China has rapidly become the world’s top car exporter, competing with established European brands through competitive pricing and innovative electric vehicles. A recent PwC study suggests that this year may see more Chinese cars entering Europe than vice versa. With over ten million electric and hybrid vehicles produced in a year, Chinese manufacturers are gaining market share, while German companies like Volkswagen and Mercedes face declining sales. Additionally, the integration of smartphones into vehicles is becoming a key selling point for Chinese brands in Europe.
In just a few short years, China has emerged as the world’s leading car exporter. The nation not only challenges established European manufacturers with competitive pricing strategies but is also at the forefront of automotive innovation.
China now holds the title for the highest production and export of cars globally, establishing itself as a technological pioneer in the electric vehicle sector. For any car company aiming for success, keeping an eye on China is essential, as it is here that groundbreaking innovations and trends are taking shape.
A recent study from PwC indicates a potential shift in the traditional trade balance between Europe and China. This year may mark the first instance where more Chinese-made cars enter the European market than European cars exported to China.
German automotive manufacturers are perceived to be slow in adapting to these emerging trends, which could create a favorable environment for car buyers this year.
Over Ten Million Electric and Hybrid Vehicles Produced
The footprint of Chinese automotive and battery companies is expanding rapidly in Europe, while the German automotive market faces dwindling shares in China.
Xi Jinping, the leader of China, announced during his New Year’s address that the country has produced over ten million electric and hybrid vehicles within a single year. This impressive feat underscores China’s significant rise in the global automotive arena.
Notably, four out of ten imported electric vehicles now originate from China, highlighting the increasing dominance of Chinese manufacturers in this segment.
Declining Market Shares for Volkswagen and Mercedes
Reflecting on the past decade, analyst Einar Tangen from the Taihe Institute recalls conversations with German and American automotive executives who were skeptical about China’s ambitions in electric vehicles. Fast forward ten years, and those same executives are now grappling with how to respond to China’s remarkable capabilities in this sector.
The competition posed by China’s electric vehicles is particularly daunting for the beleaguered German automotive industry. Historically, German carmakers, led by Volkswagen, have had a strong presence in the Chinese market, but their market shares are beginning to dwindle.
Chinese consumers are increasingly favoring electric models over traditional combustion engines and gravitating towards domestic brands. In response, BMW, Mercedes, and Volkswagen Group, which encompasses brands like Audi and Porsche, are intensifying their efforts to compete with Chinese manufacturers. Their strategy includes ramping up research and development in China, often in collaboration with local tech firms.
Interestingly, nearly two-thirds of Germans are now open to the idea of purchasing a Chinese vehicle.
The Importance of Connectivity
At recent auto shows, Chinese manufacturers have unveiled their capabilities, showcasing vehicles that seamlessly integrate with smartphones. An employee from the Chinese brand Neta, founded in 2018, emphasized that if it works on a phone, it should work in the car too. The connectivity between smartphone apps and the vehicle’s touchscreen is a significant selling point. These cars aim to be not only electric but also smart, entertaining, and budget-friendly.
Alongside Neta, a plethora of other automotive startups have emerged in recent years. The Chinese government has heavily subsidized this industry, leading to fierce competition where manufacturers are slashing prices to win over customers. This price war could prove unsustainable for some companies and poses a significant challenge to higher-priced German brands.
For Chinese consumers, the integration of entertainment and connectivity features within vehicles is crucial, making the car a smart extension of their mobile devices.
Europe: A New Frontier for Chinese Manufacturers
Chinese automotive companies are increasingly eyeing third markets as viable competitors. Last year, the EU implemented additional tariffs on electric vehicles imported from China. According to an EU Commission study, substantial subsidies from the Chinese government have resulted in overproduction of electric vehicles, allowing these cars to be sold at artificially low prices in Europe, which undermines local manufacturers.
This issue was highlighted by Deutschlandfunk on January 3, 2025, at 5:11 PM.