Shares of Chinese electric vehicle manufacturers climbed sharply on Tuesday after the European Commission unveiled guidelines outlining how China-based automakers could avoid import tariffs when selling vehicles in the European Union.
In Hong Kong trading, BYD—which has significantly expanded its European presence over the past year—rose 3.1%. Li Auto gained 1.1%, NIO advanced 1.4%, and XPeng surged 3.1%.
Other automakers also posted solid gains. Leapmotor, Geely Automobile, and Chery Automobile rose between 1% and 3%, helping lift the Hang Seng Index by around 1%. On the mainland, SAIC Motor added roughly 1%.
On Monday, the European Commission said Chinese EV producers could be exempt from import duties if they agree to sell vehicles in the bloc at minimum price levels. The Commission also noted that Chinese automakers’ investments within Europe would be taken into consideration under the framework.
Europe introduced tariffs on Chinese-made electric vehicles in 2024, following similar steps by the United States. However, EU duties were set at lower levels than those imposed by Washington, with tariffs capped at up to 35%. This pricing advantage allowed Chinese manufacturers to gain traction in Europe, with BYD recently surpassing Tesla in regional market share.
Brussels has sought to shield domestic carmakers from intensifying competition, amid concerns that Chinese firms such as BYD and SAIC have been offering vehicles at lower prices despite higher trade barriers.
The Commission’s latest move comes as Chinese EV producers accelerate overseas expansion to counter mounting competition at home. Domestic manufacturers have been locked in a prolonged price war as they compete for share in the world’s largest electric vehicle market.
BYD has identified Europe as a key growth opportunity and has announced plans to build vehicle manufacturing facilities in the region. Meanwhile, demand for electric vehicles in China is expected to soften through 2025 as economic growth slows and Beijing scales back some industry subsidies.
