A storm is brewing in the European automotive industry. The rising tide of affordable electric vehicles from China is not just challenging established carmakers – it’s igniting a fierce debate within Brussels and sparking fears of widespread job losses across the continent.
European governments, desperate to protect their national automotive champions, are clamoring for action. The European Commission finds itself in a precarious position: navigate a potential trade war with China while simultaneously attempting to revitalize a struggling economy. The stakes couldn’t be higher.
The initial response was tariffs – levies of up to 35.3 percent imposed on Chinese EVs after an investigation revealed unfair subsidies were giving them a significant price advantage. But tariffs alone weren’t enough. Now, the EU is exploring a novel approach: asking Chinese manufacturers to voluntarily commit to minimum prices for vehicles exported to Europe.
This isn’t simply about price fixing. The Commission is also open to commitments from Chinese companies to invest within the EU or limit their export volumes. Any such offers will be scrutinized to ensure they genuinely offset the impact of subsidies and are realistically achievable.
So far, only one company has submitted a price undertaking, the details of which remain undisclosed. The Commission insists it’s ready to consider more, but only if they demonstrably address the competitive imbalance. The question looms: how cheap is *too* cheap when the future of an industry hangs in the balance?
Calculations reveal Chinese manufacturers currently enjoy a roughly 20 percent price advantage in the European market. While tariffs aim to level the playing field, experts like Ferdinand Dudenhöffer remain skeptical. He points out that Chinese companies still have considerable room to lower prices, even with the added costs.
The pressure is immense. The EU automotive industry directly employs around 6 million people, with another 6 million jobs linked to the sector. But since 2019, job losses have accelerated, with approximately 100,000 positions cut in 2024 and early 2025 alone. France, Germany, Italy, and Eastern European nations are all feeling the strain.
The surge in Chinese EV sales isn’t limited to vehicles bearing Chinese brands. Many Western automakers now manufacture cars in China, contributing to the growing influx. This complex dynamic is reshaping the European automotive landscape.
Germany, historically a global automotive powerhouse, is particularly vulnerable. While EV sales are rising, Chinese manufacturers are gaining ground, even with tariffs in place. BYD, now the world’s largest EV maker, saw its German sales soar by over 700 percent last year.
The situation is further complicated by declining sales of German brands *in* China. Volkswagen, Mercedes-Benz, and BMW are all facing intense competition from local producers, with sales dropping significantly in 2025. The tug-of-war is impacting the entire industry.
Even Bulgaria, a smaller player in the automotive world, is feeling the ripple effects. As a key supplier of components to European manufacturers, its fate is intertwined with the health of the broader industry. Chinese expansion in Southeast Europe adds another layer of complexity.
Experts predict further contraction in the German and European automotive sectors as production shifts to Asia and the US. The future, according to Dudenhöffer, belongs to Asian carmakers. “Growth is taking place in Asia,” he warns, “and Asian manufacturers are increasingly dominating the car business.”
Adding to the turmoil, the EU has recently rolled back its planned 2035 ban on new petrol and diesel cars. Originally intended as a cornerstone of its climate strategy, the ban has been softened, allowing automakers to continue selling polluting vehicles – albeit with emissions reductions – beyond that date.
This decision, slammed by environmental groups as a step backward, reflects the urgent need to support the struggling automotive industry. While the EU insists its green ambitions remain intact, the compromise has drawn criticism from both environmentalists and industry leaders.
The future of European carmakers may depend on their ability to thrive in the Chinese market, developing and building EVs specifically for Chinese consumers. As Dudenhöffer bluntly puts it: “If you’re not in China, you’re not in the car business.”
