Chinese EV manufacturers will fight them by relocating production to the EU
Translated with AI assistance
European countries are trying to curb the expansion of Chinese electric vehicles through tariffs and localization requirements. Beijing’s response is gradually becoming clear: not to reduce its presence in Europe, but to move production there.
China’s Minister of Commerce Wang Wentao stated that Beijing supports investments by Chinese automakers in European facilities and closer cooperation with European companies. The statement was made during meetings with the President of the German Association of the Automotive Industry, Hildegard Mueller, and the head of Mercedes-Benz, Ola Kallenius. According to the minister, China is «not the source of the EU’s economic and trade problems, but a partner in solving them»; Beijing has urged Brussels not to close its market through protectionist measures.
Context is crucial. The EU has already imposed additional tariffs on Chinese-made electric vehicles and is now preparing «Made in Europe» rules that will set requirements for the share of European components. In response, Chinese companies are actively seeking production sites within the EU. According to Reuters, BYD is considering purchasing plants in France and Spain and ultimately aims to have three assembly facilities and one battery plant in Europe. Leapmotor, Dongfeng, Geely, and Chery have already signed agreements to use or repurpose European production sites.
BYD formulates its strategy in extremely straightforward terms. The company’s Executive Vice President, Stella Li, stated that in the long term, BYD intends to manufacture in Europe all the vehicles it sells on the European market. Localization will also make it possible to avoid import tariffs, among other things. «We are becoming a European company,» she told Reuters.
And here lies the paradox of European protectionism. The new measures may indeed reduce imports of finished Chinese cars, but not necessarily the presence of Chinese manufacturers. Moreover, following the assembly plants, part of the supply chain could also move to Europe: the production of batteries, components, power electronics, software, and charging infrastructure.
The market for such expansion remains attractive. In the first half of 2026, the share of Chinese car brands in the EU already exceeded 9%, while in the UK, where there are no tariffs similar to those in Europe, it reached 15% of new registrations.
This story extends far beyond the Chinese automotive industry. If tariff barriers increasingly turn exports into direct foreign investment, Chinese companies will more actively relocate not only final assembly but also their industrial ecosystems abroad.
For businesses from other BRICS countries, this means new opportunities to integrate into such transnational chains – as suppliers of raw materials and components, technology partners, logistics companies, and investors. At the same time, the importance of a product’s origin and localization requirements is growing: access to large markets will increasingly be determined not by where the manufacturer’s headquarters is located, but by where the added value is physically created.
In this sense, the main question is no longer whether European protectionism will stop the Chinese auto industry, but whether it will accelerate the globalization of Chinese industry.
