How the European automotive industry survives the China Electric Vehicle Challenge
China’s electric vehicle (EV) manufacturers are rapidly expanding to Europe, offering cheaper, faster markets and technologically advanced cars – a combination that has the potential to undermine the traditional automotive giants in the mainland.
Brands such as Zeekr, a senior electric car manufacturer owned by Geely, have been sold in several European countries and are planning to enter the UK within two years. Zeekr’s highly automated plant, vertical integration, and proprietary battery and software technology give it an advantage over traditional automakers and is hampered by complex supply chains, internal silos and slower development cycles.
“All new cars sold in the UK and the EU must be launched by zero by 2035, and the European automotive industry should be under tremendous pressure to adapt,” said Peter Wells, director of the Automotive Industry Research Centre at Cardiff University. “Chinese companies are agile, fast and technically advanced, especially in software that European companies struggle with.”
Last year, nearly 2 million fully electric vehicles were registered in Europe, but prices, infrastructure and consumer hesitation remained a challenge. While European manufacturers such as Jaguar Land Rover, Nissan, Volkswagen and Renault are revamping the electric future, analysts warn that they are lagging behind China for a decade in terms of production capacity and supply chain controls for key battery minerals.
Andy Palmer, former Aston Martin CEO and former Nissan executive, said tariffs are a short-term solution that can further lag Europe: “Tariffs insulate babies, so babies will never learn to walk. The entry price for Chinese brands should be localized – build here, hire here, invest here.”
He noted that Nissan’s Sunderland plant proved that local manufacturing could create a strong automotive ecosystem. Parr defaults to: “The UK is the second largest electric vehicle market in Europe. We should use it.”
Chinese electric car manufacturers focus on compact, efficient and affordable cars like Nio’s upcoming firefly, while European brands have launched larger, more expensive SUVs. Wells said the risk of this mismatch attributes the mass market to Chinese competitors.
The EU imposes tariffs of up to 45% on imports of some Chinese electric vehicles, but member states have differences: Germany is worried about retaliation for its exports to China, while France and Italy are backing down stronger trade barriers. Chinese companies are already exploring tariff solutions, including transferring production to Türkiye.
Analysts say Europe must prioritize innovation, affordability and strategic alliances over trade barriers. GlobalData’s Al Bedwell believes that by the mid-2030s, Chinese brands will account for 15% of the European all-electric market – a significant, but not an “existent threat”.
“Europe cannot compete at cost, but it has brand recognition, and the dealer network and after-sales service will take time to build,” Bedwell said. “Some Chinese brands enter the market without understanding the preferences of local customers.”
The partnership is already in the burgeoning world – Stralandis has invested in leapmotor, while BMW and Audi have signed joint projects with Chinese companies.
Felipe Munoz, a car analyst in Turin, said Europe’s high cost and complex regulations were a barrier: “These rules were designed when China is not a player. We need lower taxes, fewer traditional tape festivals and more R&D incentives.”
Palmer remains cautiously optimistic: “We have an opportunity to reset the automotive industry in Europe. If we act wisely and act quickly – Europe can still lead the EVS. If we rely on tariffs and delay tough decisions, we will face an eventual decline.”
