Major Automotive Global Trends June 2026

Global

The EU prepares to impose customs tax on Chinese-made PHEVs

According to reports published in Europe during June, the European Commission is preparing a plan to impose protective tariffs on plug-in vehicles (PHEVs) made in China imported into Europe, and is apparently already conducting an investigation on the matter.

Until now, tariffs of this type have only been imposed on fully electric vehicles (BEVs) imported from China. Since their imposition, there has been a jump of hundreds of percent in the import of plug-in vehicles to Europe, since they are not subject to tariffs. According to the EU, PHEVs also benefit from government subsidies in China that create unfair competition.

The mechanism is expected to be similar to the tariff mechanism applicable to EVs. As part of it, the EU examines the support and export policy of each Chinese manufacturer and sets a different tariff rate accordingly. Tariffs may reach up to 20%, in addition to the fixed 10% tariff currently imposed on car imports from China.

The move stems, among other things, from the increase in the market share of Chinese manufacturers in the PHEV segment. In May 2026, one of the Chinese manufacturers reported that it had become the best-selling plug-in brand in Germany for the first time, with 4,290 deliveries in that month.

In January of this year, the Commission denied that it intended to tax Chinese-made hybrid vehicles, among other things, in light of China's threats to impose trade sanctions. However, tensions escalated in the first half of the year, and at a summit held in June, EU leaders discussed measures to reduce the widening trade deficit with China and reduce dependence on the supply of critical materials, including rare minerals. As of the time of writing, no official announcement on the subject has been made.

AlixPartners report: Chinese brands’ market share in Europe could reach 16% by 2030

A new report by consulting firm AlixPartners was published in June, estimating that Chinese brands’ market share in Europe will reach 16% by 2030. The researchers note that Chinese manufacturers continue to expand in Europe despite fierce competition and saturated demand, pushing out local manufacturers without increasing overall sales in the market.

According to the report, for Chinese manufacturers, this is both an opportunity and a necessity: Europe’s stricter emissions regulations, developed charging infrastructure, and demand for EVs make it an ideal export destination, while the slowdown in sales and tough competition in the domestic Chinese market are forcing them to look for growth engines abroad.

Analysts expect China's total auto exports to climb to at least 10 million units this year, up from 7.1 million in 2025, and Chinese industry sources have even cited a target of 13 million vehicles this year. The focus of exports is now shifting from traditional "Chinese" markets like Russia and Belarus to core Western European markets like France and Germany. Market research shows that young German consumers are increasingly open to Chinese vehicles: 36% of 34-18-year-olds prefer a Chinese car to a local brand.

Europe

Automakers call to postpone Brexit tariffs on EV trade between the UK and the EU

In June, the European Automobile Manufacturers Association (ACEA) and its British counterpart (SMMT) called for a delay in the entry into force of the “Brexit tariffs” on EVs. The tariffs are due to apply from 1 January 2027 to vehicles imported from the UK to the EU and vice versa. According to the unions, the rules of origin that determine the origin of batteries for the purpose of duty exemption are too strict.

The dispute focuses on the rules of origin included in the 2020 Brexit agreement. According to the agreement, 55% of the monetary value of the vehicle must come from European production, which includes the EU and the UK, as a condition for duty exemption. For EVs, special requirements have also been set, according to which 70% of the value of the battery packs and 65% of the value of the battery cells must come from European production. If either condition is not met, a 10% tariff is imposed.

The rules were supposed to come into force on January 1, 2024, but at the last minute they were postponed for three years, so they are now supposed to come into force on January 1, 2027. But even then, it is doubtful whether manufacturers will be able to meet the requirement that 65% of battery cells be of European origin.

So far, only a limited number of European manufacturers have purchased batteries with "European" cells that are produced in a small number of battery factories in the EU. Most cells continue to be imported from Asia. This is why the automotive associations ACEA and SMMT are calling for the application of the "Brexit tariffs" on electric vehicles to be postponed again.

ACEA estimates that by the beginning of 2027, only about 20% of EV batteries will be manufactured in Europe, as the development of production capacities is progressing at a slower pace than expected. The SMMT also claims that battery supply chains are not yet prepared to meet the stricter requirements, and therefore the rules should be delayed.

Meanwhile, in June, the French government signaled its willingness to include the UK in the “EU preference” rules that form part of the EU’s “Industrial accelerator law”. This is a significant change in French policy, which previously supported strict rules of origin that left the UK outside the benefits. According to senior French government officials, “The UK is not part of the EU, but it is a close neighbour, and its economy is deeply integrated with that of the EU”.

The Commission intends to include in the benefits of the law, such as duty-free access, also products from “Partner countries” that have free trade agreements with the EU. However, this is “Only on condition of reciprocity that will be assessed separately for each sector”.

This position has increased UK concerns that it will be left out of the law. Nissan, one of the largest employers in the British car industry with 6,000 direct employees and a supply chain supporting an additional 30,000 jobs, has already recently warned the British government of serious consequences if the UK is "Excluded" from the benefits. The law still requires approval from member states and the European Parliament, so at this stage amendments to the law, including the inclusion of the UK, are still possible.

Seven EU countries oppose further easing of CO2 emissions targets

France, Spain and five other EU member states are calling on the bloc to stick to a “Clear and ambitious path towards electrification.” They say there is no room for further softening of the targets set under the new EU regulation presented in December. This is despite demands from other countries, including Germany.

The seven countries: Denmark, Spain, France, Luxembourg, the Netherlands, Portugal and Sweden, are demanding that the EU stick to the “Automotive package” presented by the European Commission in December, which includes several significant relaxations from the original target, according to which only new vehicles with zero CO2 emissions per kilometer will enter the market after 2035, also known as a “Ban on the sale of vehicles with internal combustion engines.”

The countries warn that it would be a “Strategic mistake” to continue to deviate from plans to phase out internal combustion engines. They argue that, as an alternative, the EU should stick to the original path for a sweeping transition to EVs that was set at the beginning of the decade.

In a letter to the EU Commission, the countries argued that further weakening of the emissions targets would undermine the overall strategy of reducing CO2 emissions from motor vehicles. “The current energy crisis is clear proof that reducing Europe’s dependence on fossil fuels is an absolute necessity… The transition to electric vehicles is not only a climate policy objective but also a necessity for our energy security.”

The original “Automobile package” stipulates that hybrid vehicles and models with internal combustion engines will still be able to be registered in Europe in limited numbers after 2035 if their emissions are fully offset by production using clean fuels and the use of “Green steel” originating in the EU. This means that while CO2 emissions only need to be reduced by 90% instead of 100%, offsetting the remaining 10% through the crediting mechanism will be difficult.

On the other hand, several countries, notably Germany, Italy and the Czech Republic, oppose the European Commission's plan, claiming it is too lenient. They are demanding less stringent regulations for plug-in hybrid vehicles, along with changes to the offset mechanism planned after 2035 and the setting of more flexible interim targets.

The European Commission launches a program to accelerate the production of batteries in the EU

The European Commission launched a support scheme for the production of battery cells and finished batteries in Europe in June. Companies interested in participating will be able to submit proposals in the third quarter. The scheme is financed by interest-free loans of around €1.5 billion, alongside around €300 million for the development of battery raw materials.

According to the Commission, the scheme is intended to accelerate the transition to large-scale industrial production by using revenues from the emissions trading system to finance innovation.

The scheme is limited to companies that are already in the launch phase of cell production and plan an annual capacity equivalent to the batteries of around 200,000 EVs. The Commission justifies the need for funding by saying that the launch phase of production is characterized by high rates of defective products, making it difficult to achieve profitability.

The funding is limited to the first plant of each manufacturer. Each bidder will be able to receive up to €500 million, so the entire budget may therefore be divided between just three companies.

The EU is preparing for cross-border autonomous driving trials

In June, 17 EU countries signed a declaration of intent to conduct cross-border trials of various types of autonomous vehicles. The declaration, signed at the EU Transport Council in Luxembourg, was initiated by Germany, France and Luxembourg and is non-binding. It aims to coordinate the development and deployment of autonomous vehicles across Europe, as part of the Automotive Industrial Action Plan announced in March 2025, to support the competitiveness and innovative capacity of the sector.

The initiative will develop uniform standards for technology, safety and infrastructure to enable the cross-border operation of autonomous vehicles while harmonizing national and European regulations. Possible applications include public transport, such as “Robo-taxis” and shuttles for transporting large numbers of passengers, and autonomous freight transport.

The European Transport Commission has already announced a budget of around €20 million for the "Development of the digital infrastructure required for autonomous driving". A follow-up tender is expected to start this quarter.

One of the key initiatives of the declaration is Germany, which is considered a pioneer in the field. Already in 2021, Germany became the first country in the EU to enact a law that allows autonomous driving on defined routes within its territory under technical supervision. In 2025, a regulation on remote control was also added, creating a legal framework for the operation of "Remotely controlled" autonomous vehicles on public roads and enabling the transfer of control over them to a human controller in complex driving situations.

The German government defined autonomous driving as a key technology for public transport and freight transport, and stressed the importance of setting uniform European standards.

European automakers call for a clear definition of “Made in Europe”

In June, Volkswagen, Stellantis and Renault jointly appealed to the EU to adopt a clear framework of rules that would clarify what “Made in Europe” means.

In a letter to members of the European Parliament, the three car groups proposed that 70% of the added value of vehicles sold in the 27 EU countries be produced within the bloc’s borders, along the entire value chain, from research and design to final production. Together, the three manufacturers represent around 60% of vehicle production in Europe.

In the letter, they stressed that their ability to maintain a large car manufacturing infrastructure in Europe requires a more realistic regulatory framework. They said that “Strategic technological gaps, fierce global competition and ever-increasing energy, production and regulatory compliance costs pose unprecedented competitive challenges for European car manufacturers.”

The joint appeal continues a line that Volkswagen and Stellantis began separately last year when they called for protecting the local auto industry by providing incentives and preferential support, with an emphasis on European-made EVs. The three manufacturers emphasize that annual sales in Europe have decreased by about 3 million units compared to 2019. The three car groups called for providing targeted support to the battery industry and easing regulatory requirements, especially in the small vehicle segment, in order to lower EV prices and improve the local supply chain. "We aim to provide the European middle class with environmentally friendly, affordable and technologically advanced vehicles," the letter said. The three manufacturers emphasized that Europe does not aim to close its markets but to curb the trend of transferring industrial production to third countries.

The EU promotes new rules for selling used cars and recycling end-of-life vehicles

The new rules stipulate that businesses selling used vehicles will be required to provide a vehicle assessment report proving that the vehicle is not intended for scrapping, or to present a valid annual registration test certificate. In private transactions, in order to avoid unnecessary burdens on citizens, the documents will only be required when the vehicle has been declared a legal loss or when the transaction is carried out entirely via an online platform.

Three years after the new regulations come into force, car manufacturers will be required to fully implement extended manufacturer warranties and bear all costs of recycling and removing end-of-life vehicles across the EU.

In addition, to address the problem of the large number of vehicles being smuggled out of the EU, and to prevent the illegal dismantling or scrapping of vehicles abroad, the new regulations explicitly state that five years after their entry into force, the export of vehicles that are disabled or unroadworthy will be prohibited.

According to the European Commission, "We are taking a decisive step in leading the automotive industry towards a circular economy. The new regulations will help ensure resource security, protect the environment and achieve sustainable development. At the same time, and with the aim of avoiding putting too much pressure on the industry, the regulations define realistic and achievable development targets, streamline administrative procedures and create a more equal playing field."

It should be noted that after the vote of approval in the European Parliament, the draft law still requires formal approval by the Council of the EU before it can enter into binding force. The law will be fully implemented 24 months after its entry into force.

The surge in exports to the US boosted car production in the UK

Car production in the UK grew by 2.7% in annual terms in May and reached more than 51 thousand units, of which about 95% were private vehicles. This broke a four-month series of declines. According to data from the Association of British Motor Manufacturers and Distributors, the main factor for the growth was a jump of 83.1% in exports to the US, which offset a 5.2% drop in exports to the EU and a 14.3% drop in exports to China. Since the beginning of the year, production in the UK has fallen by 8.7% to about 318 thousand vehicles.

The association warns that high energy costs, trade frictions and weak demand for electric cars are eroding the competitiveness of the British car industry. "Manufacturers are investing billions in developing zero-emission vehicles, but weak domestic demand and high regulatory costs are putting jobs and future investment at risk"

The union fears that the "Made in the EU" clause initiated by the EU, along with stricter origin rules that will come into force in Brexit agreements in 2027, will limit British vehicles' access to the European market, which is their main export destination. Added to this is the ongoing tension in the Middle East that threatens to make energy more expensive again.

USA

President Trump announces that the US doesn’t intend to renew the trade agreement with Canada and Mexico

In June, President Trump announced that he would not renew the North American Free Trade Agreement, which is the basis for Canada and Mexico’s preferential trade terms with the US. Failure to renew the USMCA could lead to lengthy and separate negotiations on auto and other key industrial issues.

He said that the US enjoys a favorable trade position with Canada and Mexico, and both countries would be required to offer better terms if they seek to renew the agreement.

The Mexican and Canadian governments have yet to respond. The next round of bilateral trade talks between the US and Mexico is scheduled for July, while formal negotiations between the US and Canada have not yet begun. The president has not said whether he is considering withdrawing from the agreement altogether.

Under the terms of the agreement, either party can withdraw by giving six months’ written notice. The US, Mexico and Canada must complete the process of reviewing the renewal of the agreement by July 1, 2026, and if it is renewed, it will be extended for another 16 years. However, given the growing tensions between the Trump administration and neighboring countries, it seems that the three sides will have difficulty reaching an agreement on renewal. Theoretically, even if the agreement is not renewed but none of the countries officially withdraws from it, it could continue to be in force for another decade and undergo a "Rolling periodic review".

Mexico and Canada are the US's two largest trading partners, with an annual trade volume of nearly $2 trillion. Goods from both that meet the USMCA rules of origin are largely exempt from the new tariffs introduced by the Trump administration.

The announcement is part of the administration’s attempt to bring back to the US from Canada and Mexico manufacturing resources for core industries such as auto plants. But the administration’s full demands remain unclear. The US Trade Representative has consistently declined to comment on whether the US is willing to reopen the full text of the agreement, and any such decision would require congressional approval.

Negotiations are currently focused on complementary bilateral agreements on issues such as trade concessions for Canada and Mexico in exchange for the waiver of all US tariffs. The key issue is the auto and steel tariffs imposed by the Trump administration last year.

The Mexican government argues that current US tariffs are hurting the competitiveness of its auto industry compared to Japan and South Korea, which signed a trade deal with the US last year that reduced tariffs on their auto imports to 15%.

The Trump administration has so far granted tariff exemptions to goods that meet USMCA rules, but has imposed sectoral tariffs on automobiles, a core area of ​​the agreement. Currently, a 25% tariff is imposed on parts not manufactured in North America and on finished vehicles imported from Mexico and Canada. This tariff rate does not apply to auto parts exports from those two countries, but the US has threatened to impose similar tariffs on them.

US Department of Commerce plans anti-dumping duty of about 130% on trailers made in China

After a lengthy investigation, the US Department of Commerce announced that Chinese companies are marketing semi-trailers, trailers and parts in the US at unfair prices. The department intends to impose a permanent anti-dumping duty on the products, subject to a hearing.

Earlier that month, the department determined that China and Mexico had illegally subsidized trailers and their components and therefore imposed "Provisional countervailing duties" on them: up to 128.78% on trailers and their parts from China, and up to 62.67% on those made in Mexico.

The anti-dumping investigation into trailers from Mexico has not yet concluded. Its initial findings are expected to be published in July, and the final conclusions in all cases related to the investigation are expected in December. At the same time, the US International Trade Commission is conducting a separate investigation into injury to the domestic industry.

Once the department's decision is published in the Federal Register, the tariffs will be imposed on imports of trailers at the provisional duty rates set. The tariffs will also apply to trailers made in China that are transported to the US through third countries such as Canada. These tariffs will be in addition to the countervailing duties previously imposed and will further increase restrictions on the entry of goods into the American market. The announcement was welcomed by the American Trailer Manufacturers Association, which said that "The decision is a significant victory for American manufacturing and for thousands of trailer industry workers across the country."
 

China

China's Ministry of Industry and Market Supervision summons automakers for hearing over "Unfair competition"

On June 11, China's Ministry of Industry and the State Administration for Market Supervision summoned several automakers for a "Reprimand call" on suspicion of engaging in improper competition practices. The automakers were required to comply with the Pricing Law and the Predatory Pricing Prevention Regulations, which prohibit selling vehicles below cost in order to capture market share.

At the meeting, regulators stressed that all automakers must "Fully implement government guidelines, strengthen their internal compliance systems, and eradicate price wars that harm product quality." At the same time, companies were required to strengthen quality management throughout the entire product life cycle so that vehicle safety and performance are not compromised.

The authorities made it clear that they would take firm action against "Conduct that disrupts market order" and promote a shift from "Price wars" to "Value wars." That is, maintaining a healthy competitive environment and protecting consumer rights throughout the entire process of purchasing, using, and servicing vehicles.

Chinese automakers' market share in Europe reached a monthly record of 9.8% in April

Chinese automakers continue to expand their operations in Europe. In April, sales of Chinese brands jumped 114% compared to April last year, to 112,992 units. Their market share reached 9.8%, a new monthly record compared to the previous record of 9.5% recorded in December 2025. In March, 149,094 vehicles of Chinese brands were sold.

By comparison, the entire European auto market grew by only 6.4% in April. Analysts in China note that the growth is focused on a limited number of large Chinese manufacturers, which are responsible for about 75% of Chinese brand sales in Europe in the same period and about two-thirds of the growth.

They claim that the rapid expansion of the large manufacturers continues to reduce the scope for the rest of the small and medium-sized Chinese brands, whose combined sales share fell from 13% to 11% compared to the same period.

Full EVs and plug-in vehicles were the two main growth drivers for Chinese brands in Europe. According to analysts, unlike many European manufacturers that focus primarily on full electric drivetrains in affordable models, Chinese brands have adopted a dual powertrain strategy. This strategy is well-suited to the needs of the European market, reducing reliance on a single segment and generating growth in several categories.

In April, Chinese brands’ BEV sales jumped 111% year-on-year to 38,281 units; plug-in models were a notable growth driver with a 256% jump.

In April, the share of gasoline-powered vehicles fell from 27% to 12% of Chinese brands’ sales in Europe, while the share of PHEVs rose from 18% to 31%. The share of full electric vehicles remained stable at 34%.

In China, it is estimated that as Chinese automakers deepen their production efforts in the European bloc, launch new models at a rapid pace, and increase brand value, they are expected to continue to increase their market share in Europe.

India

The Indian government intends to allocate over 1B$ to promote electric trucks and buses

The Indian government is formulating an incentive package worth more than a billion dollars, about 862 million euros, to accelerate the transition to electric buses and trucks. The goal of the program is to reduce dependence on energy imports and reduce air pollution.

The program is expected to last about a decade and focus on electrifying vehicles in the private sector as well. Most of the budget is expected to be directed to intercity bus operators and small companies that have difficulty bearing the costs of switching to electricity.

The planned incentives include an interest subsidy of up to 1.5 million rupees, about 13,500 euros, per vehicle, along with a partial state guarantee for credit. The initial goal is to launch about 10,000 electric buses, with the possibility of expanding to 40-50 thousand units in later stages.

Industry representatives have also proposed funding for the establishment of charging stations, the abolition of tolls and taxes for heavy electric vehicles, and a reduction in charging costs. The details of the plan have not yet been agreed upon, and the Prime Minister’s Office is expected to meet with industry representatives this month to finalize the details.

India already has a program called PM E-Drive, which was launched in October 2024 and will be in effect until March 2028. Under it, incentives were granted to 5,643 electric trucks and 14,028 electric buses. However, it is limited to government-owned public transport operators only.

India currently has more than two million privately owned buses and trucks registered, almost all with old and polluting diesel engines. About 90% of India’s oil supply depends on imports from the Gulf. The recent war has disrupted regular supplies and sharpened the need to switch to electric transport.

Japan

The Tokyo metropolitan municipality intends to increase subsidies for EVs

The Tokyo Metropolitan Government is planning to expand its EV incentive program to accelerate the adoption of electric and plug-in vehicles. Tokyo has more than 5 million registered vehicles, only a small fraction of which are electric.

The planned revision will increase the maximum subsidy available to new car buyers in the Japanese capital to about 1.3 million yen (about €7,025), an increase of almost 30% from the current ceiling. The basic subsidy for EVs in Tokyo will also be doubled from 100,000 yen to 200,000 yen.

Tokyo also plans to change the ranking of automakers for eligibility for the subsidy. The current system takes into account the volume of sales of zero-emission vehicles, the range of electric models and the manufacturer’s investments in reducing emissions.

The new system aims to give greater weight to the “Green transformation” efforts of automakers. A maximum score in this category could double the incentive from 200,000 yen to 400,000 yen, with a theoretical cap of up to 600,000 yen in the manufacturer rating component. To fund the changes, Tokyo has allocated an additional 8.3 billion yen in a supplementary budget, which will be submitted to the city assembly.

Tokyo’s upgraded incentives will be added to national incentives. Earlier this year, Japan raised the maximum subsidy for EVs nationwide to 1.3 million yen and added an additional incentive for vehicles equipped with batteries from Japanese manufacturers.

Electric vehicles accounted for just 1.6% of new car sales in Japan in 2025. In the first four months of 2026, their share rose to 2.5%, but it is still significantly lower than in most developed markets.

Israel

Reports in Israel: New Cyber ​policy may restrict Chinese-made vehicles in government and security fleets

In June, the Israeli economic press reported on the expansion of restrictions on the participation of Chinese-made vehicles in procurement tenders for the public and security sectors. According to reports, the move is related to the implementation of a new national strategy for vehicle cyber protection, which was formulated in recent years by, among others, the National Cyber ​​Directorate and the Ministry of Transportation.

The strategy deals with various aspects of vehicle operation and maintenance. Among other things, it demands the elimination of the possibility of performing remote updates on government vehicles, or making such updates conditional on inspection by authorized parties, protecting vehicle data at service stations and charging stations, and transferring data only to servers located in Israel.

According to reports, the strategy is, among other things, behind the decision of the Government Vehicle Administration at the Ministry of Finance to freeze the acquisition of new EVs, which was published in June. It was also linked to the decision to freeze or delay the plan to transition the government vehicle fleet to leasing, instead of direct purchase or periodic rentals.

The gradual transition of the government fleet to operational leasing was supposed to begin this year as a pilot program. This follows the announcement by the Ministry of Finance in May last year of the state's intention to transition to leasing for some of its vehicles, after completing the headquarters work and approving the vehicle segments that will be included in the process.

Until the situation becomes clearer, it was decided to continue with the direct purchase of vehicles, to extend the service period of 3-4 year old vehicles that are still in usable condition, and to expand temporary vehicle rentals for employees whose vehicles are going out of use.

According to estimates, the purpose of the freeze is to prevent the integration of Chinese-made vehicles, mainly electric and plug-in vehicles, in which Chinese brands have a significant presence. The government vehicle fleet is one of the largest customers in the market and consists of approximately 15,000 vehicles, of which 5,000-6,000 are employee-owned vehicles. Local authorities and government companies are also allowed to adapt their purchase conditions and model mix to the conditions of the government fleet. According to reports, the IDF is also expected to adopt a similar policy in the new round of procurement of leased vehicles, as part of a tender that began last year. The procurement is intended for officers in the ranks of lieutenant colonel and colonel, for senior NCOs, and for civilian IDF employees. The scope of the procurement is approximately 2,000 vehicles, and most of them are expected to be hybrids.