The European Commission published guidance on Monday for Chinese electric vehicle exporters seeking alternatives to countervailing duties, as Brussels and Beijing continue negotiations over a minimum price arrangement for imported EVs.
“Today, the European Commission issued a Guidance Document on the submission of price undertaking offers in the context of the anti-subsidy duties in place on battery electric vehicles from China,” the Commission said in a statement.
The European Commission concluded its anti-subsidy investigation in October 2024, imposing definitive countervailing duties on Chinese-made battery electric vehicles for five years.
Commission President Ursula von der Leyen announced the investigation in September 2023, after concluding that China’s EV value chain benefits from unfair subsidization that threatens economic injury to EU producers.
Individual duty rates vary by manufacturer. BYD faces a 17.0% countervailing duty, Geely Automobile Holdings 18.8%, and SAIC Motor 35.3%.
Tesla, which requested an individual examination for vehicles produced at its Shanghai factory, was assigned a 7.8% rate.
Other cooperating companies — including XPeng and Nio — face 20.7%, while non-cooperating companies are subject to the maximum 35.3%.
Combined with the EU’s standard 10% import duty on vehicles, Chinese EV makers face total tariffs of up to 45.3%.
The document released on Monday by the European Commission provides Chinese automakers with a detailed framework for submitting price undertaking offers — commitments to sell vehicles above a minimum price that could replace or reduce the tariffs imposed last year.
Legal Criteria
The guidance establishes that each undertaking offer “is assessed against the same legal criteria laid down in the EU basic anti-subsidy Regulation according to WTO rules, in an objective and non-discriminatory manner.”
According to the document, any offer “must be adequate to eliminate the injurious effects of the subsidies and provide equivalent effect to duties; be practicable; mitigate the risk of cross-compensation; and be in accordance with general policy considerations.”
The Commission said undertakings may be submitted individually by a single company or jointly by several manufacturers, though joint submissions “must take into account each individual company’s specifics.”
Minimum Import Price
The guidance specifies that a Minimum Import Price “must be set at a level appropriate to remove the injurious effects of the subsidisation.”
Given the wide variation in vehicle models and configurations, the Commission said “specific MIPs are required for each model and configuration option.”
The document outlines two pathways for determining minimum prices. The first is based on the exporter’s CIF prices during the investigation period, “increased by the relevant margin of the countervailing duties imposed.” The second bases the minimum price on “the non-subsidised EU-produced BEV’s sales price in the Union of the same product type,” including selling, general and administrative expenses and “a reasonable margin of profit.”
“The more limited the variety in models and configuration options, the more practicable the UT,” the guidance states.
Cross-Compensation Risk
A significant portion of the guidance addresses concerns about cross-compensation — the risk that manufacturers could offset higher EV prices by subsidizing other products or services.
“Companies that export to the EU one or few BEV models would present a lower risk of cross-compensation,” the document states. Conversely, “a broad range of BEV models, or exports of products not under measures to the same customers, would increase the risk of cross-compensation.”
The Commission suggested that exporters may include annual volume commitments “as an element that could mitigate concerns on the risk of cross-compensation.”
A limited validity period — such as a fixed timeframe or one “conditional upon the life cycle of a particular model” — could also help “mitigate the risk of cross-compensation in time.”
Sales Channel Complexity
The guidance warns that complex distribution structures could complicate undertaking offers.
“A comparatively simple corporate structure and simple organisation of the sales channels greatly simplifies determining the net sales price,” the document states. This is “required for comparison with the MIP” and “facilitates monitoring and verification of the exporter’s compliance.”
The Commission measures distribution complexity by factors including “the number of representatives in the Union market, the presence of intermediaries in the distribution chain and the variety of distribution channels (e.g. b2c sales on the internet, agency sales models, fleet sales).”
“Direct sales to unrelated importers allow a simpler approach to establishing the sales price for comparison with the MIP,” the guidance notes. “The more complex the sales channels, with one or more related distribution companies, the less practicable.”
EU Investment Commitments
The document indicates that pledges to invest in European manufacturing will be weighed favorably in assessing undertaking offers.
“Any commitment to invest in the BEV-related industries within the EU will be considered and assessed as part of the UT offer,” the Commission states. However, such commitments “must be clearly defined in terms of nature, scope, schedule and financial magnitude” with “clear, verifiable milestones.”
The guidance warns that “non-compliance with such an investment commitment may constitute a breach of the UT, leading to the withdrawal of the acceptance of the UT and to the retroactive collection of duties.”
Assessment Process
Once a formal undertaking offer is submitted, the Commission said it will conduct the assessment “expeditiously” and disclose its preliminary findings to interested parties for comments.
If accepted, “there would be an Implementing Decision that forms the basis for the conclusion, and an amendment of the regulation imposing the existing measures.” If rejected, “there would only be an Implementing Decision stating the reasons.”
All decisions require approval from EU member states “according to comitology rules.”
Ongoing Negotiations
The guidance comes as the EU and China resumed in December talks over a potential minimum price arrangement.
“In parallel, and in the spirit of dialogue, the Commission and China have been exploring alternative WTO-compatible solutions that would be effective in addressing the problems identified by the investigation,” the Commission said.
As reported by EV in mid-December, China and the European Union restarted negotiations over a minimum price plan for Chinese-made electric vehicles.
European Production Push
Several Chinese automakers have moved to establish local production in Europe to bypass the tariffs — investments that could now factor into undertaking negotiations.
XPeng signed last year an agreement with Magna Steyr to assemble vehicles in Austria, with test production of the P7+ sedan completed this week at the Graz facility.
The company also recently opened its first European R&D center in Munich.
BYD is building a plant in Hungary, where it has established its European headquarters.
Production is expected to begin next year with the Dolphin Surf — known in China as the Seagull — as the debut locally manufactured model. The Shenzhen-based company is also preparing to start production at a new facility in Turkey.
Nio, which faces the 20.7% duty rate, indicated it would consider local assembly in Europe if sales reach about 6,000 units per month.
The company’s head of global business, Chris Chen, said last week that Nio would evaluate local production “if we’re able to sell 6,000 cars a month.”
Changan Automobile, which owns the Avatr and Deepal brands, launched sales in Europe in late 2024 through Norway and Germany before expanding to the UK, Switzerland, Sweden, and Finland in early 2025.
The company aims to enter at least 10 European markets by year-end, with operations across the continent targeted by 2028.
