It is, but the PRC has been pushing back against sourcing from within Europe and only intends to use CDKs to assemble EVs. This is what the EU is pushing back against.

What EU states are now lobbying for is if BYD wants to sell an EV in the EU, it should include European originated parts. Just assembling a knockdown kit in Hungary whose parts were all manufactured in China is not "Made in Europe". If BYD or MG wants to sell a BYD or MG car in the EU, they should source the battery pack and powertrain from the EU.

Alternatively, the PRC can drop similar origination requirements from it's domestic market.

The reality is the PRC won't back down, so they will be tariffed by the EU, especially as the EU has lost patience with the PRC due to their active involvement in the Russia-Ukraine War [0], attempting to use diplomatic immunity to kidnap a French national [1], and attempting to embargo the EU's rare earth imports [2].

Additionally, it's easier for the EU to push back against China versus the US while also winning brownie points in the US.

[0] - https://www.reuters.com/business/aerospace-defense/russians-...

[1] - https://www.lemonde.fr/societe/article/2024/07/02/deux-espio...

[2] - https://www.reuters.com/business/autos-transportation/china-...