European carmakers are confronting growing challenges as imports of Chinese electric and hybrid vehicles gain traction across the continent, threatening a key industrial sector that accounts for around 7 percent of the European Union’s economic output. Industry leaders warn that without strategic intervention, the region’s automotive industry could face significant job losses and market share erosion over the next decade.
Stéphane Séjourne, the European Union’s industry commissioner, has described the sector as being in “mortal danger,” while Germany’s automotive industry association projects up to 22,500 jobs could be lost by 2035. The surge in competitive Chinese imports comes amid concerns about alleged subsidies from Beijing, which the EU responded to in early 2024 by imposing tariffs of up to 45 percent on Chinese electric vehicles. However, hybrids have been largely exempted, facing only a 10 percent tariff, prompting Chinese manufacturers to pivot toward these models.
Data from the consultancy Dataforce indicates that Chinese brands have captured more than 20 percent of Europe’s plug-in hybrid segment and dominate over half of that market in countries like Poland, Hungary, and Romania. This trend has sparked debates among European policymakers over the appropriate balance between protecting domestic manufacturers and maintaining affordable options and consumer choice.
Experts caution that protectionist measures could come with trade-offs. David Bailey, an industrial policy specialist at the University of Birmingham, noted that while European and British automakers might receive temporary relief, consumers, particularly those in the middle class, could face higher prices and fewer affordable vehicles. Research from Bruegel, a Brussels-based think tank, suggests that prioritizing European-made components—such as battery cells—in public procurement could increase the cost of an electric vehicle by more than €2,100 ($2,300).
Simone Tagliapietra, deputy director at Bruegel, highlighted that such cost increases risk excluding middle-class buyers from adopting crucial green technologies, especially at a time when energy transition is considered vital for Europe’s economic and environmental agenda.
Chinese automakers, meanwhile, appear to be focusing on long-term investment in Europe, with companies such as Leapmotor collaborating with European manufacturers like Stellantis, and BYD planning local production facilities in Hungary. This strategy aligns with a broader ambition to transition from exporting vehicles to manufacturing them within the EU.
In Spain, where demand for electric and hybrid vehicles is rising rapidly, Chinese brands have expanded their presence from practically zero to around 600 dealerships by the end of 2023, a figure that is expected to reach 1,000 by 2026. BYD and MG, the latter a British brand owned by a Chinese state-run company, lead this growth. Spanish dealership association Faconauto regards the influx positively, citing competitive pricing as a key driver. While the price gap between Chinese and European electric vehicles has narrowed—from discounts of up to 30 percent—it remains substantial, with BYD’s average entry price estimated between €30,000 and €45,000, compared with approximately €50,000 for European models.
German market growth for Chinese brands is also notable, despite their relatively smaller overall share. BYD aims to grow its dealership network to 300 locations by year-end, with sales doubling in 2025 and continuing to climb. Industry analyst Stefan Bratzel referred to Germany as a critical proving ground for Chinese automakers, emphasizing that success in this market is seen as a springboard for broader European expansion.
As the European Union navigates these shifts, policymakers face the difficult task of safeguarding domestic industry competitiveness without undermining consumer access or delaying the continent’s transition to cleaner mobility. The outcome will have significant implications for the future structure and resilience of Europe’s automotive sector.