The balance of power in the European automotive market is undergoing a profound shift. On January 27 local time, the European Automobile Manufacturers' Association (ACEA) released final registration data for 2025. In December 2025, the market share of battery electric vehicles (BEVs) in the EU reached 22.6%, officially breaching the last line of defense held by traditional gasoline vehicles (22.5%). This marks a watershed moment in automotive history: in the heart of Europe, electric vehicle sales have, for the first time, achieved a historic overtake of internal combustion engine vehicles. Furthermore, in this transformative shift, Chinese automakers are no longer distant guests at auto shows merely discussing strategy; instead, they are charging aggressively into the core of the European automotive industry. For Chinese car companies deeply mired in a domestic price war with squeezed profit margins, the European market presented continuous challenges in 2025. Yet, armed with billions in real capital, Chinese players have persistently increased their bets in Europe, striving to cross the critical threshold of scale before the market becomes completely saturated with competitors and before traditional giants complete their "elephant turn," thereby securing their ticket to the next decade. Whichever company can transform first in the deep waters of this great voyage will be able to reshape the value anchor for Chinese intelligent manufacturing in this trillion-dollar game. The gears of industrial change have only just begun to turn.
A Surprise Assault Before 2025, Chinese automakers were minor players at the European table, with low market shares for all brands except SAIC's MG and Volvo. Now, however, they have become a force that cannot be ignored in the European market. In 2025, European new car registrations reached 13.3 million units. Against a backdrop of sluggish growth of just 2.3%, Chinese automakers displayed remarkably aggressive performance. In December alone, sales of Chinese-branded vehicles in Europe surpassed the 100,000-unit milestone for the first time, reaching 109,864 units—a staggering year-on-year increase of 127%. Their market share also leapt from 4.5% in the same period of 2024 to 9.5%. This means that one out of every ten new cars sold in Europe now has "Chinese heritage." A senior executive from a leading private Chinese automaker noted that in the past, Chinese companies primarily entered the European market through brand acquisitions. However, with the explosion of new energy vehicles, the recognition of Chinese NEV brands in Europe has changed, allowing them to enter this market under their own brands. The surge of Chinese automakers in Europe shows a clear concentration effect among top players. The first tier, represented by SAIC's MG, BYD Company Limited, and Chery, has carved a place in the minds of European consumers through distinctly different strategies. In this process, each automaker exhibits a different state. BYD Company Limited's full-year sales in Europe skyrocketed from 49,000 units in 2024 to 186,600 units in 2025, an explosive increase of 276%. The core logic behind BYD Company Limited's breakthrough in Europe lies in localized channel penetration and high-frequency consumer engagement. In 2024, BYD Company Limited replaced Volkswagen as the official partner of UEFA EURO 2024. The endorsement from such a top-tier sporting event fully materialized in 2025. In terms of channel development, BYD Company Limited abandoned the arrogance of a pure direct-sales model, opting instead for deep partnerships with established local dealers. Maria Grazia Davino, Head of BYD Company Limited Europe, clearly stated the goal to double European sales outlets to 2,000 by the end of 2026. From a model perspective, its Seal U recorded nearly 80,000 units in annual sales, with over 90% being the PHEV version, also making it the sales champion for plug-in hybrids in Europe. As one of the earliest Chinese brands to establish a presence in Europe, SAIC's MG achieved annual sales of 307,282 units in Europe in 2025. The logic behind MG's success lies in extreme localization. Through deep collaboration between its London design center and Birmingham R&D center, it has positioned itself as a "high-value local brand" in the eyes of European consumers. Even in 2025, a year of tariff pressure, the MG4 remained the best-selling Chinese electric car model in Europe, with annual sales exceeding 20,000 units. Leapmotor emerged as the dark horse of the European EV market in 2025, with sales exploding from 771 units to 22,077 units. Leveraging Stellantis's global channels, Leapmotor aims to cover 500 outlets in Europe by 2026. Chinese automakers are already stirring up the landscape in Europe, a heavyweight region of the global automotive industry.
The 'Game' in Deep Waters A year ago, the market was filled with doubts about whether Chinese automakers could continue their advance in Europe. In October 2024, the EU formally imposed countervailing duties on imports of Chinese electric vehicles, casting a shadow over the development of Chinese NEVs, particularly pure electric models, in the European market. Although the policy was optimized on January 12 this year, Professor Cui Fan from the School of International Trade and Economics at the University of International Business and Economics believes this optimization represents "progress, but it's not that simple," as transparency requirements for Chinese automakers' European operations have been further strengthened. This means that the strategy for Chinese automakers in Europe can no longer rely on simple export models; they must now focus efforts on product competitiveness and local production. An industry observer pointed out that when European consumers look at Chinese brands today, beyond price competitiveness, they focus more on functionality and driving range. McKinsey's 2025 research indicates that Chinese automakers have won recognition from European consumers through smart innovations. Chinese brands are incorporating features previously found only in luxury cars costing hundreds of thousands, such as LiDAR, advanced navigation-assisted driving (NOA), and intelligent interactive cockpits, into models priced between €30,000 and €50,000. Through OTA updates and deep ecosystem integration, they offer a digital experience distinct from traditional mechanical aesthetics. The localization pace of Chinese automakers is also accelerating. The "reverse joint venture" between Leapmotor and Stellantis demonstrated formidable explosive power in 2025. By utilizing existing mature European factories for assembly, it achieved extreme price competitiveness. BYD Company Limited's factory in Hungary is set to begin production in the second quarter of 2026. Chery, taking over the former Nissan plant in Barcelona, plans to achieve a localization rate of over 80% by 2026. SAIC Motor also explicitly stated that its goal for building factories in Europe is not small-scale but rather倾向于 establishing large-scale production centers to radiate across Mediterranean markets. Xu Bin, Head of China Automotive Research at UBS Securities, analyzed that Europe will be a crucial region for the next phase of development for Chinese automakers. While the current market share of Chinese brands in Western Europe is around 5%, it is expected to reach 15% by 2030. He shared an observation that in Nordic countries like Norway, despite very cold weather, the push for electric vehicles is very aggressive, and acceptance of Chinese brands is also very high. He believes that Western Europe will see a further increase in acceptance of Chinese brands.
Re-establishing the Anchor For capital markets, 2026 will be a critical juncture for the valuation reassessment of the Chinese automotive industry. For a long time, influenced by the domestic price war, the market has often assigned lower valuation multiples to Chinese automakers. However, as export volumes maintain high growth rates in 2026, the overseas market has become the true mainstay driving overall profits for these companies. A CFO from a leading automaker stated that currently, per-vehicle profit in overseas markets can be about 2-3 times that of the domestic market. According to incomplete statistics, overseas gross margins have, for the first time in some segments, surpassed domestic margins. The contribution of overseas gross profit to listed Chinese manufacturing companies has risen to 25%-30%. The overseas business gross margins for automakers like BYD Company Limited and Changan generally exceed 25%, while domestic margins remain between 12% and 17%. As companies like BYD Company Limited and SAIC achieve localized production in Europe, their value will be reflected not just in export data, but also in their nodal control within the global supply chain. This model resembles Toyota's approach in the 1980s, achieving profit repatriation on a global scale through capital and technology exports. From an investor's perspective, the focus is shifting from domestic sales growth to the proportion of overseas revenue. In the capital markets, this high-margin, high-growth overseas business is driving an upward re-rating of the PE multiples for quality Chinese automotive assets. In 2025, capital expenditure by Chinese automakers in Europe reached a historical peak, with cumulative investment exceeding €20 billion for factory construction and R&D centers. Although large-scale infrastructure investments pressure free cash flow in the short term, from a long-term financial model perspective, this step is essential for realizing the value of a localized brand. Chinese brands are no longer satisfied with merely selling cars; they are exporting a complete set of intelligent, green, and efficient solutions for future mobility. By building factories, establishing R&D centers, and deepening service networks in Europe, Chinese automakers are becoming an indispensable part of the European automotive industry. There is no turning back in this age of great navigation. The surge of 2025 demonstrated the capability of Chinese automakers to challenge the status quo. The rooting and valuation repair in 2026 will determine whether these brands can truly grasp the value anchor for the next decade. This so-called great navigation is, in essence, Chinese automakers using a more certain overseas future to hedge against the uncertain internal competition domestically. As Chinese automakers begin to redefine the game, the gears of industrial change have only just begun to turn.
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