Consolidating a European perspective for the automotive industry

In a circular economy, electric vehicles (EVs) are playing an increasingly crucial role. Signaling a shift in power source utilization, they have broader implications for our planet. Making the automotive sector sustainable is a top priority in both circular transition efforts and innovation policy. With its ambitious 2035 zero-emission goals, the EU has strategically focused on the circular transition in the EV sector, encouraging production, supporting sales, and ensuring the sustainable maintenance of EVs. Achieving this energy transition requires a well-established circular economy, pushing the industry to integrate “end-of-life” vehicle directives and sustainable treatment operations. Notably, the entry of Chinese EV companies into the European market suggests that these brands will be integral to the EU’s climate strategy.

What’s the Trend?

The overall trend is clear: Chinese-imported EVs are becoming part of the new normal in Europe. Faced with domestic overcapacity, Chinese car manufacturers have boosted exports to Europe by 124%. In 2024, 19.5% of all EVs sold in the EU - approximately 300,000 units - were built in China. Projections suggest Chinese homegrown brands could account for as much as 20% of the market by 2027.

"Against the backdrop of the US’s ‘reciprocal tariffs,' China and the EU may quickly resolve some trade disputes to prevent trade frictions from escalating." Zeng Zhiling, market director for Asia Pacific at GlobalData, Yicai, 2025

Such growth is fueled by the Chinese state subsidies and competitive pricing strategies, with EVs priced around 20% lower than EU-manufactured models. In response, the European Commission has imposed additional tariffs of up to 38% on Chinese EV imports.

While this temporarily levels the playing field for European manufacturers, its long-term effectiveness remains uncertain. Chinese automakers had already anticipated tariff hikes and devised ways to reduce production costs. Some have been considering moving their value chains to Europe to avoid such trade barriers. Therefore, protectionist measures may shield local industries in the short term, but they risk raising consumer prices and disrupting global supply chains.

Understanding the Chinese EV growth and implications

China has steadily emerged as a global EV leader. Its market presence in Europe is more than just economic; it reflects broader socio-technological strategies. So, how did China’s EV sector advance so rapidly? Three major drivers are underpinning their growth model:

1. Experimenting in adjacent industries

Chinese companies like BYD and Geely began in sectors such as electric buses and motorcycles in which technical challenges stimulated companies to refine battery technologies at both ends of the spectrum — high-capacity for buses and lightweight for bikes. These learnings later fueled their EV strategies.

2. Encouraging operational solutions

Chinese automakers collaborated with taxi companies to tackle practical challenges like limited driving range and long charging times. They coordinated shift-based charging schedules to align with low power consumption hours, easing grid strain and improving efficiency.

3. Doubling down on core technology

Recognizing battery tech as the heart of EVs, Chinese companies invested in R&D and leveraged access to raw materials. They also partnered with tech giants such as Baidu, Toyota, and Tencent to strengthen their ecosystems and enhance manufacturing, software, and service capabilities.

“With a broad product portfolio and access to a large number of people and resources, they can rapidly meet the current demand. While the first Chinese companies in this sector focused on the premium segment three years ago, more and more Chinese brands are now focusing on a competitive price-quality ratio.” BOVAG, NLTimes, 2025

Why the car is here to stay

Car-free neighborhoods have negative consequences, such as segregation and the emergence of uniform enclaves, writes Carlo van de Weijer.

Government support - both financial and policy-based - has been crucial. Over the last decade, EVs have become a symbol of the Chinese central government’s economic and technological narrative. Understanding this context is vital for European businesses.

Economically, the EV boom represents China's pivot toward sustainability. Promoting electric vehicles (EVs) also helps shape favorable bilateral narratives, portraying China as a progressive trading partner.

Culturally, Chinese leadership uses EV success stories to legitimize domestic authority and showcase the triumph of “designed in China” innovation, boosting national pride and cultural confidence.

Geopolitically, amid the US-China tech and trade rivalry, China has restricted graphite exports, citing national interest. As graphite is crucial for EV batteries, such moves highlight vulnerabilities in the global supply chain, which affects the automotive stakeholders in Europe.

CarbonX: powering Europe’s battery future from Delft to the world

CarbonX is ready to disrupt battery production by offering a local alternative to graphite. They present it at the Drive Forward event.

Collaboration is not an option - it’s a necessity

At the recent 2025 Drive Forward Conference held at Automotive Campus Helmond, industry leaders and policymakers emphasized the urgent need for robust industrial policies rooted in a European perspective to remain competitive amid the evolving Chinese market dynamics. It urges that systematic collaboration across sectors, borders, and at all levels is needed.

Looking ahead, it has been reported that EU leaders will plan a summit with China’s President Xi in Beijing in late July, implying a renewed incentive for engagement amid strained EU-US relations. Negotiations on EV pricing and investment cooperation in the automotive sector are reportedly on the agenda.

"Regardless of current global developments, it must also be discussed here how to reduce obstacles and distortions in international trade, rather than building new hurdles." German auto industry association VDA, Reuters, 2025.

Europe at the crossroads: Building competitive digital mobility

At Drive Forward in Helmond, industry leaders mapped out the path from strategy to deployment - and the urgent need for Europe to catch up.

The Dutch automotive industry is part of the broader European ecosystem. As a key gateway to the European market for Chinese automotive businesses, the Netherlands has been among the first to experience both competition and disruption.

In the coming years, we will witness significant transitions in the European automotive landscape — transitions that Dutch companies are driven to shape and lead. In a collaboration between researchers from Fontys University of Applied Sciences, HAN University of Applied Sciences, and Utrecht University of Applied Sciences, we remain closely attuned to the trends and developments shaping the future of the Dutch automotive industry.