Chinese Electric Cars Surge Across Europe

The Chinese Electric Wave: Can Europe's Carmakers Survive the Surge?

A new force is reshaping the global automotive industry. Chinese electric cars, increasingly sophisticated and affordable, are arriving on British and European shores. This influx promises more choice for consumers but presents a monumental challenge to established manufacturers. As these sleek, tech-laden vehicles become a common sight, questions surrounding trade, security, and the future of Europe's industrial heartlands intensify. The automotive world is on the cusp of a revolution, and its epicentre is in China.

A Seagull Lands in Europe

In its homeland, the vehicle is known as the Seagull. The name suits its sharp, streamlined appearance, with bright, angled headlamps that seem to convey a playful character. This small car, created for affordable urban travel, carries enormous significance. It has proven immensely popular in its home market since its 2023 introduction and recently debuted in European territories under the Dolphin Surf moniker, a change apparently motivated by differing continental preferences compared to the tastes of Chinese consumers.

When the vehicle becomes available for purchase in Britain, expectations place its asking price near £18,000. In the context of Western vehicle pricing, this would still be an exceptionally low-cost option. It will not, however, hold the title for the most inexpensive model available. The Leapmotor T03, produced by a partnership between Chinese firm Leapmotor and the corporation Stellantis, is priced lower. Additionally, the Dacia Spring, a joint manufacturing effort between Renault and Dongfeng in Wuhan, is also more affordable.

Despite this, the debut of the Dolphin Surf has caused the greatest apprehension among legacy automakers. The reason for this anxiety lies with the corporation responsible for its creation, which is making increasingly significant global moves.

Image Credit - BBC

The Unstoppable Rise of BYD

BYD already stands as the dominant force within China. The company surpassed Tesla during 2024, earning the title of the world’s foremost producer of battery-powered automobiles. Since its arrival on the European scene two years prior, the firm has pursued an ambitious growth strategy. According to Steve Beattie, who is the UK director of sales and marketing for BYD, the company's ambition is to secure the leading position in Britain's market within a decade.

This move contributes to a larger movement of Chinese corporations and their products, which some observers feel could reshape the worldwide vehicle sector. This trend has already elicited decisive responses from both the European Union and the United States government. The goal is ambitious but reflects a company brimming with confidence. BYD aims for half of its total sales to come from international markets by 2030, with a primary focus on Europe and Latin America.

A New Automotive Landscape

This expansion means that previously obscure names such as Xpeng, Zeekr, Omoda, or Nio could soon become as recognizable to consumers as Volkswagen or Ford. These newcomers will stand alongside heritage marques like Lotus, Volvo, and MG, all of which have operated under Chinese stewardship for several years. The selection of vehicles is vast, covering a spectrum from compact city cars like the little Dolphin Surf to high-performance supercars such as the U9, a vehicle from the premium Yangwang sub-brand of BYD.

David Bailey, a professor at the Birmingham Business School specializing in business and economics, notes that Chinese manufacturers are achieving substantial European market penetration. In 2024, global sales of battery and plug-in hybrid automobiles reached 17 million, with 11 million of those transactions in China. Concurrently, Chinese companies captured a ten percent share of battery-electric and plug-in hybrid deals outside their home territory. Forecasters anticipate that this percentage will only increase.

The Consumer Advantage

For buyers, this development should represent positive news, resulting in a wider availability of high-caliber, reasonably priced electric automobiles. The fierce competition within China's domestic market has driven innovation and, crucially, pushed prices down. As these companies look abroad, European buyers stand to benefit from this relentless drive for efficiency and market share.

The BYD Dolphin Surf serves as a key illustration of this trend. Even with its starting price, it offers specifications that challenge competitors in higher price brackets. The availability of such vehicles can accelerate the shift to electric mobility, making it accessible to a broader segment of the population and supporting national climate goals.

China’s Industrial Blueprint

China's automotive sector has undergone swift evolution since the nation’s 2001 accession to the World Trade Organisation. This advancement gained significant momentum in 2015 with the Communist Party's "Made in China 2025" policy. This decade-long initiative, designed to establish the nation as a forerunner in various cutting-edge fields including electric vehicles, drew sharp condemnation from other countries. The United States, in particular, leveled accusations of coerced technological handovers and intellectual property violations, claims that officials in Beijing have consistently rejected.

Buoyed by generous government financial support, the strategy provided the foundation for the explosive expansion of businesses like BYD, which started as a supplier of mobile phone power cells. The plan also helped the Chinese parent corporations of Volvo and MG, Geely and SAIC respectively, to emerge as significant forces within the battery-electric vehicle space. Dan Caesar, who leads Electric Vehicles UK as its chief executive, asserts that the overall quality of Chinese automobiles is remarkably high.

An Uneven Playing Field?

Opponents have contended that inexpensive labor within China, combined with state financial aid and a highly developed parts network, has provided Chinese businesses with an upper hand. A study distributed by the Swiss financial institution UBS in late 2023 indicated that BYD on its own could produce vehicles at a cost 25% lower than its Western counterparts. This cost advantage is a formidable weapon in a price-sensitive market.

Chinese companies refute the suggestion that the competitive environment is skewed. Brian Gu, the vice chairman of Xpeng, conveyed to the BBC at the 2024 Paris automotive exhibition that his firm is successful because it has persevered within the world’s most intense marketplace. They argue that intense domestic rivalry, not state support, has honed their efficiency and innovation, preparing them for global competition.

Image Credit - BBC

The West Strikes Back with Tariffs

Anxieties that imported Chinese electric vehicles could inundate global markets to the detriment of incumbent producers escalated to a critical point in 2024. In America, the Alliance for American Manufacturing issued a stark caution that such imports could be catastrophic for the nation's industry. Meanwhile, Ursula von der Leyen, the European Commission president, pointed to what she described as "massive government assistance" for Chinese companies as a force upsetting the European landscape.

The administration of President Biden implemented a severe measure, increasing import duties on electric vehicles made in China from twenty-five to one hundred percent, a move that essentially eliminated the business case for selling them within the U.S. This action was decried by Beijing, which labeled it "blatant protectionism." Concurrently, in October 2024, the European Union levied supplementary duties reaching as high as 35.3 percent on electric vehicles manufactured in China.

The UK’s Open-Door Policy

While the US and EU erected trade barriers, Great Britain has, so far, taken no such action. This has made the UK a particularly attractive and vulnerable market for Chinese manufacturers looking to expand their footprint in Europe. The UK government has prioritised keeping markets open, resisting pressure to impose punitive tariffs like its international partners.

This stance is partly because the UK lacks a large-scale domestic EV manufacturing sector to protect. For consumers and fleet operators, a tariff-free market supports the growth of vehicle financing and leasing, making EVs more affordable. However, this divergence from the EU could jeopardise existing preferential trade arrangements, such as tariff-free EV trade between Britain and the bloc.

Brussels and Beijing Seek a Truce

Recently, the EU and China have started negotiations to find an alternative to the contentious tariffs. Discussions are underway to potentially set minimum prices for Chinese-made electric vehicles. This move could de-escalate trade tensions that have also affected other sectors, such as French cognac makers who faced retaliatory measures from Beijing.

Trade Commissioner Maros Sefcovic and China's Commerce Minister Wang Wentao have instructed their teams to find a resolution that satisfies World Trade Organisation standards. While talks are in their final stages, more work is needed. In return for a potential deal on EVs, China has agreed to speed up approvals for rare earth exports to Europe, highlighting the complex interplay of modern trade negotiations.

Europe’s Carmakers Race to Compete

Faced with this challenge, European manufacturers are working diligently to create their own budget-friendly electric automobiles. The French automaker Renault is one of them. Inside its facility in Douai, located in the country’s northeast, a legion of robots that emit sparks fastens together steel segments to construct vehicle frames. Along the primary assembly line, robotic mechanisms join the car bodies with their corresponding doors, power units, and engines, after which human technicians perform the final assembly tasks.

The plant has been assembling automobiles for Renault since 1974, but the dated manufacturing lines were swapped out four years prior for modern, highly robotic, and digitally managed equipment. A Chinese-owned battery company, AESC, also assumed control of a portion of the property, where it established its own neighboring "gigafactory." This is a component of Renault’s more extensive strategy to create a technologically advanced electric vehicle "center" in the north of France.

Leaning on a Rich Heritage

European companies are also leveraging an asset that its Chinese competitors lack: a deep-rooted history. The newest Renault model, the Renault 5 E-tech assembled in Douai, draws its name and style from one of the brand's most celebrated creations. The initial Renault 5, which first appeared in 1972, was a distinctive, small, everyday vehicle characterized by its squared-off design and economical operation, which helped it become a celebrated favorite.

The modern iteration, while being an advanced electric vehicle, acknowledges its forerunner in both name and style, in a bid to replicate its widespread attractiveness. By tapping into nostalgia and brand loyalty, legacy automakers hope to create an emotional connection with buyers that new entrants cannot replicate. It is a strategy of blending cutting-edge technology with a celebrated past.

The Car as a Data Collection Device

Yet regardless of the appeal of Chinese automobiles when measured against their European counterparts, some analysts suggest that caution is warranted for security-related reasons. The majority of contemporary vehicles possess some form of internet connectivity, for functions like satellite-guided directions. Drivers frequently link their personal phones to the car's technology. A practice first popularized by Tesla, "over-the-air updates" allow for remote enhancements of a vehicle's onboard systems.

This high level of connectivity has sparked apprehension in certain circles that automobiles might become targets for hacking. The fear is that malicious actors could use them to conceal espionage software, track people's movements, or even disable a vehicle with a simple command. A modern car can generate enormous amounts of data, including location, driving patterns, and voice commands.

Image Credit - BBC

Espionage on Wheels?

These security fears are not merely theoretical. A story from a British newspaper emerged earlier in the year stating that military personnel and intelligence leaders received directives not to engage in official conversations while traveling in electric vehicles. Furthermore, allegations surfaced that automobiles containing Chinese-made parts were forbidden from entering sensitive government installations. Following this, Sir Richard Dearlove, who previously led the MI6 intelligence service, communicated to lawmakers in May his belief that technology originating from China in various products, cars included, could be remotely managed and programmed. He cautioned Members of Parliament about the capacity to potentially "immobilise London."

Similar concerns have surfaced elsewhere. In Australia, officials revealed that a government minister had to take precautions with his own Chinese-made EV due to warnings from his department about data collection and tracking risks. These incidents highlight a growing anxiety that connected cars could become tools for foreign intelligence gathering.

Beijing’s Staunch Denial

The government in Beijing has consistently refuted every accusation of espionage. A representative of the Chinese embassy in London described the recent claims as "completely baseless and ridiculous." The representative informed the BBC that China has always supported the safe, transparent, and standards-based growth of international supply networks. They added that Chinese businesses that function globally are expected to follow the laws and rules of their host countries.

The spokesperson concluded by noting that no trustworthy proof has been presented to substantiate the idea that Chinese electric vehicles represent a safety hazard to Britain or any other nation. From Beijing's perspective, these security concerns are a pretext for protectionism, designed to stifle the growth of a competitive industry that threatens the dominance of Western automakers.

Mitigating the Cyber Threat

Despite the strong denials, these potential vulnerabilities cannot be dismissed entirely. Joseph Jarnecki, a research fellow with the defense and security think-tank known as The Royal United Services Institute, posits that these potential vulnerabilities can be managed. He notes that Chinese automakers operate within this intensely competitive arena. While they may be subject to Chinese legislation which could require cooperation with agencies of national security, none of them wish to compromise their ability to grow internationally by being labeled a security threat.

He adds that Beijing’s government is likewise aware of the necessity for economic expansion and is not solely fixated on conducting surveillance. Mr Jarnecki believes regulatory bodies overseeing crucial sectors should receive adequate funding to oversee cybersecurity and to inform businesses that use Chinese goods about any emerging problems.

A Web of Technological Interdependence

The automotive sector is merely one domain where technology from China is becoming more deeply integrated into the British economy. Mr. Jarnecki adds that meeting the government’s climate targets, for example, "will require the utilization of technology supplied by China." This creates a complex paradox: the very technology needed for a green transition may also introduce security vulnerabilities.

Even vehicles assembled in Europe often contain a significant number of Chinese-made parts. Dan Caesar of Electric Vehicles UK notes that most people own smartphones and other items made in China, America, or Korea, without much thought. Consequently, he believes there is a degree of alarmism circulating regarding Chinese capabilities. The reality of globalised supply chains means complete disengagement is almost impossible.

The Future is Chinese

Regardless of trade disputes and security debates, automobiles that rely on Chinese technology are a permanent fixture. The country’s dominance in battery technology, particularly in next-generation solid-state batteries, is set to grow. Companies like CATL and BYD are investing heavily in research and aim for small-scale production of these advanced batteries by 2027.

The scale of China's domestic market and its control over critical raw materials give it a formidable advantage. As European manufacturers race to get on a level playing field, they face a sobering reality. Professor Bailey cautions that if these companies do not awaken and rapidly accelerate their progress, they risk being completely overwhelmed. The future of the road appears, in large part, to be written in Mandarin.