Chinese Automakers, Don't Push Europe to the Brink

Quietly making money, or jumping up to become a target.

Still waters run deep.

On one hand, domestic car groups are issuing statements supporting the China-EU trade negotiations on automobiles.

On the other hand, the Chinese automobile industry, suppressed for half a century, is marching towards Europe en masse. Behind 40% of the exhibition stands at the Paris Motor Show lies a life-or-death situation concerning the next three to five years.

The ambitions displayed by major listed Chinese automakers are not just seen by Europeans. This is vastly different from 20 years ago when European media mocked them as "a pile of scrap iron from China". Today's Chinese cars are far from what they were.

On October 12, the 91st Paris Motor Show opened at the Porte de Versailles. "AutosKline" found that 16 Chinese automakers participated with 25 brands, accounting for about 40% of all participating automotive brands.

At the same time, the market share of Chinese automotive brands in Europe has risen from less than 1% 5 years ago to 10.8% currently. In the first half of 2026, Chinese brands accounted for about 9% of new car sales in the EU.

Compared to the grand scale of Chinese automotive brands' participation, more attention should be paid to the stance shown by Chinese automakers in this away game and the European response.

Perhaps, the proud Chinese automobile industry should learn from Volkswagen and Toyota how to localize. This is the long-term path for Chinese automakers going overseas. As Chinese automakers, during this special period, don't push Europe to the brink.

01

Li Ke, Global Vice President and Top Executive of BYD in Europe, publicly stated before the Paris Motor Show, hoping to surpass Volkswagen Group and Toyota Motor Corporation to become the world's largest automobile manufacturer within 5 years, emphasizing that this goal can be achieved even without entering the US market.

XPeng Group Chairman He Xiaopeng announced during the Paris Motor Show that the company's goal is an annual global sales volume of 1 million vehicles by 2030, with Europe accounting for half, i.e., 500,000 vehicles, listing Ford and Opel as benchmark targets.

"Image Source: XPeng"

Li Ke's and He Xiaopeng's bold words, from a commercial communication perspective, are unassailable. People hearing this cannot help but feel proud of the strong rise of Chinese automobiles.

"AutosKline" also believes that, leveraging first-mover advantages in electrification and intelligence, the Chinese automobile industry has achieved overtaking on a curve against traditional US and European automotive powers in a sense, and using this opportunity to remove the hat of "low price and low quality" placed on the Chinese automotive industry.

However, we should also note that these achievements made by the Chinese automobile industry appear exceptionally sensitive in the current European economic environment, and seem extremely glaring to Europeans.

The automotive industry is a pillar of the European economy, and even more so for Germany.

02

The Ford mentioned by He Xiaopeng, though an American brand, has taken root in Europe for a long time, delivering over 426,000 vehicles in Europe in 2025; Opel, a purebred European native brand, had new car registrations of about 400,000 in the same year.

At the same time, however, while Chinese automakers are making a massive entry into Europe, the days of European local automakers are not going well.

Volkswagen Group's operating profit in 2025 dropped significantly, while another European giant, Stellantis Group, suffered huge losses. Losses, factory closures, and layoffs have become common fare in the European automotive industry over the past two years.

According to data from authoritative European institutions, the business sentiment index for the German automotive industry continues to decline, dropping as low as -35 points in September of this year.

In the same month, the German Metalworkers' Union launched a large-scale worker demonstration, protesting layoffs and demanding the government protect the local industry from the impact of low-price imported products.

Italian unions even directly suggested that once Chinese brand car registrations in Europe exceed 8%, the excess portion should be taxed at 80%.

Under this industrial sentiment, Chinese automakers' declarations to "become number one globally" and "take 500,000 vehicles from opponents like Ford and Opel" are providing the most easily cited evidence for European protectionist forces.

The Volkswagen Group union has directly suspended capacity cooperation negotiations with Chinese enterprises.

"AutosKline" believes that in a market where the automotive industry directly relates to millions of jobs, and these jobs are disappearing at an alarming speed, loudly declaring intentions to replace creates political communication risks that are actually far greater than the commercial communication benefits.

03

Turning back to the domestic situation, recently, the second regular meeting of the China-EU Trade and Investment Consultation Mechanism held in Beijing reached a consensus, securing a phased stable expectation for Chinese automakers.

Regarding hybrid vehicles, both parties reached an "upward arrangement" based on the import of 302,000 hybrid vehicles from China to the EU in 2025, with a fixed increase annually, and the quota obtained by the Chinese side will not be lower than any other import source for the EU side. Regarding electric vehicles, the anti-subsidy case was successfully navigated in January 2026, with a price commitment mechanism replacing high taxes.

However, it is worth noting that stability does not mean loosening.

Price commitments mean that the selling price of Chinese electric vehicles in Europe cannot be lower than local models of the same class; the competition logic is forcibly shifted from price-performance driven to brand and technology driven. Although the hybrid vehicle quota is "arranged upwards", the existence of the quota itself means the growth space has a ceiling.

More crucially, tightening at the regulatory level is accelerating. The EU's "Industrial Accelerator Act" proposes that electric vehicles must have a local component content of at least 70% to qualify for subsidies, with the European Parliament further raising this to 75%.

Macron stated during the Paris Motor Show that France is finalizing an agreement with Germany to "better protect our industry", with the core exchange being France's concession to Germany on the gasoline car ban in exchange for Germany's support for strict "Made in Europe" rules.

This means the time window secured at the trade level is precisely the last opportunity for Chinese automakers to complete their localization layout.

04

Facing regulatory tightening and public opinion pressure, the response of China's major listed automakers is shifting from exporting products to embedding into systems.

As the Chinese listed automaker most successful in international operations, Geely Motor effectively integrates existing capacity through cooperation to achieve overseas development, which is also the way that best considers European industrial sentiments and ensures local employment and economy.

For example, relying on the acquisition of Volvo to form system asset reuse is the path with the earliest start and deepest accumulation for Chinese automakers in internationalization.

Recently, Geely acquired 34% equity in Ford's Valencia factory in Spain for 221 million Euros, gaining European local manufacturing capabilities with capital investment far lower than building a factory from scratch.

"Image Source: Geely"

Lynk & Co under Geely utilizes Volvo's dealer network deeply cultivated in Europe for decades to achieve channel implementation. Starting from January 2027, Volvo will become Lynk & Co's exclusive dealer in Europe.

Chery's path focuses more on local embedding of manufacturing and R&D. Chery and Spanish automaker EBRO established a joint venture, utilizing the former Nissan factory in Barcelona for production, with an annual capacity target of 30,000 units, aiming to increase to 150,000 units by 2029.

In April this year, Chery launched its European Operations Center and Spanish Research Institute in Barcelona, intending to perfect its global R&D network.

Leapmotor chose a lighter path. It established Leapmotor International Joint Venture with Stellantis Group. Stellantis holds 51% shares, Leapmotor holds 49%, and the B10 model has officially started production at the Stellantis Zaragoza factory in Spain.

"Image Source: Leapmotor Official Account"

BYD Hungary Passenger Car Plant total investment is 4 billion Euros, Phase 1 capacity is 150,000 units, planned to start assembly in the fourth quarter of 2026.

05

In the view of "AutosKline", there is a common logic behind these localization layouts: using local employment, local taxes, and local supply chains to offset the European political accusation of "stealing bowls".

At this Paris Motor Show, Chinese automakers such as Changan, GAC, Geely, Chery, XPeng, etc., all raised localization slogans similar to "In Europe, For Europe", showing determination to take root locally.

When a Chinese automaker's European business is managed by a European team, produced in European factories, and sold through European brands, the political rhetoric against Chinese cars loses its most direct target.

However, the weak point of this strategy is also obvious. Localized production means Chinese automakers must face Europe's most solid institutional barrier — unions.

Volkswagen union holds half the seats on the supervisory board, possessing institutional veto power on factory closures and production line modifications. The salary standards and working condition requirements of the German Metalworkers' Union may significantly erode the cost advantages of Chinese automakers.

"In Europe, For Europe", which is good intentions to create employment in Europe, can completely be interpreted by unions as a threat to replace original decent jobs with low-wage positions.

06

Obviously, a considerable portion of Europeans still harbor bias against Chinese cars. And this bias can only be eliminated by time and personal experience.

Therefore, "AutosKline" always believes that regardless of whether strategic communication is radical or restrained, regardless of whether the degree of localization is deep or shallow, product quality is always the fundamental bottom line determining whether Chinese cars can stand in Europe.

Chery OMODA 5's axle breakage accident in Malaysia was reported by European media. The same model, same structural position broke twice within two years, constituting an almost unrefutable fact.

How future Chinese automakers can avoid systematic design or manufacturing defects, especially in the European market which has extremely high reliability requirements, is a key topic.

The Maextro V800 brake pedal bracket breakage event jointly developed by Huawei and JAC Motors also spread to Europe along this wall of the internet.

These two incidents coincided with the existing prejudice against the reliability of Chinese cars in the European market, giving European protectionist forces a moral high ground that requires no argumentation.

The trust of European consumers in Chinese cars itself is like an account with almost no deposits. Every safety accident is a direct deduction, while every reliable delivery is a deposit. In this account, safety failure is a zero-tolerance event.

It cannot be denied that Europe's high oil prices, Europe's automotive industry's delayed transformation, China's first-mover advantage in electrification, these conditions can not only allow Chinese brands to rise rapidly, but also cause them to suffer collectively due to quality, political, or strategic mistakes during the rise.

The window period left for Chinese automakers is roughly three to five years. During this time, Chinese brands have the opportunity to complete the cognitive shift from "cheap Chinese cars" to "trustworthy brands" in the hearts of European consumers.

Views of AutosKline:

Fullness invites loss, modesty brings gain. Chinese people value long-term flow. It's not about not making money, but earning sustainable money. Low-key is not about lacking ambition, but putting ambition into product quality, localization systems, and brand trust.

The overseas expansion of the Chinese automobile industry is not an overnight achievement. It changes the hundred-year landscape of the world's automotive industry, which requires sufficient patience from us.

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