Chinese electric vehicle (EV) brands are making significant inroads into the European market, capturing a growing market share and challenging European manufacturers. At the recent Munich motor show, Chinese brands dominated the event, showcasing their electric vehicles that are ready for the market, while European manufacturers displayed vehicles that are slated for release in 2026 or later.
Chinese EV brands have seen their market share in Europe increase from less than 1% in 2021 to 2.8% so far this year. In the EV segment specifically, they have a market share of over 8%. This surge in market share is due to a combination of slowing local demand in China, overcapacity, and the Chinese manufacturers’ desire to expand overseas.
One key advantage that Chinese manufacturers have is their dominance in battery technology, which accounts for 40% of the cost of an electric vehicle. China controls two-thirds of global lithium processing capacity and dominates battery production. They produced ten times as many battery vehicles as Germany last year. Additionally, Chinese manufacturers have a cost advantage of 20 to 25%, making their vehicles more affordable than their European counterparts.
The shift towards electric vehicles is happening rapidly in Europe, with almost one in five cars sold being electric. The International Energy Agency has raised its forecast for EV market share to 35% of global sales by 2030. China, the largest automotive market globally, has already reached this level of electric vehicle adoption.
European policymakers and the automotive industry itself are grappling with the transition to electric vehicles. While targets have been set, there has been a lack of planning and support to achieve these goals. The industry is calling for “technological neutrality,” which allows for alternative technologies like e-fuels. However, experts argue that battery electric vehicles are the preferred technology in terms of efficiency and urge the industry to fully commit to them.
As Chinese EV brands continue to gain market share in Europe, it is crucial for European manufacturers and policymakers to develop a robust industrial strategy that ensures a level playing field with China and the United States. Erecting trade barriers is not a viable option, and instead, efforts should focus on strengthening the European EV ecosystem, including charging infrastructure and reducing battery costs.
Overall, the rise of Chinese electric vehicle brands in Europe highlights the need for decisive action and investment in the transition to electric vehicles. The industry must embrace this disruptive technology and adapt to the changing landscape to remain competitive in the global market.
