KATHMANDU: The European Union and China are close to resolving their dispute over electric vehicles. The talks aim to reduce trade tension and avoid a wider trade conflict.
Under the proposed plan, the EU may replace its new tariffs on Chinese electric cars with a minimum price system. This would allow Chinese EV makers to sell cars in Europe without paying extra duties.
According to an Associated Press report, Chinese brands could avoid tariffs of up to 35.3 percent if they agree to sell their vehicles above a fixed minimum price set by the EU.
This system is known as a “price undertaking.” Brands such as BYD, Geely, and SAIC would not face border taxes if they follow the price rule. The EU says the move is meant to offset government subsidies given to Chinese EV makers.
The European Commission has issued guidance on how the system would work. The rule will not apply automatically. Each company must submit its own proposal. The EU will review these plans one by one.
The review will check whether the proposed prices are enough to balance the impact of subsidies. Future investment plans in Europe may also be considered.
China’s Ministry of Commerce called the progress an “important breakthrough.” This is a softer stance compared to late 2024, when China warned of possible counter-tariffs on European products.
Chinese EV brands continue to grow in Europe despite the tariffs. In the second half of 2025, they held over 10 percent of the European EV market for several months.
Some companies are also setting up factories in Europe. BYD is preparing to open an EV plant in Hungary. Local production would help it avoid tariffs or minimum price rules.
If approved, the deal could protect European carmakers while allowing Chinese brands to keep selling in Europe. It may also help prevent further trade disputes.
