Quota obstacle to China's $7.5 billion hybrid vehicle exports to the EU

"This makes the conditions a little more difficult for the Chinese, but just like with electric cars, it will not be enough to stop them," Car Industry Analysis expert Felipe Munoz told Reuters about the development.

"Europe is moving towards a threshold where it has to decide whether to follow the path followed by the United States or to stand by and watch the entire industry be taken over by the Chinese," Munoz said.

According to the data of the automotive research company Schmidt Automotive Research, Chinese brands increased their market share in the European electric vehicle market from 9.5 percent in the first quarter of 2024 to 15 percent in the second quarter, reaching a record level.

The share of Chinese-origin rechargeable hybrids in this segment increased sharply from 1.7 percent at the beginning of 2024 to over one quarter.

While European Trade Commissioner Maros Sefcovic said in a statement on Friday last week that the agreement "will reduce the import of several million cars in four years", the Brussels and Beijing administrations have not yet announced how the regulation will be implemented.

In its statement today, the Chinese Ministry of Commerce stated that the regulation reached will ensure the continuation of growth in exports and will provide China with a quota guarantee that will not be lower than that granted to any other import source.

Investors largely interpreted the agreement as a sign that trade tensions have eased and the possibility of customs duties on Chinese-origin hybrid vehicles has been shelved for now.

While BYD shares decreased by 1.8 percent in the stock market, Chery shares gained 1.4 percent and SAIC shares gained 0.5 percent.

Citi analysts shared their assessment: "We see this picture as a risk-off rally in general, as implementation rules, volume caps, floor prices and exemptions are still subject to technical negotiations."

China Automobile Dealers Association analyst Li Yanwei stated that the rapid climb in Chinese hybrid sales is increasingly challenging European manufacturers, including Volkswagen, which has long been a leader in plug-in hybrid sales in the region.

BYD, China's largest exporter of hybrid vehicles to Europe, sold more plug-in hybrid vehicles than fully electric models in the first eight months of the year, according to data compiled by Li. The company's best-selling model was the Seal U SUV.