Europe Prepares New Barrier: Chinese Firms Take Over Car Factories

European automakers are calling for stronger protection against Chinese competition, urging EU authorities to implement transparent "Made in Europe" rules to support the local automotive industry. Volkswagen, Stellantis, and Renault, collectively responsible for about 60% of car production in Europe, sent a letter to members of the European Parliament last week. They propose that 70% of vehicles sold in the European Union must have 70% of their value generated within Europe.

This proposal extends beyond final assembly to include vehicle design, engineering, and the production of components and batteries. The automakers believe such measures would enhance cost competitiveness, ultimately making electric cars more affordable and popular. "We want to offer clean, affordable, and technologically advanced cars to the European middle class," the manufacturers stated in their letter.

The urgency stems from the increasing pressure European car manufacturers face from Chinese competitors, particularly in the electric vehicle segment. While EU carmakers are cutting production plans, Chinese manufacturers are expanding theirs. LMC Automotive forecasts that European production of fully electric vehicles will reach approximately 8.2 million units in 2032, a significant reduction from the previous year's projection of 10.3 million. Forecasts for the 2026–2032 period have been collectively reduced by 10 million vehicles compared to earlier estimates.

"The transformation in Europe is progressing slower than anticipated. Forecasts reflect weaker-than-expected demand for electric vehicles and growing uncertainty about the future competitiveness of European industry," commented the Association of Distributors and Manufacturers of Automotive Parts (SDCM). In contrast, China's electric vehicle production forecast for 2032 has been raised to over 10.9 million vehicles, with projections for 2026–2032 now nearly 7 million vehicles higher than a year ago. This growth is attributed to substantial government support and rapid scaling of production.

Analysis by Oxford Economics reveals a stark difference in investment. While European automotive suppliers maintained annual investments in factories, machinery, and technology around $42–43 billion between 2021 and 2026, Chinese firms' investments surged by 57% during the same period, reaching approximately $115 billion by 2026. "European suppliers have been investing in the development of electromobility for years, but rising energy costs, labor..."

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We want to offer clean, affordable, and technologically advanced cars to the European middle class.