at that point. The German Association of the Automotive Industry, or VDA, confirmed to Handelsblatt in mid-August 2026 that it was reviewing whether its previous position should change, while continuing to support free and fair trade and calling on China to remove competitive distortions.

ACEA data underline the scale of the issue. The EU imported about 1.106 million new vehicles from China in 2025, including almost 1.003 million Chinese-produced passenger cars worth €13.7 billion. Vehicles made in China represented 7% of European passenger-car sales, including 20% of battery-electric sales and 12% of plug-in vehicle sales. The figures include cars produced in China by Western manufacturers, not only Chinese brands. In the opposite direction, the EU exported about 161,500 new vehicles to China, worth €8.5 billion. China had fallen to fifth place among EU export markets for new vehicles.

European capacity remains substantial but costly

Europe has not lost its entire industrial position in electric vehicles. VDA figures identify Germany as the world’s second-largest electric-car production location after China. German plants manufactured about 1.7 million electric passenger cars in 2025, including roughly 1.2 million battery-electric vehicles. Electric models accounted for 40.2% of total German passenger-car production.

Cost pressures nevertheless remain severe. In a VDA survey conducted in early 2026, 72% of participating companies said they intended to postpone, move abroad or cancel planned investment in Germany. Another 64% reported that they had already reduced employment in Germany during 2025. These are industry survey results rather than official employment statistics, but they indicate the concerns of manufacturers and especially medium-sized suppliers. Energy and labour costs, permitting, research, battery technology, software and the pace of industrialisation will therefore shape European competitiveness alongside tariffs.

Austrian suppliers face direct exposure

Austria’s automotive sector is closely tied to decisions by major European carmakers. According to ADVANTAGE AUSTRIA, the industry generated approximately €42.5 billion in production value in 2024 and directly or indirectly employed about 192,000 people. Around 87% of production was exported. Major companies include BMW Motoren in Steyr, Magna Steyr, AVL, Kromberg & Schubert and ZKW.

Orders for engines, transmissions, lighting, electronics, metal parts, engineering and production equipment can quickly transmit changes in European vehicle output to Austrian plants. Domestic demand offers some support: Statistics Austria reported that new passenger-car registrations rose 15% year on year in the first half of 2026. However, tariffs alone cannot eliminate production costs or supply risks. The VDA has also pointed to Chinese export restrictions on rare earths and permanent magnets, which strained European industries in 2025 and affect critical components such as electric motors.