China Expands Its Footprint in Europe’s “Automotive Heartland,” Combining Cost Advantage With Rising Technical Sophistication

Market Share Climbs From 2.7% to 5.1%
Price Edge Strengthened by Quality Improvements
High Production Efficiency Puts China in the Lead

Chinese electric vehicles are rapidly gaining ground in Europe. Despite the European Union’s imposition of steep additional tariffs on Chinese EVs, local brands continue to press their advantage in pricing, proving difficult to contain. At a major auto show in Germany, the heart of Europe’s car industry, Chinese automakers also showcased improved technology and design, drawing strong consumer attention.

China Gains, Korea Slips

According to U.K. auto market research firm JATO Dynamics on the 14th, sales of Chinese-made cars in 28 European countries reached 347,135 units in the first half of this year, up 91 percent from 181,897 a year earlier. Over the same period, Chinese automakers’ market share nearly doubled, rising from 2.7 percent to 5.1 percent. JATO credited five companies—BYD, Xpeng, Leapmotor, Omoda, and JAC—with driving this growth.

By contrast, South Korea’s Hyundai and Kia, which had been steadily building their European presence, saw sales decline. Their combined first-half sales totaled 631,027 units, still outpacing Chinese competitors but down 4.1 percent year-on-year. As a result, their market share slipped, with the two brands holding 8.5 percent in August, down 0.7 percentage points from the previous year.

Chinese brands’ surge is particularly striking given the EU’s tariff barriers. Since October 2023, Brussels has levied countervailing duties on Chinese EVs, citing Beijing’s subsidies as unfair practices that distort the market. While tariffs had stood at 10 percent, they now range between 17.8 and 45.8 percent.

In response, Chinese automakers pivoted to hybrids, which are exempt from the extra tariffs. BYD’s Seal U, a midsize hybrid SUV, ranked third in European plug-in hybrid sales in the first half, while JAC’s compact crossover, the JAC 7, placed ninth in June.

From “Low-Cost” Image to Practical Tech

China’s global ambitions were on display at IAA Mobility 2025 in Munich, held from the 8th to the 13th. The number of Chinese exhibitors rose to about 100, up 40 percent from 2023. BYD took center stage at the Messe München exhibition hall, while Xpeng attracted crowds downtown with humanoid robots and mock-ups of urban air mobility taxis.

The focus was on charging, driving range, and diversification of models. BYD emphasized its “400 km in 5 minutes” fast-charging technology to ease consumer anxiety about infrastructure. Xpeng unveiled its high-performance sports sedan “The Next P7” with enhanced AI capabilities, and demonstrated its family-oriented MPV X9, winning praise from visitors.

Chinese exhibitors sought to shed their “cheap” image by showcasing lifestyle-friendly innovations, from charging solutions to software and in-car displays. Xpeng even positioned its booth directly opposite Volkswagen’s, underscoring its intent to challenge incumbents head-on. Large-scale presentations reinforced the impression that Chinese brands are vying for mainstream recognition in Europe through both brand identity and technological maturity.

Securing Key Raw Materials

Industry observers see China’s aggressive push as doubly potent given its cost advantage. RJ Scaringe, CEO of U.S. EV maker Rivian, told the “Everything Electric” podcast that China’s low production costs and subsidies pose a major threat to Western automakers. “Chinese vehicles are highly advanced, ahead of most Western manufacturers—except perhaps Rivian and Tesla,” he said.

Scaringe stressed that China’s price edge stems not from “magical technology” but from its low-cost capital structure. Government-backed development and lower labor expenses, he noted, reduce costs from components to finished vehicles.

He also highlighted the critical challenge of securing raw materials for batteries. Nickel, essential for EV production, is in short supply in the U.S. “No matter how much we want it, building a nickel supply chain domestically in the near term is impossible,” he said. This reality explains why Western automakers, including those in the U.S., cannot easily disengage from China’s supply chain, leaving them structurally vulnerable to Beijing’s expanding presence in Europe.