Hong Kong, Jan 14, 2026, 15:39 HKT
- BYD climbed as much as 4.8% in Hong Kong; Xpeng jumped 5.3%, while SAIC Motor rallied up to 3.6% in Shanghai trading
- The EU is considering a minimum-price scheme to potentially replace anti-subsidy tariffs on battery EVs made in China
- Officials remain focused on striking a deal that eliminates subsidies and tackles “cross-compensation” between vehicle lines
Shares of BYD and other Chinese EV makers surged Tuesday following a European Commission hint that import tariffs might be swapped for a minimum-price mechanism. BYD jumped as much as 4.8% in Hong Kong, Xpeng climbed 5.3%, and SAIC Motor’s Shanghai-listed shares rose up to 3.6%. (Bloomberg)
This development is significant since the EU’s tariffs on China-made EVs are at the heart of Brussels’ toughest trade battle with Beijing. European automakers, facing competition from lower-priced Chinese models gaining ground, have been demanding clear answers. Now, the discussions seem to be edging toward a negotiated settlement rather than further escalation.
Following talks with China’s commerce ministry, the Commission released guidance on how “price undertakings” — agreements to sell above a set floor price — could replace tariffs as high as 35.3%. Any such offer must completely neutralize the damaging effects of subsidies, match the duties’ impact, and remain practical. It also has to prevent “cross-compensation,” where pricing on one model or vehicle type compensates for another. (Reuters)
The Commission’s trade department presented the guidance as part of its anti-subsidy measures targeting battery electric vehicles (BEVs), which are powered solely by batteries. It confirmed the EU wrapped up its probe on Oct. 29, 2024, imposing final countervailing duties—tariffs designed to neutralize subsidies—ranging between 7.8% and 35.3%. At the same time, it is working with Beijing on WTO-compliant alternatives. (Trade and Economic Security)
The EU guidance demands minimum prices be established for each model and configuration, tied to the sales price to the first independent buyer within the bloc. It also highlights greater risks for manufacturers selling other vehicle types in Europe, particularly hybrids, since moving discounts and margins between line-ups is difficult to monitor.
Hybrid shipments from China to the EU have skyrocketed, with the Commission reporting import volumes in the first nine months of 2025 were five times greater than the same period last year. It added that cross-compensation risks decrease when offers come with volume commitments or are limited in duration.
Brussels kicked off stress tests last month on how these deals might function on the ground. The review targets a Volkswagen proposal that sets a minimum price and an import quota for the Cupra Tavascan electric SUV manufactured in China, the guidance noted.
China’s commerce ministry welcomed the document, highlighting Brussels’ commitment to non-discrimination as a sign that both sides can resolve their differences through dialogue.
Nio echoed that sentiment the following day, stating: “We are pleased to see China and the EU making steady progress toward consensus on the basis of mutual respect.” (Reuters)
Analysts in the markets zeroed in on how the minimum-price rules might squeeze margins and whether quotas would limit growth. Eugene Hsiao from Macquarie described the move as “positive for developing better ties between the EU and Chinese automakers.” Morgan Stanley called it “constructive for Chinese EV’s sales expansion in Europe.” Data shows China shipped 579,000 battery EVs to Europe in the first 11 months of 2025. BYD, SAIC, and Zhejiang Geely Holding Group each accounted for around 10% to 15%, according to Morgan Stanley’s estimates. (The Business Times)
But a “minimum price” benefits stocks only if the floor stays low enough to keep cars competitive—and if Brussels can enforce it. Should the Commission impose model-specific floors that are too high, or clamp down with strict volume caps, the result risks resembling tariffs in disguise. That, in turn, could prompt Beijing to retaliate elsewhere.
