The EU and China have reached an "understanding" on trade issues, with the EU set to impose a quota on imports of Chinese-made hybrid vehicles, initially capped at 350,000 units per year and increasing by 6% annually over four years. Concurrently, China announced it would cut the value-added tax (VAT) rebate on electric vehicle exports from 13% to 9% starting next April. Deutsche Bank analysts believe the rebate cut will directly erode the profits of Chinese new energy vehicle exporters, potentially reducing BYD's net profit by approximately 5,000 yuan (US$747) for each vehicle exported to the EU. They also anticipate a 21% downward revision in BYD's 2027 profit forecast. These measures, coupled with declining domestic sales in China, could place significant financial pressure on Chinese EV manufacturers.