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Following the success of the "Export Map" series launched in 2024, Heyan Yueche introduced the "Navigating Overseas" series in 2025, aiming to provide the automotive industry with even more valuable insights into "going global." Despite the uncertainties in the international market this year, Chinese automakers remain committed to expanding their global footprint. As China's primary destination for electric vehicle exports, the EU imposed controversial high anti-subsidy tariffs on Chinese-made electric vehicles last year. Amidst this backdrop, where will Chinese automakers steer their course in this pivotal European market?

Produced by|Heyan Yueche Studio

Written by|Zhang Dachuan

Edited by|He Zi

Total words: 2924

Reading time: 4 minutes

In 2025, "going global" remains a hot topic and a compulsory course for Chinese automakers.

Despite encountering some trade barriers in 2024, the overall performance of Chinese automakers in their global expansion was commendable. According to recent data from China's General Administration of Customs, China's auto exports surged 23% year-on-year to reach 6.41 million vehicles, with an export value of $117.4 billion. Auto exports accounted for 3.3% of China's total exports, significantly contributing to GDP growth amidst domestic demand stimulation efforts.

△ Auto exports have become a "compulsory course" for domestic automakers

The importance of the European market is increasingly prominent

According to the China Passenger Car Association, the top ten countries for vehicle exports in 2024 were Russia (1.158 million vehicles), Mexico (445,000 vehicles), the UAE (331,000 vehicles), Belgium (280,000 vehicles), Saudi Arabia (276,000 vehicles), Brazil (237,000 vehicles), the UK (195,000 vehicles), Australia (178,000 vehicles), the Philippines (169,000 vehicles), and Turkey (134,000 vehicles). Specifically for new energy vehicles, from January to November 2024, the top five destinations were Belgium (242,300 vehicles), Brazil (149,900 vehicles), the UK (112,000 vehicles), Thailand (105,900 vehicles), and the Philippines (105,700 vehicles).

△ The port of Antwerp in Belgium has become the first stop for Chinese cars entering the EU

Belgium serves as the gateway for Chinese automakers exporting to Europe, and the UK is another significant export destination. The significance of the European market for China's new energy vehicles is evident. Despite the EU imposing additional tariffs of up to 35.3% on Chinese electric vehicles from October 2024, raising the total tariff to a high of 45.3%, Chinese automakers continue to seek entry into the European market. They are exploring various strategies, such as increasing exports of hybrid models or establishing factories in Europe to circumvent tariff restrictions, to expand their share of the European auto market, particularly in new energy vehicles.

△ Even with high EU tariffs, Chinese automakers are still finding ways to operate in the European market

The European electric vehicle market has cooled down

The European auto market faced challenges in 2024 due to overall economic underperformance.

According to the European Automobile Manufacturers Association (ACEA), total new passenger car sales in the EU market amounted to 10.6 million vehicles in 2024, a slight year-on-year increase of 0.8%. Including the UK and the European Free Trade Association (Iceland, Norway, and Switzerland), total sales reached 12.964 million vehicles, up 0.9% year-on-year. Among major European car-consuming countries, only Spain recorded a year-on-year growth rate of 7.1%, while major EU economies like Germany, France, and Italy experienced declines.

△ Fuel vehicles still occupy an important position in the European market

In terms of powertrain, gasoline car sales topped the EU market with a 33.3% market share, while hybrids and electric vehicles ranked second and third with 30.9% and 13.6% market shares, respectively. The market share of diesel vehicles further shrank. Volkswagen, Stellantis, and Renault remained the top three automakers, with Volkswagen maintaining its unshakeable dominance in the European market. However, Stellantis experienced a year-on-year decline of 7.3%, making it the only one among the top three to decline.

With the popularity of MG models in the European market, SAIC Motor ranked 12th with a year-on-year increase of 5.1% and annual sales of nearly 250,000 vehicles. This suggests that the EU's imposition of the highest anti-subsidy tariffs on SAIC aims to suppress Chinese automakers. In contrast, BYD and Geely have yet to gain significant momentum in the European market, posing a relatively smaller threat to European automakers in the short term. Taking Geely's Lynk & Co. as an example, even with Volvo's support, its performance lags behind MG, a brand native to Europe. Therefore, BYD and Geely still have a long way to go to truly establish a foothold in the European market.

△ Sales ranking of major automakers in the European auto market

If we delve further into electric vehicles, sales in 14 European countries in 2024 totaled 1,584,761 vehicles, a year-on-year decrease of 15.91%. These countries include the UK, Norway, the Netherlands, Spain, Sweden, Denmark, Germany, Italy, Switzerland, Ireland, Finland, Austria, Portugal, and France.

△ With the decline in subsidies, European electric vehicle sales have declined significantly

Currently, the cost of electric vehicles is still significantly higher than that of fuel vehicles. When some countries取消 subsidies for electric vehicles, the decline in electric vehicle sales, including Tesla, becomes inevitable. Notably, Tesla's sales in the European market declined by more than 10% in 2024. Although Tesla's decline outpaced the overall decline in electric vehicle sales in the 14 European countries, with new models constantly being launched by various automakers, Tesla's electric vehicles, which have not been updated for a long time, are gradually losing their appeal to European consumers.

△ Electric vehicle sales of major brands in Europe

How to face European trade barriers

Under the pressure of EU tariffs, Chinese automakers' electric vehicle exports to the European market have been significantly impacted. Except for a few automakers like BYD, Xpeng, and Zeekr, most have seen a notable year-on-year decline in export volumes.

△ Exports of Chinese automakers to Europe in 2024

However, most Chinese automakers find it difficult to abandon the European market. Currently, electric vehicles remain a potent tool for Chinese automakers to penetrate the European market. Nevertheless, the nearly 50% tariff rate has effectively barred SAIC's MG electric vehicles from being exported to the European market as complete vehicles. In contrast, while BYD and Geely also face high tariffs in Europe, they haven't completely lost opportunities. Chinese automakers' cost advantage in electric vehicles is evident and difficult for European counterparts to match in the short term.

△ High tariffs have blocked the export of domestically manufactured MG electric vehicles to the EU

In the future, Chinese automakers will accelerate their efforts to establish factories in Europe. BYD, which is aggressively expanding its European market, has invested in building factories in Hungary and Turkey. Meanwhile, Chery's joint venture factory in Spain has already commenced production. Leaping Auto's production of the T03 at Stellantis' factory in Poland is also nearly finalized. Rumors suggest that Volkswagen may sell its previously planned closed factories to Chinese automakers or introduce Xpeng models for production in Europe, indicating increased collaboration between Volkswagen and Chinese automakers. Additionally, SAIC, Geely Zeekr, and others are likely to accelerate their production pace in Europe in 2025.

△ Models manufactured by Chery in Spain have rolled off the production line

Apart from electric vehicles, Chinese automakers can also consider exporting fuel/hybrid models. Currently, even in fuel vehicles, which are traditionally European automakers' strength, domestic automakers like Geely can compete in terms of manufacturing quality. However, traditional European automakers have significant advantages in technical stability, brand appeal, and sales networks. Unless Chinese brands offer highly competitive prices, it will be challenging for fuel vehicles to penetrate the European market solely based on product strength and cost-effectiveness, although the possibility exists.

△ Plug-in hybrid models are expected to become the "new main force" for Chinese auto exports to Europe

Compared to fuel vehicles, China's hybrid models hold more promise in the European market. The popularity of hybrid models is rapidly increasing in Europe. Post the Russia-Ukraine war, European energy prices soared, and it will take a long time for relations between the EU and Russia to normalize. Therefore, hybrid models, which alleviate range anxiety, offer price competitiveness, and provide better fuel economy, are anticipated to experience a growth surge in the European market.

Commentary

Apart from new energy technology, the strength of Chinese automakers in intelligent connectivity should not be underestimated. They enjoy a generational advantage over multinational automakers in terms of intelligent driving and cabin experiences. Converting these product and pricing advantages into new market share is a test for Chinese automakers, requiring coordination among strategic management, production and manufacturing, and marketing teams to swiftly adapt to European market rules and accelerate local production.

(This article is originally created by Heyan Yueche and cannot be reproduced without authorization)