Since the beginning of the decade, European car manufacturers have been losing ground in the Chinese market. Conversely, China is conquering market share in Europe, and not only in the electric vehicle segment.
In 2023 and 2024, records were reached in the automotive sector. Never before have so many electric vehicles been imported from China for European consumers. Nor have European vehicle exports to China been so low. However, the first decade of the 2000s was marked by significant vehicle exports to China. And the 2010s saw all the major European manufacturers set up production in China. But the 2020s seem to mark a clear reversal of the trend. This period will be remembered as one of European factory closures in China and massive exports of Chinese electric vehicles to Europe.
While the United States and Canada, which import very few electric vehicles from China, have decided to impose a 100% customs duty on this product, the European Union has launched an investigation into public subsidies for the electric car sector in China, which has resulted in the introduction of customs duties, since October 30, 2024, ranging from 7.8 to 35% depending on the manufacturer[1] (in addition to the 10% already existing).
The following analysis considers EU-China trade in this sector, marked by spectacular political twists and turns.
Chinese overproduction creates tensions
The Chinese automobile market is booming. According to the China Association of Automobile Manufacturers, vehicle sales in China increased by 12% between 2022 and 2023. It is an extremely competitive market, where Chinese players such as SAIC, Geely or BYD have gradually gained the upper hand over European and American producers. This merciless internal competition has for several years encouraged Chinese manufacturers to seek market share abroad, in order to remain competitive in China.
According to estimates, around 30 million vehicles[2] have been produced in 2024, while Chinese consumers have bought… only 22.8 million[3]. Chinese manufacturers therefore had to find export outlets for more than 7 million vehicles. To give an order of magnitude, 1.7 million new vehicles were registered in France in 2024, according to estimates by La Plateforme automobile. The disruptive potential of this overproduction on international markets is therefore considerable.
In China, the year 2024 also marks the coming of age of electric vehicles. Chinese consumers have bought more than 10.97 million hybrid or electric vehicles, nearly one in every two new vehicles purchased in China[4]. In Europe, in 2023, only a little more than one in five vehicles sold was hybrid or electric[5]. And in the electric vehicle category, exports from China accounted for more than 20% of sales in the European Union[6].
The European automotive sector is losing momentum in China
French and German manufacturers largely dominate European vehicle exports to China as they accounted for 96% of the total for 2023[7]. The disparity between the two countries remains significant, however. Germany is a much bigger player, both in terms of exports of individual vehicles to China and in terms of the presence of manufacturers there.
After several attempts at industrial installation between 2002 and 2017, the Stellantis group (formerly PSA) and its joint venture Dongfeng have never managed to break into China, failing to meet the needs of Chinese consumers. After reaching 2.37% market share in 2014, the group plummeted to 0.28% of Chinese market share in 2022 – or less than 58,000 vehicles sold[8].
Table 1: Development of French passenger car exports to China between 2017 and 2023 (in millions of euros). Source: Eurostat (this table combines the statistical categories 870321-24; 820331-33; 820360; 820370; 820380).
Furthermore, French vehicle exports to China are four times less than German vehicle exports. China is no longer a key market for French manufacturers, whether in terms of local production in China or exports to China. This may explain their support for the investigation into subsidies for the Chinese electric car sector in Europe, as well as France's support for European sanctions against manufacturers established in China.
German manufacturers, even if they continue to be present on the Chinese market, are also seeing their results drop, with a contraction of 25% between 2018 and 2023 in number of units sold[9]. The reputation of German brands is not proving to be enough, given the subsidies to purchase domestic brands in China and the growing consumer preference for electric vehicles that German manufacturers produce little of. Between 2020 and 2024, German brands lost market share, falling from 24% to 15%[10]. However, faced with the difficulties encountered in China, Germany has chosen to increase its investments there, promising 2.5 billion euros more for the local factories of its manufacturers.
Table 2: Development of German passenger car exports to China between 2017 and 2023 (in millions of euros). Source: Eurostat (this table combines the statistical categories 870321-24; 820331-33; 820360; 820370; 820380).
German vehicle exports also fell sharply (by 9 percentage points) between 2022 and 2023, although they remained much larger than those of France.
Table 3: Development of German exports of passenger cars to China by vehicle category between 2017 and 2023 (in millions of euros). Source: Eurostat (statistical categories taken into account for combustion vehicles: 870321-24; 820331-33; hybrid vehicles: 820360; 820370; electric vehicles: 820380).
Despite the German effort to export hybrid and electric vehicles to China from 2018, 2023 marked a clear decline in German passenger car exports to China, regardless of the vehicle type.
In other words, whether for export or through production directly on the Chinese market, French and German prospects are not very encouraging. At the same time, China exported a record number of electric vehicles to European Union states in 2024.
The Chinese automobile sector is conquering Europe in electric… and combustion vehicles
Sales of Chinese vehicles took off in Europe from 2021. By 2022, China had doubled its exports. And in 2023, the value in millions of euros of its exports to Europe was close to the amounts exported to China from the EU27. In other words, the European and Chinese export curves intersect. This seems to be becoming a longer-term trend, as Chinese production is booming.
The bulk of Chinese exports are electric vehicles. In 2023, China increased its exports of electric vehicles 17 times compared to 2021, the first year of an increase in exports. It is this massive growth that has led the European Commission to launch an investigation into electric vehicles from China.
China's ambitions in the European car market do not stop at electric vehicles. In 2023, China also exported as many combustion vehicles to the EU as France exported to China. Chinese exports to the EU27 in this segment have doubled compared to 2022, and quintupled compared to 2021. However, while Chinese manufacturers of electric vehicles are subject to sanctions, this is not the case for combustion vehicles. As Chinese consumers increasingly turn to electric vehicles, it is likely that Chinese combustion engine vehicle manufacturers will seek new markets for their products. The EU, where 78% of new vehicles registered in the European Union in 2024 were combustion, seems to be an interesting market in this respect.
Finally, many analysts believe that the sanctions applied to motor vehicles from China are too weak to divert China from the European market[11]. However, they are having an impact. Between the submission of the European Commission's report on subsidies in July 2024 and the adoption of sanctions by EU Member States against Chinese manufacturers on October 4, 2024, with implementation on October 30, 2024, China significantly increased its exports.
Table 4: Evolution of China's electric vehicle exports to the EU27 in units (June-November 2024). Source: China Customs Statistics. Statistical category: 820380.
In consequence, in September 2024, China exported 50% more vehicles than the previous month. Volumes then fell in November, following the implementation of sanctions, dropping below the levels recorded in June. In other words, China anticipated the effects of sanctions by boosting its exports between the announcement of potential sanctions and their application.
Looking Ahead
Between 2015 and 2024, the trade balance in the automotive sector between China and the EU27 has therefore been reversed. Sales of European vehicles produced on the Chinese market are declining, as are exports of European vehicles to China, all categories combined. Conversely, Chinese exports of vehicles to the EU27 are increasing sharply in all vehicle categories, even if the driving force of this commercial asymmetry remains the electric car.
Sanctions on electric vehicles could, on the one hand, partially slow down Chinese exports in this category, at least temporarily. On the other hand, they could, as a knock-on effect, lead to sanctions against European manufacturers in China and vehicle exports to China, which would have a heavy impact on German manufacturers, and to a much lesser extent on French manufacturers.
However, other categories of vehicles – hybrid and combustion, which are not subject to sanctions – can continue to be exported without hindrance to the European market. In these categories, Chinese manufacturers are likely to continue to increase their market share. Current indicators therefore allow us to predict that the flow of personnel vehicles from the EU27 to China will continue to decline, while flows from China to the EU, all categories combined, still have a bright future ahead of them.
[1] European Commission, "The EU imposes duties on unfairly subsidized electric vehicles from China, while discussions on price commitments continue" Brussels, 29/10/2014.
[2] Marklines – Automotive Industry Portal, “China – Automotive Sales Volumes, 2024”, January 2024.
[3] Jiri Opletal, Early data shows record-breaking 11 million NEVs were sold in China in 2024, penetration rate nearly 50%, CarnewsChina, 08/01/2025.
[4] China Association of Automobile Manufacturers, Statistics for the year 2024.
[5] European Environment Agency, “New registration of electric cars EU27”, 06/11/2024.
[6] European Automobile Manufacturers Association, “Factsheet: EU-China vehicle trade", 12/06/2024.
[7] Calculations expressed in value from EU27, French and German data available on Eurostat.
[8] Goodcarbadcar – automotive sales data, “Peugeot Sales Data, Trends & Analysis for the Chinese Automotive Market”.
[9] Alexander Brown & Andreas Mischer, “German Carmakers Are Placing a Risky Bet on China”, 09/12/2024.
[10] Alexander Brown & Andreas Mischer, “German Carmakers Are Placing a Risky Bet on China”, 09/12/2024.
[11] Gregor Sebastian, Noah Barkin & Agatha Kratz, “Ain’t no duty high enough,” 29/04/2024.
