Markets and Innovation

Tesla proposed a new compensation agreement for chief executive officer Elon Musk potentially valued at about US$1 trillion, a massive package without precedent in corporate America.

The long-awaited proposal, designed to incentivise Musk to lead Tesla for years to come, sets a series of ambitious benchmarks he must meet to earn the full payout, including expanding Tesla’s robotaxi business and growing the company’s market value to at least U$8,5 trillion from around US$1 trillion today. The plan spans 10 years.

The additional shares Musk could receive would push his stake in the electric-vehicle maker to at least 25 percent, according to the terms detailed in Tesla’s proxy filing Friday.

Musk has publicly stated he wants a stake of that size.

The plan dangles a financial windfall and expanded control of the company to Musk, already the world’s richest person, after his 2018 package valued in excess of $50 billion was struck down by a Delaware court. While Tesla appeals that decision, the board is seeking other ways to compensate its CEO, including with an interim stock award in early August valued at about $30 billion.

The incentives in the new plan aim to keep Musk’s focus on Tesla while it pursues growth in newer markets, including robotics and artificial intelligence.

Friday’s proxy filing also included a non-binding shareholder proposal for Tesla to take a stake in Musk’s xAI startup, an idea Musk has previously discussed.

The new agreement underscores Musk’s iron grip on the automaker, despite the myriad demands on his time. Musk, who has served as Tesla’s top executive since 2008, oversees four other companies: SpaceX, xAI, Neuralink and the Boring Co. He told Bloomberg in an interview in May that he’s committed to still being at the helm of Tesla in five years.

Tesla’s shares have declined 16 percent this year through Thursday. — Bloomberg

Nqobile Bhebhe-Zimpapers Business Hub

THE National Railways of Zimbabwe is a strategic national institution whose revival is critical for Zimbabwe’s economic transformation and regional integration, newly-appointed board chairman Dr Misheck Sibanda has declared.

Dr Sibanda, a former Chief Secretary to the President and Cabinet, was appointed with effect from September 1, taking over from Advocate Mike Madiro.

He was formally introduced to the NRZ board and directors on August 27 by Mutapa Investment Fund chief executive officer, Dr John Mangudya, during a special board meeting in Harare.

Yesterday, he was officially introduced to the media in Bulawayo before engaging management in a closed-door meeting.

Dr Sibanda said he was stepping into the role with determination to ensure the parastatal regains its place as a backbone of national development.

“I feel honoured to serve as chairman of such a unique organisation as NRZ,” said Dr Sibanda.

“Our President (Mnangagwa) has long recognised that NRZ is not delivering what it should to the economy. He has directed that its resuscitation be accelerated, and I am committed to ensuring this institution becomes once again a driver of our national growth.”

He vowed to lead with focus and teamwork.

“I am determined that we will achieve what we set out to do. We will work as a united team and leave a legacy of excellence. Our leadership, especially the President, is determined to leave a legacy of development, and NRZ will be central to that.”

This week in China, President Mnangagwa held talks with China Railway International Group (CRIG) centred on a US$600 million package earmarked for NRZ revival.

For decades, Zimbabwe’s rail system has been crippled by aged equipment, frequent breakdowns and limited capacity, forcing overreliance on road transport.

The result has been higher logistics costs and extensive damage to national highways as bulk goods, particularly mining ore, are moved by heavy trucks.

A comprehensive overhaul will ease transport costs, enhance efficiency for industries such as mining, agriculture and manufacturing, and position Zimbabwe as a competitive regional trade hub under the African Continental Free Trade Area framework.

While NRZ’s design capacity is around 18 million tonnes annually, its operational capacity significantly declined over time, plummeting to just 3,4 million tonnes by 2017.

CRIG, a subsidiary of the Fortune 500-listed China Railway Group Limited, is expected to play a key role in the revival programme.

Dr Sibanda said NRZ must reclaim its position as a continental rail transportation leader.

“We have the brains locally, and we have the expertise in the diaspora, many of whom are eager to come back and contribute. With such talent and commitment, there is no reason NRZ cannot lead in Africa.”

Dr Sibanda revealed that he had thought his time in public service was over and had begun writing his memoirs before being called to national duty once again.

“The feeling was, why don’t I have my time? I thought I had left the Government after working for so many years. I was starting to write my books, but I was told, ‘You can write later, go and help,” he said.

Calling for unity, he added, “Let’s work in unity as a team to bring NRZ back to where it should be. The team is composed of very knowledgeable people and this will be shown very soon.”

Dr Sibanda also expressed appreciation for the support of President Mnangagwa and Dr Mangudya, head of the Mutapa Investment Fund, in the revival efforts.

“I feel so privileged to participate and work with the President and our former head of the financial sector, Dr John Mangudya, who now heads Mutapa Investments,” he said.

He further acknowledged the role of the media in highlighting the NRZ’s journey, urging for continued cooperation.

NRZ, under the Mutapa Investment Fund, is central to the attainment of Vision 2030 of transforming Zimbabwe into an empowered upper-middle-income economy.

In recent years, the company has embarked on stabilisation measures to “prevent the ship from sinking”, while pursuing recapitalisation, re-organisation and transformation to make it the “modern and efficient transporter of choice” for both bulk freight and passengers.

As part of its 2020–2030 strategic plan, NRZ adopted a phased approach to turn around operations across short, medium and long-term horizons.

In June 2023, NRZ signed a contract with RITES of India for the supply of 10 locomotives and 315 wagons. Implementation began in earnest, with trains under the agreement entering service on April 26 this year, following the formal signing of the facility on March 13.

The recapitalisation is expected to significantly improve service delivery, ensuring reliable wagon supply, reducing breakdown-related delays and improving freight predictability. This will lower transport costs, boost export competitiveness and enhance Zimbabwe’s ability to move goods seamlessly across borders.

At its peak, NRZ employed more than 20 000 people and remains one of the country’s largest transport and logistics employers.

Rehabilitation of key rail corridors is progressing, with the strategic Machipanda-Mutare line already completed and commissioned, while work on the Mutare-Harare section is ongoing.

Tapiwanashe Mangwiro

Banking experts believe that Zimbabwe’s heavy reliance on cash, despite widespread, deep mobile penetration and modern payment infrastructure, is a hindrance to the country’s goal of a predominantly digital economy

This was said by Reserve Bank of Zimbabwe chief policy research and anti-money laundering compliance officer Mr Amon Chitsva at the ongoing inaugural ZimSwitch Digital Connect Symposium in Nyanga.

His sentiments were echoed by Mr Irvine Masona, the president of the Electronic Payment Association of Zimbabwe (EPAZ), who also provided a detailed assessment of the nation’s digital payment landscape and the hurdles slowing digital adoption.

Mr Masona noted that while countries such as China and the United Kingdom had more than 90 percent of their daily transactions conducted digitally, Zimbabwe remains heavily cash-dependent.

This is also despite mobile penetration exceeding 100 percent.

A FinScope survey indicates that 70 percent of Zimbabwe’s citizens still rely on cash for daily transactions.

“Our volumes are going in the wrong direction,” Mr Masona said.

“Customers withdraw their salaries as cash, then transact outside the digital ecosystem, limiting the potential of digital platforms.”

“Are we providing the right level of convenience cash already offered?” the EPAZ president asked.

“If someone puts US$100 into their account, can they still transact US$100, or do they lose value immediately? Unless we fix that, adoption will remain low.”

He highlighted that convenience, cost and trust are key factors driving cash use. Digital transactions can incur fees and sometimes reduce the value of deposits, while cash offers immediate, predictable access.

Mr Masona compared Zimbabwe’s adoption with global peers. In China, contactless and mobile payments dominate daily life, in the UK, 93 percent of transactions are digital, and in South Africa, 91 percent of payments are digital, prompting some retailers to phase out cash entirely.

“Globally, 70 percent of new value over the next decade will come from digitally enabled economies,” he said, citing World Economic Forum research.

“If we fail to capture that, Zimbabwe risks falling behind.”

He also urged banks and fintechs to design products that matched Zimbabwean realities rather than copying foreign templates. Mr Musona said the thriving digital economy must be built for customers, not for someone else.

Mr Chitsva told the symposium that digitalisation is central to Zimbabwe’s economic and financial stability. The Reserve Bank has incorporated digital transformation into the National Development Strategy and works with stakeholders, including ZimSwitch, to modernise the payments ecosystem.

“The digital economy is not only about adopting technology but about resilience, collaboration and innovation,” Mr Chitsva said.

He identified several barriers: uneven access to technology, limited digital literacy, cybersecurity risks, weak data protection, and ongoing cultural preference for cash.

Transaction fees were also a disincentive, according to the regulator. To unlock a bolder digital economy, he said, “it requires a shared vision, strategic alignment and unwavering commitment from all stakeholders”.

The central bank intends to provide appropriate regulation that encourages innovation while maintaining financial stability. Transaction fees, he noted, remain a major disincentive for citizens. Both speakers emphasised the need for cooperation between regulators, banks and fintechs.

Mr Masona highlighted the importance of creating digital platforms that meet citizens’ daily needs, including transport payments, airtime, pensions, and healthcare services.

“Unless we deliver real value and build trust, digital adoption will remain low,” he said.

Mr Chitsva added that achieving a bold digital economy requires shared vision, strategic alignment and unwavering commitment from all stakeholders.

The Reserve Bank plans to continue supporting infrastructure, interoperability and consumer protection.

The symposium illustrates both progress and challenges. Zimbabwe has the infrastructure, mobile reach and regulatory alignment to grow its digital economy. Yet cash dominance persists, and low adoption limits the potential for financial inclusion and innovation.

Industry experts warn that without immediate action to address fees, trust and usability, Zimbabwe risks lagging behind regional and global peers in the digital payments revolution.

Business Reporter

OK Zimbabwe’s newly reinstated chief executive, Mr Willard Zireva, has unveiled a comprehensive turnaround strategy for the retail giant, describing the company’s recent state as a “painful” sight.

Speaking exclusively on CapitalkFM’s Business Focus Show, Mr Zireva detailed plans to restore financial stability, mend supplier relations and rebuild consumer trust.

Mr Zireva, who returned from retirement to lead the company, told listeners that when he came back he found a business weighed down by debt, with “strained supplier relations, empty or almost empty shelves in most branches, and, naturally, lost consumer support.”

He called the situation painful to witness but expressed a belief that it presented an opportunity for renewal.

“It was painful to see, because OK Zimbabwe has always been a trusted household name.

“But I didn’t see defeat — I saw an opportunity for renewal. I must emphasise that the turnaround is a process, not a one-day event. But I am encouraged by the positive way everyone — our customers, suppliers and staff — is walking with OK Zimbabwe on this journey,” said Mr Zireva.

To address the immediate financial challenges, the company has raised US$20 million through a rights issue and is expecting an additional US$10,5 million from the sale of immovable assets.

This fresh capital has enabled OK Zimbabwe to partially settle its debts and strengthen its working capital, he said.

According to Mr Zireva, the company has also reopened dialogue with suppliers and is renegotiating terms to ensure a steady flow of products.

Mr Zireva outlined a clear roadmap for the company’s revival, focusing on three key pillars. The first is financial stability, which involves completing debt repayments, safeguarding working capital and securing steady stock.

The second pillar is operational excellence, which entails streamlining costs, refurbishing key stores and retraining staff to deliver world-class service. The third pillar is transparency and governance, which includes reconstituting the board, implementing tighter controls and committing to regular, open updates for investors and the market.

Acknowledging the brand’s deep connection with Zimbabweans, Mr Zireva said the company has launched a new theme, “OK, Moving Forward, Stronger with You,” to reconnect with customers.

He stated that the company is reintroducing community-driven promotions and investing in customer engagement through both in-store activities and digital platforms.

Mr Zireva concluded with a resolute message to all stakeholders: “We are back, and we are here to stay.”

He thanked suppliers for their patience and staff for their dedication, emphasising that the turnaround is a process that the company is happy to be walking side by side with all stakeholders.

“But let me stress again — this is a process. We are building systematically, and while there will be challenges along the way, the direction is positive and encouraging. Every day, we see signs that OK Zimbabwe is regaining strength,” said Mr Zireva.

The start of Donald Trump’s second presidency has matched his first term in proving a boon for emerging-market stocks, but the rally risks running out of steam given his trade and fiscal policies are also sinking corporate earnings.

The benchmark MSCI Emerging Markets Index has posted an advance every month from January through August this year, the first of Trump’s second term. That’s happened only twice before in the 37 years that investors have tracked emerging markets as an asset class: in 2017, also a Trump inaugural year, and in 1993, under Bill Clinton.

But the Trump bump hides a fact that should worry investors in emerging-markets stocks, who’ve seen their wealth increase by $4.3 trillion so far this year: companies in developing nations are hurting. They’ve failed to meet expectations for profits in 2025, and, on average, are trailing projections for a 13th successive quarter. Earnings projections have also begun to fall, indicating the pain is set to deepen.

The contrasting trends in stock-market performance and corporate earnings are both driven by Trump’s policies. His disruptive tariffs and fiscal expansionism have reduced the US dollar’s haven appeal, driving a hunt for alternative assets.

At the same time, technology restrictions and trade barriers have eroded revenue and profit growth in developing countries from South Korea to Brazil.

“We stay cautious on emerging-market equities in a global context, as tariff-related risks continue to weigh more heavily on sentiment in EM,” said Nenad Dinic, an equity strategist at Bank Julius Baer. “Earnings-per-share estimates for 2025 flipped back to a downward trend after the 90-day tariff pause, reflecting concerns about tariff pressures building into the second half of the year.”

This year started with most emerging-market money managers bracing for a stronger dollar as they expected Trump’s tariffs to delay US monetary easing and drive more bids for the greenback. That translated into a weak outlook for developing-nation stocks, which typically do poorly when the dollar strengthens. —  Bloomberg

Business Reporter

Econet Wireless Zimbabwe is spearheading a digital revolution, laying the groundwork for a more connected and efficient future, according to deputy chief executive officer Mr Roy Chimanikire.

Speaking at the Econet stand at the ongoing Zimbabwe Agricultural Show (ZAS), Mr Chimanikire, shed some light into the company’s ambitious vision for a technology-driven economic transformation.

At the heart of that technology-driven push is the company’s rapid 5G network expansion.

Mr Chimanikire announced that the company has already deployed some 300 5G base stations as of July 2025, bringing high-speed 5G connectivity to over 500 000 customers. This is over and above the rest of its millions of customers that use 4G (LTE) mobile data and the few that still use 3G.

He said while the 5G technology usage is still growing, Econet’s rapid rollout marks a powerful stride towards harnessing the full potential of Zimbabwe’s digital transformation as the country moves towards a full digital economy.

He noted that 5G’s true potential lies beyond basic applications on smartphones, pointing instead to its transformative impact on businesses and industry, through the “Internet of Things” (IoT) – the collective network of connected devices and the technology, such as 5G, that facilitates communication between devices and the cloud, as well as between the devices themselves.

“It’s about the next level of technology in terms of the efficiency it can bring to businesses and the scalability at which businesses can do things and speedily deliver products and services now,” Mr Chimanikire explained.

He showcased several applications at the Econet stand – which is a key attraction at the entire show – including a smart water solution designed to manage water grids more efficiently, using intelligent data from connected devices. He also highlighted the use of drone technology for applications like smart parking and agriculture, noting the significant reduction in labour costs and time for tasks such as crop spraying.

Econet is also actively infusing AI in its business processes and to address customer pain points and improve service delivery.

The company has introduced a chatbot named Yamurai, which fluently communicates in local languages, including Shona and Ndebele.

“What it’s really doing is it is allowing customers themselves to (quickly) resolve some of their pressing pain points,” Mr Chimanikire said.

He added that the chatbot can also assist with tasks such as obtaining a PUK number or configuring a SIM card, all without the need for human interaction with an agent. The AI-powered chatbot supports interactive voice, allowing users to speak to it as if they were speaking to a real human being.

Mr Chimanikire said artificial intelligence presents a significant opportunity for companies to have a positive societal impact, aligning with global development goals.

He said Econet was actively exploring more ways to use these technologies to provide services that are convenient, relevant and have a transformative impact on people’s lives.

Nelson Gahadza

Zimpapers Business Hub

FBC Holdings says liquidity within the banking sector has remained constrained with deposits being largely transitory.

Consequently, the banking group has shifted its focus to funding diversification through lines of credit and new customer segments.

FBC Holdings is a financial services holding company listed on the Zimbabwe Stock Exchange (ZSE), offering a diverse range of services. These include commercial banking, mortgage financing, short-term and reinsurance, securities trading and microfinancing through its various subsidiaries.

In a statement of financials for the half-year ending 30 June 2025, group chairman, Mr Herbert Nkala, said that the company is engaging external financiers for lines of credit.

“Negotiations are at various stages to conclude several credit lines worth more than US$50 million and these are expected to be finalised before the end of the year. This will enhance our ability to support our customers’ funding requirements and grow our revenues,” he said.

Mr Nkala said the group’s banking subsidiaries remain profitable and well-capitalised, with key performance indicators aligning with industry benchmarks.

He added that the business model is, however, undergoing a transformation to remain competitive and the focus has been on increasing investment in technological infrastructure and solutions. The aim is to improve customer experience and convenience and to widen product offerings.

“These interventions are also complementary to the national agenda on financial inclusion through the provision of improved access to financial services at an affordable cost,” he said.

Mr Nkala also said several system enhancements and upgrades are underway, particularly for front-end systems such as mobile banking and internet banking platforms, to improve the customer experience.

“The group has gone further to embrace Artificial Intelligence (AI), focusing on improved processes, product development and enhancements. These initiatives should result in improved efficiency, robust processes, and superior customer service,” he said.

During the period under review, Mr Nkala said the group’s insurance subsidiaries are fully compliant with the new minimum capital requirements and are trading profitably.

He noted that the group’s focus locally is to align with local economic sector growth prospects and enhance its underwriting capacity to offer relevant products that target these economic sectors.

He also highlighted that FBC Re Botswana, on the other hand, continues to register growth in regional markets.

“On the regulatory front, the Government, through the Insurance and Pension Commission (IPEC), issued a new regulatory framework, Statutory Instrument (SI) 67 of 2025, setting the new minimum capital requirements for players in the insurance sector in June 2025. This is meant to promote a stable insurance industry, which, if achieved, will improve confidence and growth,” said Mr Nkala.

In terms of financial performance, group operating income was ZiG1,85 billion, a decline from the ZiG4,06 billion recorded in the corresponding period of 2024. Consequently, profit after tax amounted to ZiG915,7 million, representing a 22 percent decrease from the prior period’s ZiG1,18 billion.

“The outcome underscores a deliberate strategic realignment of the group’s business model in response to the new, stable macroeconomic environment. The composition of the group’s income has shifted markedly towards core business activities, with reduced reliance on gains arising from hedging assets,” said Mr Nkala.

He concluded that the group will continue exploring opportunities to diversify its business portfolio, both locally and regionally.

Business Reporter

Zimbabwe’s tobacco industry is facing a potential bottleneck in processing due to a significant increase in output, some industry experts have said.

Following a record harvest of 354 million kg for the 2025/26 season, the country is aiming for a new target of 400 million kg of flue-cured tobacco.

However, with only three green leaf threshing (GLT) plants currently operational, industry players are warning of severe processing delays.

This could lead to a backlog in fulfilling international orders and an increase in warehousing costs.

Chevron Tobacco’s executive director Mr Tapiwa Masedza noted Zimbabwe’s tobacco processing capacity was failing to keep pace with the country’s record-breaking yields, creating significant bottlenecks and potential delays in international exports.

Mr Masedza highlighted that the country’s three existing GLT plants have a combined processing capacity of approximately 90 tonnes per hour.

He said even with an efficiency rate of around 88 percent, this capacity is insufficient to handle the projected 350 million kg harvest from the current season in a timely manner.

“If you are looking at that, this year we have got [over] 350 million kg, and we started to process it around April,” said Mr Masedza.

He said given the efficiency, if operations were to pause for the Christmas period, approximately 318 million kg would have been processed, with the remainder being handled in January 2026.

“This then creates a challenge, a bottleneck in the processing, because we have got issues to do with export schedules.

“The tobacco that we are talking about is not going to be consumed in Zimbabwe, it has to be exported. And the final consumers, the factories that are probably in Dubai, China and globally, they need this tobacco.

“And what is just going to happen is there is going to be a mismatch between these processing schedules and the export schedules. This is going to create a challenge for the merchants.”

Echoing these concerns, an executive with a tobacco exporting firm, who wished to remain anonymous, said that the logistical challenges are already a major headache for the sector.

“We are constantly worried about the pile-up of un-threshed leaf in our warehouses. Every day of delay adds to our storage costs and puts pressure on our ability to meet our contracts,” said the executive.

“The call for an additional plant is not a luxury; it’s a critical necessity to ensure we don’t squander the gains we’ve made in production.”

Business Reporter

The Zimbabwe Investment and Development Agency (ZIDA) is actively engaging the global investment community, with a key conference underway in the United Kingdom aimed at mobilising private capital and forging strategic partnerships.

Organised in partnership with the Institute of Chartered Accountants of Zimbabwe (ICAZ), the event seeks to showcase Zimbabwe’s progress in creating a competitive and investor-friendly climate, with a focus on sustainable, long-term growth.

According to a ZIDA media release, the conference is “more than just another business event; it is a premier platform for connecting Zimbabwe with the global investment community.”

The event is considered timely as Zimbabwe undergoes significant reforms to position itself as a strategic investment destination. The conference provides “fresh insights into economic reforms, investment opportunities, and sectoral developments,” and serves as a forum for dialogue, fostering partnerships and strengthening networks.

ZIDA’s ultimate goal is to signal to the global market that Zimbabwe is not just open for business but open for “sustainable and strategic partnerships that can drive long-term growth.”

As the anchor of Zimbabwe’s investment ecosystem, ZIDA’s role is to facilitate, promote and protect investment. The Agency operates a One-Stop Investment Services Centre (OSISC) to streamline licencing and registration by integrating multiple government agencies. Digitisation through the e-Regulations Platform has further enhanced transparency and efficiency.

In its promotional role, ZIDA actively markets the country as a competitive destination. Investor protection is a key function, safeguarded by the ZIDA Act and the Investor Grievance Response Mechanism, which provides a time-bound dispute resolution process. ZIDA also provides aftercare services, supporting investors beyond the initial licencing stage by advocating on their behalf to ensure retention and reinvestment.

Zimbabwe presents a wide array of opportunities for private capital, particularly in key sectors such as mining, energy, agriculture and manufacturing.

The energy sector is equally attractive, with rising demand and government commitment to diversifying supply through solar, hydro, wind and gas-to-power projects. Agriculture remains a cornerstone of the economy, while manufacturing offers potential for value addition to raw materials. Tourism and real estate are also drawing attention, supported by world-class attractions and growing urban centres.

Zimbabwe has designed a competitive incentive framework to attract investors. Companies in Special Economic Zones, for instance, enjoy tax holidays of up to five years, followed by a reduced corporate tax rate of 15 percent for the subsequent five years. Export-oriented companies benefit from further tax reductions, with rates as low as 15 percent. Investors are also supported by a VAT deferment facility for capital equipment valued at $500 000 or more, providing vital cashflow relief.

According to ZIDA, the investment landscape has been active. The Agency issued 397 investment licences in the second quarter of 2025. The top sectors attracting investment between 2022 and 2025 were mining, manufacturing, construction and energy. The primary source countries for investment during this period were China, India, the EU, the UAE and South Africa. UK-linked licences were mainly in mining, energy, construction and tourism.

SHANGHAI, Dec 5 (Reuters) – Automakers in China are ramping up exports of hybrid vehicles to Europe and planning more models for the key market, exposing the limits of the European Union’s electric vehicle tariff scheme.

The bloc’s latest EV tariffs to protect its auto industry from a flood of cheap Chinese imports do not apply to hybrid cars. That could see major brands such as China’s top EV maker BYD (002594.SZ), opens new tab continue expansion in the region, analysts say.

Some manufacturers are also shifting production and assembly to Europe to lower the cost around tariffs.

“The increase is driven by Chinese OEMs shifting toward PHEVs (plug-in hybrids) as a way to sidestep the new EU tariffs on BEV (battery-powered EVs) imports from China,” said Murtuza Ali, an analyst at Counterpoint Research.

He expects China’s hybrid exports to Europe to grow 20% this year and even faster next year.

EU tariffs of up to 45.3% on Chinese EV imports came into effect in late October to counter what the European Commission says are unfair subsidies that helped create spare production capacity of 3 million EVs per year in China, twice the size of the EU market.

The anti-subsidy investigations on Chinese EV imports, which began in October 2023, and slowing car sales in China from an economic slowdown, have led some automakers to change their European strategy to focus more on hybrid exports, the data shows.

That helped exports of plug-in hybrids and conventional hybrids account for 18% of China’s total vehicle sales to Europe in the third quarter, doubling from 9% in the first quarter. The proportion of EV shipments, however, fell to 58% from 62% during the same period.

The trend is likely to gain further momentum.

China, which overtook Japan as the world’s biggest auto exporter last year aided by its dominance in EVs, is stepping up its export drive to address overcapacity at home, analysts say.

Given 100% tariffs on Chinese-made EVs in the United States and Canada, Europe is also one of the most obvious outlets for Chinese auto makers.

The European Commission did not immediately reply to a request for comment on rising hybrid imports from China.

MORE HYBRID MODELS

Major Chinese automakers could upend the European plug-in hybrid market dominated by European and Japanese firms as they meet rising demand for affordable cars with better fuel economy amid rising inflation.

BYD is taking on Volkswagen (VOWG_p.DE), opens new tab and Toyota (7203.T), opens new tab in Europe with its first plug-in hybrid model for the region, the Seal U DM-i.

The model is priced from 35,900 euros ($37,700), 700 euros lower than VW’s best-selling PHEV model Tiguan and 10% cheaper than Toyota’s C-HR PHEV.

It is also considering production of both EVs and hybrids in its Hungarian plant, Chinese official media China Auto News reported.

“The segment could see bigger growth potentials with Chinese automakers bringing more affordable options to Europe that are attractive to cost-sensitive consumers,” said Yale Zhang, managing director at Automotive Foresight.

SAIC (600104.SS), opens new tab, whose EV exports to the EU face the highest additional rate of 35.3%, has said it plans products with various powertrain systems for the European market.

Geely (0175.HK), opens new tab, China’s second-largest automaker by sales, launched a new plug-in hybrid under its brand Lynk & Co for Europe last month.

“The recent increased introduction of electrified hybrid models to markets around the world by global automakers is in line with consumer demands and purchasing trends,” Geely said in response to Reuters questions. It did not comment on trade restrictions.

Japanese automakers too are taking advantage of the growth of conventional hybrids in Europe this year and addressing their overcapacity problems in China.

Honda (7267.T), opens new tab, which suffered a 29% slump in China vehicle sales in the first nine months of this year, exports two conventional hybrids, one plug-in hybrid and one pure EV model from China to Europe.

While increasing exports from China could trigger intense price competition in Europe’s hybrid vehicle market, some experts caution Chinese firms are likely to tread more carefully for fear of sparking another round of EU tariffs.

“If BYD takes Qin Plus to Europe at a price of 20,000 euros, I am sure it would trigger another earthquake,” Zhang said, referring to its hybrid sedan.