European policymakers have observed Chinese carmakers steadily gaining ground with affordable and polished electric vehicles, posing a significant challenge to Europe’s automotive industry—a sector that supports over 13 million jobs directly and indirectly across the EU.

Concerns have been raised about the potential dismantling of Europe’s automotive pride following what has been termed the "new China shock." The trade tensions surfaced notably in the electric vehicle sector, with the EU imposing tariffs on Chinese-made EVs last year, prompting retaliatory tariffs from China on European products like cognac, pork, and dairy.

Despite these challenges, a growing number of industry insiders express cautious optimism that European EV brands could achieve cost parity with their Chinese rivals by 2028 or 2029. Harald Hendrikse, European head of autos research at Citi, highlighted that this goal depends on two critical factors: the effective implementation of the "Made in EU" requirements within the proposed Industrial Accelerator Act (IAA) and continued European access to Chinese technology and expertise.

Hendrikse emphasized the openness of the Chinese industry to collaboration with Western manufacturers, stating, "The most important thing is the fact that the Chinese are completely open, the Chinese industry is completely open to working with Western manufacturers, which means that basically, even relatively new Chinese technology is coming very quickly to Europe."

This strategic approach aims to harness Chinese technological advancements to strengthen Europe’s EV competitiveness and preserve a vital industrial sector amid evolving global market dynamics.

Sources

South China Morning Post World