Victory away: Chinese cars have captured Europe
The share of Chinese brands in total new car sales in the European Union, the United Kingdom and the European Free Trade Association (EFTA) countries reached 10.9%. In just one month, Europeans purchased more than 150,000 cars from China, which means an increase of 118% year-on-year. For European automakers accustomed to dominating their own territories, these figures look like a terrible omen. China has punched a hole in the protection of the European market, bypassing protective duties and displacing traditional leaders. The future of the European automotive industry is described in the Izvestia article.
Phenomenal growth
China has demonstrated impressive flexibility in conquering the European market. In the fall of 2024, Brussels imposed protective duties (up to 35.3% above the standard 10%) on Chinese electric vehicles (BEVs), hoping to stem the flow of cheap imports. Beijing responded asymmetrically. Chinese automakers have rebuilt their export lines, relying on rechargeable (PHEV) and full hybrids, which are not yet subject to European duties.
In June 2026, sales of Chinese full hybrids in Europe soared by 246% (to 33,624 units), and rechargeable hybrids by 213% (to 47,241 units). Today, hybrids account for about 31% of all sales of Chinese brands, making them the fastest growing segment. The BYD Atto 2 small crossover became a bestseller, which sold more than 12 thousand copies in a month. The Leapmotor T03 microcar, sold through a joint venture with Stellantis, showed growth of a phenomenal 566%.
From expansion to dominance
The dynamics of the trade balance between the EU and China is quite eloquent. In 2016, exports of cars from the European Union to China consistently exceeded the oncoming flow by eight times: Europe supplied about 400-500 thousand cars per year (mainly in the premium segment), while Chinese exports in the opposite direction barely reached 50-100 thousand units.
Now the situation has turned upside down: the ratio is 8:1 already in favor of Beijing. China annually ships about 1.2 million cars to Europe, while European exports to China have shrunk to a modest 150,000 units. In just five years, the trade balance in the passenger car segment collapsed from a surplus of 200,000 to a deficit of 1 million cars.
It is characteristic that the turning point and the beginning of a particularly rapid growth in Chinese supplies occurred in 2022-2023. A coincidence? Unlikely. It was during this period that two macroeconomic factors converged. First, Europe is facing an energy crisis: the cost of electricity and gas for German and French factories has skyrocketed, making production within the EU critically expensive. Although the automotive industry was not among the most vulnerable industries (compared, for example, with the chemical industry), the damage from the breakdown of relations with Russia was undeniable. Secondly, China has completed a multi-year cycle of government subsidies to its electric vehicle (EV) industry, moving from quantity to quality and launching large-scale export expansion to dump excess production that the growing domestic market cannot absorb.
Who goes to Europe and what?
Five years ago, China's presence in the European market was associated with niche gasoline models or the first, not the most successful attempts at electrification (for example, the early models of Chery or Geely). The import structure looks different today.
Chinese brands are making their way in the most sought-after segments. In the first half of 2026, battery—powered electric vehicles accounted for 35% of Chinese brand sales in Europe, while rechargeable hybrids accounted for 31%. Market leadership today is shared by corporations whose strategies are aimed at the mass consumer. Firstly, it is SAIC (MG brand). The company retains its leadership among the "Chinese" in Europe with 180,000 cars sold in the first half of the year (+18%). MG successfully uses the British historical heritage of the brand to penetrate the markets of Western Europe.
Secondly, BYD, which showed a phenomenal growth of 145%, having sold 173 thousand units. The BYD Atto 2 subcompact crossover tops the sales lists of Chinese models for the second month in a row, becoming the bestseller in the PHEV segment (10 thousand units in June). Finally, the Chery Group has made a leap by 303% (to 169,727 cars), actively using localization — some models (under the Ebro brand) are already assembled at the former Nissan plant in Spain.
The growth in the share of Chinese cars (from 5.7% in June 2025 to 10.9% in June 2026) is solely due to European and, to a lesser extent, Japanese and Korean brands. The European mass market (Volkswagen, Renault, Stellantis) was clearly not ready to offer consumers affordable electric vehicles and hybrids in the price range up to € 25-30 thousand. Chinese manufacturers, having full control over the supply chains of batteries (from lithium mining to cell assembly), offer machines with the best equipment 15-20% cheaper than their European counterparts.
Tariff wall with a hole
Attempts by Brussels to stop this expansion by administrative means have so far failed. The additional duties imposed by the European Union at the end of 2024 on fully electric cars (BEVs) from China, reaching 35.3%, did not work as expected. Chinese corporations have been able to adjust by shifting their focus to hybrids.
Statistics also show this. Sales of full hybrids from China soared by 246%, and of rechargeable hybrids by 213%. The legislative clumsiness of Brussels allowed the Chinese to circumvent the tariff wall by exploiting a loophole in the classification of power plants. Now the European Commission is hastily preparing an expansion of duties on hybrid cars, but the time has already passed — Chinese brands have gained a foothold in dealer networks and consumer consciousness.
One of the main consequences of the successful expansion from the east is that the German car industry, the traditional engine of the EU economy, is in a state of prolonged crisis. Volkswagen, whose business model has relied on revenue from the Chinese market for decades (where VW is losing share under pressure from BYD), is now forced to defend its home turf. Against the background of falling sales and high energy prices, VW, Mercedes-Benz and BMW are reducing investment programs in Europe, moving the assembly of electric vehicles to the United States (where subsidies from the IRA act apply) or, ironically, entering into partnerships with the same Chinese as the VW and Xpeng alliance or Stellantis and Leapmotor. Sales of the latter in Europe in June increased by 566% (12.7 thousand cars), and this is a direct consequence of the fact that the European Stellantis, desperate to defeat the Chinese, decided to become their distributor and assembly partner.
At the fork in the road
At the moment, the future of the European automotive industry is clouded over. There are two scenarios for the development of events. The first is the strengthening of protectionist tendencies. The European Union will inevitably impose 40% protective duties on all types of cars from China (including hybrids and cars with internal combustion engines). Beijing will respond symmetrically by hitting the European premium in China and, more worryingly, by restricting exports of critical raw materials (graphite, lithium) or battery components to the EU.
In response to the duties, Chinese giants (BYD, SAIC, Chery) are accelerating the construction of their own factories inside Europe (in Hungary, Spain, Poland), following the path of Japanese Toyota in the USA in the 1980s. By 2030, Chinese cars will be produced with a Made in EU nameplate, bypassing tariffs, but profits and technology will still belong to Chinese corporations. The market share of traditional European brands will shrink to 35-40%.
The second is that if Brussels fails to maintain the tariff wall due to pressure from countries dependent on trade with China (Germany, Hungary), or due to the threat of a shortage of affordable cars for the population, Chinese companies will occupy up to 25-30% of the market by the end of the decade. European automakers will be forced to switch to the Apple model: they will retain the design, brand and software, and the physical production of platforms and batteries will be completely outsourced to Chinese partners.
In any of the scenarios, it will be possible to fix that Europe has lost its status as a technological leader in the automotive industry. Ironically, this happened largely because of the "green deal" and the bets on electric vehicles, where the Europeans talked and regulated a lot, and the Chinese did. It is much easier to build an electric car than a car with an internal combustion engine, in the case of the same German cars, which are a small engineering masterpiece.
At the same time, the attempt to protect the domestic market with administrative barriers only highlights the inability to compete in costs, speed of development and access to resources. The EU's automotive industry, which provides millions of jobs, is slowly but surely giving way to East Asian capital.
Переведено сервисом «Яндекс Переводчик»
