EU carmakers pave way for Chinese rivals as balance in market shifts
Chinese electric vehicle makers like Xpeng, BYD, and Geely are expanding into Europe by acquiring underused factories from struggling European automakers such as Volkswagen, Nissan, and Stellantis, while Europe’s car sales have declined from 15.3 million in 2019 to under 13 million in 2025. Xpeng’s managing director criticized Volkswagen’s aging facilities, highlighting the shifting global market balance as Chinese brands gain a foothold in Europe with 8.6% market share in early 2026, up from 4.3% a year prior.
European automakers are selling underused factories to Chinese electric vehicle (EV) rivals amid declining sales and overcapacity. Chinese brands, including Xpeng, BYD, Changan, Chery, Dongfeng, and Geely, are expanding into Europe, where their market share reached 8.6% in the first quarter of 2026—nearly double the same period a year earlier. Nissan is in talks to lease part of its Sunderland plant to Chery, while Ford has reportedly agreed to sell a portion of its Valencia factory to Geely. Stellantis, which owns brands like Peugeot and Vauxhall, has already partnered with Chinese EV maker Leapmotor to produce vehicles in two Spanish plants. Xpeng’s managing director for north-eastern Europe, Elvis Cheng, criticized Volkswagen’s aging facilities during a Financial Times conference, suggesting the German automaker’s plants may not meet modern standards. Despite Volkswagen’s struggles to find buyers for its Dresden factory—the first to close in Germany in 88 years—Cheng indicated a deal with the company could still happen if a suitable location is found. However, European automakers face pressure as Chinese brands gain credibility, with one industry executive warning they could threaten traditional manufacturers across market segments. European car sales have dropped from 15.3 million in 2019 to under 13 million in 2025, leaving manufacturers with excess capacity. Selling factories to Chinese firms avoids costly closures and layoffs, though Volkswagen’s CEO admitted finding buyers remains difficult. Stellantis CEO Antonio Filosa downplayed concerns, emphasizing potential mutual benefits in partnerships, though privately, European executives acknowledge the competitive threat from Chinese rivals. The shift reflects a broader trend as China’s EV industry surges, with imports flooding Europe and local brands struggling to adapt. While some European firms resist outright sales, others are actively collaborating, signaling a new era in global automotive competition. The balance of power in the industry is clearly tilting toward China, even as European automakers seek short-term solutions to survive.
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