Summary of Key Points
Since 2026, Chinese automakers such as Geely, Chery, and Leapmotor have flocked to the European market. By acquiring factories (for example, Geely purchased a 34% stake in Ford's Spanish plant) and accelerating local production, they have taken advantage of rising oil prices due to geopolitical conflicts, resulting in a 118% increase in sales for Chinese brands in Europe year-on-year. However, there are three major obstacles in the European market: high and unstable electricity prices (unaffordable for consumers and costly for automakers), conservative consumer attitudes towards pure electric vehicles (prefering hybrid models over pure electric ones), and inconsistent policies (the ban on fuel vehicles by 2035 has been relaxed). These factors pose long-term challenges to the expansion of Chinese automakers in Europe.
I. Chinese Automakers Making a Big Move in Europe: Surge in Sales, but with a "Temporary" Boost
Chinese automakers have been very active in Europe this year: Geely acquired Ford's Valencia plant in Spain (with an annual production capacity of 400,000 to 500,000 vehicles, one of the top manufacturing bases in Europe), while Chery and Xiaomi have established research and development centers and joint-venture factories. Sales figures are impressive: new vehicle registrations in Europe increased by 13% in June, with Chinese brands growing by 118%, far outpacing local players like Volkswagen and Renault.
However, this growth is driven by a temporary opportunity created by high oil prices. Geopolitical conflicts have pushed European fuel prices to the "2 euro era," significantly increasing the cost of using fuel vehicles, which has given electric vehicles (especially hybrids) a temporary advantage. Once oil prices fall, this advantage may disappear, and whether Chinese automakers can sustain their growth will depend on the long-term market conditions.
II. Electricity Prices: A Double-Edged Sword
(1) Consumers: Electric Vehicles Aren't Necessarily Cheaper
Electricity prices in Europe are not only high but also highly volatile:
- High costs for public charging: A quick charge for 100 kilometers in Germany costs 12 euros, similar to the cost of fueling a vehicle (6 liters × 2 euros = 12 euros).
- Additional expenses for home charging: Installing charging stations and photovoltaic equipment can cost thousands of euros, which is unaffordable for most households. For example, a German car owner gave up on buying an electric vehicle even with subsidies and opted for a battery-powered vehicle instead, considering it a luxury.
(2) Automakers: Struggling with High Energy Costs
Europe relies heavily on natural gas for electricity, and the tensions between the US and Iran have led to increased prices:
- Energy costs for British companies are 70% higher than before the Russia-Ukraine conflict, with 90% of companies seeing increases in their energy bills and 40% reducing their investments.
- The situation is even worse for the manufacturing sector: High electricity prices have depressed the German manufacturing industry.
- Additionally, AI data centers are competing with automakers for electricity. The EU plans to triple the capacity of data centers within five years, and data centers already account for 18% of a country's electricity consumption in some European countries, putting even more pressure on automakers' energy needs.
III. European Consumers Unenthusiastic about Pure Electric Vehicles; Hybrids as a Temporary Solution
European consumers are much less receptive to pure electric vehicles than Chinese ones:
- Data shows that while BYD's sales of plug-in hybrids have increased by 260% in the EU, those of pure electric vehicles have only increased by 78%; Chery's plug-in hybrid sales have risen by 668%, but pure electric vehicle sales have only reached 2,247 units. As of November 2025, the proportion of pure electric vehicles in the EU was only 16.9%, far below policy targets.
- There are two main reasons for this:
① Practical concerns: Concerns about range and high charging costs.
② Emotional attachment to fuel vehicles: 73% of fuel vehicle owners prefer to continue using them in the long term, with even celebrities like Mr. Bean publicly questioning the environmental benefits of electric vehicles. Hybrids are a compromise due to high oil prices, not a true acceptance of pure electric technology.
IV. Uncertain Policies Dampen Market Confidence
European policies on electrification have been highly inconsistent:
- A ban on fuel vehicles by 2035 was passed in 2023 but relaxed at the end of 2024.
- Surveys show that 68% of Germans support the relaxation of this policy, indicating a conservative attitude among consumers that outweighs their willingness to change.
This uncertainty makes it difficult for automakers to make significant investments (such as building pure electric factories), and consumers are reluctant to switch to electric vehicles, adding further instability to the market.
Conclusion
The expansion of Chinese automakers in Europe presents both opportunities and challenges. Short-term gains due to high oil prices have led to surge in sales, but long-term obstacles such as high electricity costs, conservative consumer attitudes, and unstable policies must be overcome. To conquer the European market, Chinese automakers need not only strong products but also wait for Europe to address its energy issues and for consumer attitudes to change, which may take longer.