Volkswagen’s Cupra Tavascan Dodges EU Tariffs, and Now Chinese Automakers Want the Same Deal

The first crack in Europe’s tariff wall against China-made EVs didn’t come from BYDor SAIC. It came from Volkswagen, Europe’s biggest automaker, which just secured an exemption from the 20.7% additional duty on its China-built Cupra Tavascan SUV. The European Commission published the decision Tuesday in the Official Journal of the EU, and Chinese automakers are already lining up to negotiate their own deals, Reuters reported.

Here’s what you need to know:

• The Fact: VW’s Cupra brand will sell the China-made Tavascan in Europe under a minimum price and import quota agreement instead of paying the 20.7% tariff that has been in effect since 2024.
• The Delta: This is the first tariff exemption the EU has granted since imposing duties on Chinese-made EVs. It went to a European company, not a Chinese one.
• The Buyer Impact: If Chinese automakers secure similar deals, European consumers could see more competitive EV pricing. But the model-by-model approval process will be slow.

VW’s tariff pain forced the first move

The Cupra Tavascan is built exclusively at Volkswagen’s plant in Anhui, China, and exported to global markets including Europe. The all-electric SUV coupe has been subject to a 20.7% additional tariff on top of the existing 10% base duty since the EU imposed fresh levies on Chinese-made EVs in 2024. That 30.7% combined rate nearly destroyed the business case for the car.

The damage was real. The higher tariffs nearly wiped out Volkswagen‘s SEAT/Cupra division operating profit in the first nine months of 2025. Cupra’s CEO had publicly warned that the tariffs put the Tavascan’s future in Europe at risk. VW started submitting proposals to the EU last year, before the Commission even published its January 2026 guidelines for price undertakings, according to people familiar with the negotiations.

Under the deal, Volkswagen Anhui agreed to sell the Tavascan at or above a minimum price, cap annual import volumes, commit to EU investment projects, and refrain from exporting any other BEVs to the EU. That last condition is a significant concession most coverage has missed. The Commission did not disclose the exact price or quota. Because the Tavascan was not in production during the EU’s investigation period (October 2023 to September 2024), the minimum price is based on a comparable VW model built in Europe.

Chinese automakers see an opening, but the door is narrow

The China Chamber of Commerce to the EU (CCCEU) confirmed Wednesday that some Chinese EV manufacturers are considering submitting their own price undertaking proposals. The chamber expressed hope for equal treatment compared to European companies. That last part matters.

Eugene Hsiao, head of China equity strategy at Macquarie Capital, called the VW deal positive for both Chinese and foreign EV makers in China. But he acknowledged a critical limitation: approvals appear to be handled on a model-by-model basis. For Chinese automakers like BYD, which exports dozens of models, or SAIC, which faces the highest tariff rate of 35.3%, the paperwork alone could take months per vehicle.

Not every Chinese automaker is rushing to apply. Some are weighing whether the disclosure requirements and bureaucratic burden are worth it, according to a person with knowledge of the matter. The EU’s price undertaking process requires detailed cost data and pricing commitments that some companies may not want to share with Brussels.

Julian Litzinger, an automotive analyst with Dataforce, pointed out how Chinese automakers have adapted. When the original tariffs were introduced, the expectation was that Chinese cars would become more expensive and less attractive. Instead, Chinese carmakers accepted leaner profit margins and sold more internal combustion and hybrid models, which are not subject to the EV-specific tariffs. The minimum pricing model “should make Chinese cars less attractive by ensuring their prices are comparable to those of European cars in the same category,” Litzinger said.

Europe is the last open market for Chinese EVs

Chinese EV makers are effectively shut out of the U.S. (100% tariffs), India (steep import duties), and Japan. Europe, with tariffs of up to 35.3%, is still the most accessible major market for Chinese EV exports. At home, the pressure is intensifying. Data released Wednesday showed China’s car sales in January fell at the fastest pace in nearly two years. The domestic price war shows no signs of ending. China warned Wednesday of possible investigations into French wines if the French government pushed for tariffs on Chinese goods.

While China has sought a collective deal between its automakers and the EU, the bilateral nature of VW’s agreement suggests a blanket solution is unlikely. Each manufacturer will need to negotiate individually, model by model. That advantages established players with dedicated EU lobbying operations and hurts smaller Chinese brands trying to break into Europe.

VW may build the next Tavascan in Europe anyway

In an ironic twist, Handelsblatt reported Wednesday that VW is considering building the next generation of the Tavascan SUV coupe in Europe instead of China. If that happens, the tariff exemption VW just spent months negotiating becomes a bridge solution for a single model generation.

That potential shift aligns with a broader trend. BMW‘s joint venture in China produces the electric Mini and incurs a 21.3% tariff. BMW has filed a complaint against the duties with the European Court of Justice. Other European automakers with Chinese production are watching VW’s deal closely as a template.

EVXL’s Take

I’ve been covering this EU-China tariff story since the Commission first imposed duties in mid-2024. We tracked the minimum price negotiations when they started in April 2025, and documented how they stalled for eight months before restarting in December. This Cupra deal is the first concrete result of that process.

But let’s be clear about what this actually is: a European company got preferential treatment on a European trade policy. VW had a head start because it began negotiating before the official guidelines even existed. Chinese brands, facing higher tariff rates and greater political scrutiny, won’t have it this easy.

The model-by-model approach is designed to be slow. Brussels wants to control the flow, not open the floodgates. BYD alone would need separate approvals for the Atto 3, Seal, Dolphin, and every other model it ships to Europe. At the pace the Tavascan deal moved, we’re looking at months per application.

Here’s what I think happens next: BYD and Geely will be the first Chinese brands to submit applications, likely within the next 60 days. But I don’t expect the first Chinese-brand approval before Q4 2026. Brussels will take its time. Meanwhile, Chinese automakers will continue doing what they’ve been doing since the tariffs hit: absorbing costs, shifting to hybrids, and building market share through sheer product velocity.

The real question isn’t whether Chinese brands will get tariff exemptions. It’s whether Europe’s own automakers, drowning in billions in losses and writedowns, can use the breathing room that tariffs provide to actually become competitive. So far, the evidence isn’t encouraging.

Editorial Note: AI tools were used to assist with research and archive retrieval for this article. All reporting, analysis, and editorial perspectives are by Haye Kesteloo.