Chinese plug-in hybrid electric vehicle (PHEV) exports to the European Union surged 600% year-on-year in May 2025, driven by lower tariffs compared to fully electric vehicles, according to the China Automobile Dealers Association.

China’s overall PHEV exports jumped 127% year-on-year in May 2025, totaling 324,000 units in the first five months of 2025.

Passenger PHEVs, which include vehicles with fewer than nine seats that combine rechargeable batteries with traditional combustion engines, made up the majority of this growth.

Currently, PHEVs face a base tariff of 10% in the EU, while fully electric vehicles are subject to tariffs of up to 45.3%.

This allows Chinese manufacturers to offer competitive prices.

In May alone, China exported US$1.4 billion worth of passenger PHEVs, making it the country’s 20th-largest export category that month, supported by rising global demand for hybrids.

While electric vehicle exports fell, PHEVs became a major growth driver, with strong demand not just from Europe, but also from ASEAN, the Middle East, and other markets.

Trade experts warn that new protectionist measures, such as a 25% auto tariff imposed by the US, could affect China’s car exports.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ China’s EV industry demonstrates remarkable adaptive strategy to trade barriers

The dramatic pivot to plug-in hybrids represents the latest chapter in China’s long-term EV strategy that began decades ago.

China’s current PHEV export surge follows years of deliberate government planning, including the “863 EV Project” initiated in 2001 that laid the groundwork for developing various electric vehicle technologies 1.

The shift from BEVs to PHEVs is particularly strategic as Chinese manufacturers exported 147,000 battery electric vehicles in May (down 8% year-on-year) while simultaneously increasing PHEV exports by 127% 2.

This adaptability mirrors earlier pivots in China’s EV industry, which has consistently responded to market challenges since the government included electric vehicles in its ninth Five-Year Plan as a key development project 1.

2️⃣ Price advantages fuel Chinese manufacturers’ market penetration despite trade barriers