‘MADE IN CHINA = CHEAP CAR?’: How Chinese EVs Are Rewriting the Rules in Europe

Years ago, Chinese EVs at the IAA were afterthoughts—small booths tucked near the exit, overshadowed by European legacy brands’ flashy launches. This year? The script flipped.

Chinese EV (Electric Vehicle) s began their serious push into the EU (European Union) market around two years ago. In the European market, where traditional automotive giants abound, especially in the "home ground" of BBA (Benz, BMW, Audi) brands like Mercedes-Benz, BMW and Audi, the rise of Chinese automakers has not been easy. However, in today's European auto market, Chinese EVs have become some of the most sought-after vehicles. The market share of Chinese EVs has reached close to 10% of the whole market, with brands like BYD (Build Your Dreams) seeing a five-fold year-on-year sales increase, a dramatic expansion fuelled by ultra-high-cost performance, long-range batteries, and technology that often leads the global market.

At the IAA (Internationale Automobil-Ausstellung) Mobility 2025 has just ended in Munich, CATL (Contemporary Amperex Technology Co. Limited) ’s NP3.0 (New Product 3.0) technology platform drew circles of industry analysts, BYD’s Megawatt Flash Charging had attendees taking notes, and even the coffee stands nearby buzzed with one question: How did Chinese EVs go from “observers” to the show’s main attraction? This shift represents more than just a market disruption; it's a fundamental breakdown of the deep-seated Western perception that ‘Made in China’ signifies cheap imitation, achieved through superior product differentiation.

This newfound competition benefits European consumers immensely. They now enjoy a wider array of choices across various price points and vehicle segments. More importantly, their market power has increased, as automakers are now forced to compete more aggressively on both price and features. For Chinese EV brands, success in Europe translates to massive growth in overseas sales and profits. Crucially, gaining a foothold in the mature and demanding European market serves as the ultimate validation of their brand power and quality, boosting their credibility worldwide. They can have access to the strict technical and environmental protection standards of the European Union, which in turn promotes their own technological upgrades and the improvement of compliance capabilities.

Consider the growth rates from the last six months: while sales of the top-selling Volkswagen EV model grew by an impressive 67%, BYD's sales skyrocketed by 140% in comparison. This stark contrast underscores how Chinese EVs have fundamentally reshaped the competitive landscape of the European auto industry, forcing all participants to make strategic adjustments. In response, European firms are accelerating the pace of technology development, particularly in battery tech and software iteration. Product prices are being driven down across the board due to this new pressure. Furthermore, the competition is promoting greater integration of the EU's domestic EV supply chain, incentivizing investments in local battery production to reduce reliance on external sources. Some less competitive smaller firms may even be acquired or forced out of the market. Paradoxically, by successfully acting as pioneers, Chinese brands have lowered the barrier for other new entrants, providing a blueprint and boosting confidence for other potential players.

Regarding the impact on the EU auto industry, China and the European Union have reached a significant breakthrough in the dispute over anti-subsidy taxes on new energy vehicles. Both sides have agreed to replace the punitive tariffs imposed by the EU starting from 2024 with a minimum price commitment mechanism, which marks a shift from "confrontation" to "rule negotiation" between China and Europe in the competition of green industries. This competitive pressure triggered a protectionist response from the EU, which imposed countervailing duties of 17% to 35.3% on Chinese EVs last year. However, in a significant de-escalation, a new agreement has been reached. Instead of punitive tariffs, a ‘minimum price commitment’ mechanism is being finalized. Chinese automakers would commit to selling their cars above a set price floor (reportedly between €35,000 and €40,000), effectively neutralizing their most potent weapon: the price advantage.

These policies are designed to protect local firms and industry, but they might affect the EU's car market as well. For example, the price level of cars in the EU could rise, which is not beneficial for the Green Transformation of EU and harmful to local consumers' interests. Also, this may disturb the global electric vehicle supply chain, as frictions in international trade would bring instability.

In the short term, cooperation between Chinese EV firms and local brands may become more common. Therefore, the market share of Chinese firms would increase to 8%-10%. For a longer time period, this ‘shattering of prejudice’ will create a chain reaction. Cutting-edge Chinese technologies would enter the EU supply chain through EVs, like in-vehicle chip technology and intelligent driving assistance systems, etc., which will have a deeper impact on the EU’s industrial ecosystem.

The conversation in Europe has irrevocably shifted. It is no longer about whether Chinese EVs are ‘good enough’, their technology and sales figures have answered that. The new, more profound question is how legacy automakers will adapt to a world where ‘Made in China’ no longer signals a bargain bin alternative, but a benchmark for value and innovation. The IAA floor wasn’t just a display of new cars; it was the unveiling of a new world order, and the race is on, not to build walls, but to build the best car for a transformed global market.