EU prepares safeguard cap on Chinese hybrid car imports, report says

The European Commission is preparing safeguard measures that would limit imports of Chinese-made hybrid cars, Bloomberg News reported on Wednesday, citing people familiar with the matter. The step would target a part of Europe's car market that Chinese brands have pushed hard into since Brussels put extra tariffs on their fully electric models.

The Commission, which handles trade for the 27-nation bloc, may impose the restrictions after sales of Chinese-made hybrids surged in Europe, while growth in imports of Chinese battery-electric cars, which already face steep EU tariffs, has slowed, according to the report. No measure has been announced. It was not clear how large a cap would be or when it could take effect, and neither the Commission nor Beijing had commented publicly on the report as of late morning in Brussels.

The report lands a day before Trade Commissioner Maroš Šefčovič begins two days of talks in Beijing. Politico reported on Tuesday that Brussels was seeking a commitment from China to stem hybrid exports as a possible result of the trip, and that the Commission would present the outcome to EU leaders at a summit on Oct. 15-16. On Monday, German Chancellor Friedrich Merz and French President Emmanuel Macron called in a joint letter for the Commission to be given the power to restrict, or even cut off, imports from countries that distort the EU's single market.

Why hybrids slipped through

When the EU imposed anti-subsidy duties on Chinese-built battery-electric cars in October 2024, hybrids were left out. They still pay only the standard 10% tariff on imported cars, while some Chinese electric models face duties of up to 45%. Chinese carmakers have shifted their European push toward hybrids since then. In August, one in eight new cars sold in the EU was Chinese, mainly because of a boom in plug-in hybrid sales. Monthly hybrid imports from China rose from about 3,800 vehicles in October 2024 to around 50,000 in July 2026, the Financial Times reported in September.

Industry registration figures show the pace. BYD registered 20,845 cars in the EU in August, up 129.4% from a year earlier, lifting its market share to 2.9% from 1.3%, according to the European Automobile Manufacturers' Association. Chery's registrations roughly tripled to 14,048 and Leapmotor's to 6,446. Plug-in hybrids from all brands made up 10% of new EU registrations in the first eight months of the year, up from 8.8% a year earlier.

European manufacturers have pressed for action. Volkswagen, which plans to cut 100,000 jobs worldwide and close four factories in Germany, has called on the Commission to curb the surge in hybrid imports.

How a safeguard would work

A safeguard is a different tool from the duties Brussels used on electric cars. Under World Trade Organization rules, a government can temporarily restrict imports of a product when a jump in those imports causes or threatens serious injury to its own industry, without having to show an unfair practice such as subsidies or dumping. The restriction can be a quota or a higher duty, and a measure generally cannot last more than four years, or eight with an extension. A cap would typically work as an extra duty charged only on imports above a set volume.

Two rules matter here. Safeguards normally require an investigation first, and in January the Commission's trade spokesman said there was "no ongoing investigation into exports of hybrid vehicles from China to the European Union." The rules also say safeguards should generally apply to imports from every country, not just one, and it is not clear how a measure aimed at Chinese cars would be built.

Beijing has already pushed back

China rejected a softer version of the idea last month. After reports that the EU had asked Beijing to voluntarily limit hybrid exports, a Commerce Ministry spokesperson said such restraints "seriously violate WTO rules" and that "China firmly opposes this." A Foreign Ministry spokesperson said China would follow the EU's moves closely and take necessary measures to protect the rights and interests of Chinese companies.

How carmaker shares moved

The report lifted shares of Europe's mass-market carmakers. Volkswagen's preferred shares rose as much as 4.6% in Frankfurt, and Renault and Stellantis led the CAC 40 index in Paris during the morning, MarketScreener reported. Much of the gain faded by midday. At about 12:25 p.m. Central European time (6:25 a.m. Eastern), Volkswagen was up 1.1% at €69.64, Renault was up 2% at €26.31 and Stellantis was up 0.9% at €4.10, according to cnbc.com market data.