The rapid expansion of Chinese electric vehicle (EV) manufacturers in Europe, which had seen a promising surge over the past five years, has come to a halt in 2024. This shift is attributed to a combination of trade barriers, including new European Union (EU) tariffs, and a broader slowdown in the European car market.
According to automotive research firm Dataforce, Chinese brands such as SAIC Motor Corp.’s MG, BYD Co., and Xpeng Inc. registered 3.5% fewer EVs across Europe in 2024, marking the first annual decline since they entered the market. As a result, their combined market share in the region dropped to around 8.5%. December was particularly challenging for Chinese carmakers, with their market share dipping slightly to 8.2% despite a minor uptick in November.
A key factor contributing to this slowdown is the EU’s imposition of new tariffs, which began in December following a ruling that Chinese-made EVs benefited unfairly from state aid. These levies, which can exceed 45% in the case of MG, have had a significant impact on sales. Originally set to take effect in July, the tariffs were delayed and subject to extensive negotiations. However, they remain a contentious issue, even among non-Chinese manufacturers. Companies like Tesla Inc. and BMW AG have filed lawsuits in an attempt to block the tariffs, arguing that they will distort the competitive landscape.
For MG, which was once the top-selling Chinese EV brand in Europe, the impact of the tariffs has been stark. Following a pre-emptive inventory push in June to beat the original tariff deadline, the brand has seen a sharp drop in sales, losing its position as the leading Chinese brand in the region. In contrast, BYD, despite facing a 17% surcharge on top of the standard EU import duties, has continued to push forward. The Chinese giant has made inroads into countries like Greece and has partnered with French car-leasing company Ayvens SA to target corporate clients. Additionally, BYD is progressing with plans to build a factory in Hungary to circumvent the new tariffs, and has also announced plans for a $1 billion plant in Turkey, which has a customs union agreement with the EU, exempting BYD cars built there from the duties.
Xpeng Inc., another Chinese player, has secured its spot as the third-largest Chinese EV manufacturer in Europe, having made substantial progress in countries such as Denmark, Norway, and the Netherlands. According to Dataforce analyst Julian Litzinger, Xpeng’s strategy of targeting EV-friendly nations has helped maintain its position in the market.
Despite the setbacks caused by the EU tariffs, Chinese manufacturers are still seen as an “existential threat” to European carmakers, according to a January report by automotive researcher Jato Dynamics. This is particularly true given the rapid growth of EVs in the Chinese market and the fact that Chinese manufacturers are gaining ground in emerging markets, where they offer more affordable models. However, European consumers have not yet seen the same pricing benefits. For instance, BYD’s Atto 3, priced at €37,990 in Germany before subsidies, is 44% cheaper in China, according to Jato. Similarly, the MG4, a popular small SUV from MG, costs £26,995 in the UK, but is much less expensive in China.
More Read
The price advantage of Chinese EVs is one of the reasons why BYD, despite the additional tariffs, is able to continue its expansion. Unlike European carmakers such as BMW and Tesla, who are also subject to the EU tariffs, Chinese companies have greater flexibility to absorb the added costs due to their lower manufacturing expenses.
BMW has been vocal in its opposition to the tariffs, arguing that the added fees will not enhance the competitiveness of European manufacturers. Instead, they will slow the decarbonisation of the automotive industry and harm the business models of globally active companies. In its objection, BMW also called for a negotiated agreement between Brussels and Beijing, warning that a trade conflict would ultimately lead to losses on all sides.
As the European market continues to navigate these challenges, the future of Chinese EVs in the region remains uncertain. While the tariffs have dampened their momentum, the overall trend of growing competition from Chinese manufacturers cannot be overlooked. The coming months will be crucial in determining whether European policymakers can strike a balance that encourages both fair competition and the decarbonisation of the automotive industry.
