Market Reaches a Period of Calm
After several volatile years, Europe’s automotive sector appears to have regained equilibrium. Figures released by the European Automobile Manufacturers’ Association (ACEA) show that car registrations across the European Union have remained largely unchanged in 2025, marking the end of a prolonged decline. The turnaround reflects improved supply conditions, stable energy prices, and more predictable consumer spending. Electric vehicles continue to drive momentum, representing roughly one-fifth of all new car purchases, as government incentives and charging network expansions fuel adoption across major economies.
Chinese EV Makers Deepen Their Presence
As the European market steadies, Chinese carmakers are rapidly strengthening their position on the continent. Automakers including BYD, MG, and Zeekr have stepped up exports and announced plans for European factories designed to ease the impact of new import tariffs. The European Commission introduced duties of up to 35% on China-made electric cars at the end of 2024, following an investigation into government subsidies. Despite these measures, Chinese brands have continued to gain ground, now holding about 5% of Europe’s passenger vehicle market, particularly in lower-cost and fleet segments where affordability is key.
Traditional Automakers Under Growing Pressure
For Europe’s established players such as Renault, Stellantis, and Volkswagen, steady sales figures have not translated into stronger earnings. The arrival of competitively priced Chinese models has tightened margins and increased the urgency for European companies to cut costs and expand domestic battery production. Industry groups are urging the EU to ramp up support for clean manufacturing and strengthen investment in electric technology to protect jobs and competitiveness. Analysts caution that 2026 will be pivotal in determining whether Europe’s automakers can adapt quickly enough to remain leaders in an increasingly global and electrified market.
