Europe's carmakers set course for managed decline
STLA•European carmakers are relying on tariffs and proposed “Made in Europe” rules to counter Chinese rivals, but the measures may not stop their market-share gains. Chinese-branded cars held 9% of the European market in the first half of the year, and AlixPartners expects them to reach 16% of wider European sales by 2030.
1. Brussels plans protection
The European Union imposed tariffs on Chinese electric vehicles in 2024 and is preparing measures addressing hybrids and cars that qualify for subsidies. A proposed “Made in Europe” regime would require a minimum share of locally made parts for cars to qualify for national subsidies and tax benefits, but it is not yet law and EU countries disagree over which suppliers would count.
2. Limits to the measures
Brussels persuaded Beijing to cap Chinese hybrid exports to Europe at 350,000 units from December, compared with 302,000 in 2025; the article says the EU had expected 800,000 without the cap. The deal lasts four years, during which BYD and other makers could increase annual sales by 6%, and production outside China could help them circumvent the limits. BYD executive Stella Li said the company was still looking for another European factory location and was not yet mass-producing cars at its Hungarian plant.
3. Competition and costs
Chinese groups displayed larger, more luxurious cars in Paris, while Citroen unveiled an electric version of its 2CV priced at €15,000. The article says about 60% of new European car sales go to companies and fleet managers, who are more likely to want technology-packed SUVs. It also cites European carmakers’ underused factories and older brands, Volkswagen’s plan to cut 100,000 jobs, and valuations of less than four times expected earnings for Volkswagen and under five times for Stellantis.
