economy
February 10, 2026
Will Europe let China crush its car industry?
Europe’s automotive industry is under growing pressure from China. European automakers are steadily losing market share to Chinese vehicle manufacturers and, in some cases, reporting significant financial losses. Europe’s political leadership should have anticipated this challenge and adopted policies to strengthen and protect the continent’s domestic auto sector.
TL;DR
- Chinese vehicle manufacturers have increased their share of the European car market to approximately 10%, up from 3% two years ago.
- European automakers like Stellantis and Mercedes-Benz are experiencing financial losses and declining sales.
- China's success is attributed to state-directed industrial policies, providing subsidies and financing that allow Chinese exporters to underprice competitors.
- Chinese companies are establishing factories within Europe to avoid tariffs, with BYD constructing facilities in Hungary and planning another in Turkey.
- China's dominance in global battery production gives its automakers a significant cost advantage in the electric vehicle market.
- There is a geopolitical concern that China could leverage its manufacturing strength, particularly in EV supply chains, for political influence.
- Recommendations for Europe include reducing business taxes, allowing market demand to guide the EV transition, and reconsidering costly energy policies.
- The article advises the U.S. to recognize China as a strategic adversary and continue policies to prevent Chinese automakers from entering the U.S. domestic market.
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