China's Carmakers Go Wild in Europe

The balance of power in the European automotive market is shifting profoundly.

On January 27th local time, the European Automobile Manufacturers Association (ACEA) released end-of-year registration data for 2025. In December 2025, the market share of battery electric vehicles (BEVs) in the EU reached 22.6%, officially breaching the final line of defense of traditional gasoline cars (22.5%).

This marks a watershed moment in the history of human automobiles: in the heart of Europe, electric vehicle sales have surpassed those of gasoline-powered cars for the first time.

Furthermore, in this transformation, Chinese automakers are no longer distant guests discussing strategy as they did at previous auto shows; instead, they are charging into the very heart of the European automotive industry with unstoppable momentum.

For Chinese car manufacturers, mired in a domestic price war and facing compressed profit margins, 2025 presents a continuous challenge in the European market. However, armed with tens of billions of yuan in capital, Chinese automakers are continuously increasing their investments in Europe, aiming to cross the threshold of scale before the market becomes completely crowded and before traditional giants complete their "elephant turns," thus securing their ticket for the next decade.

Whoever can transform first in the deep waters of this great voyage will reshape the value anchor of "Made in China" in this trillion-dollar game. The gears of industrial revolution have only just begun to turn.

A surprise attack

Before 2025, Chinese automakers were minor players in the European market, with only MG (owned by SAIC) and Volvo having significant market share. However, Chinese car companies are now a force to be reckoned with in the European market.

In 2025, new car registrations in Europe reached 13.3 million units. Amidst a sluggish growth rate of just 2.3%, Chinese automakers demonstrated a very aggressive performance.

In December of last year, Chinese automakers' sales in Europe surpassed 100,000 vehicles for the first time, reaching 109,864 units, a year-on-year increase of 127%. Market share also jumped from 4.5% in the same period of 2024 to 9.5%. This means that one in every ten new cars sold in Europe has "Chinese blood."

A senior executive from a leading private car manufacturer told Wallstreetcn that in the past, Chinese car companies mainly entered the European market through brand acquisitions. However, with the boom in new energy vehicles, the recognition of Chinese new energy brands in the European market has changed. Chinese brands are now able to enter this market with their own brands.

Chinese car companies are exhibiting a clear top-heavy concentration effect in their European expansion. The first tier, represented by SAIC MG, BYD, and Chery, has penetrated the minds of European consumers through distinct paths.

In this process, each car manufacturer has presented different states.

BYD's full-year sales in Europe soared from 49,000 units in 2024 to 186,600 units, a staggering increase of 276%.

BYD's core logic for breaking into the European market lies in deepening localization of its sales channels and achieving high-frequency user engagement. In 2024, BYD replaced Volkswagen as an official partner of the UEFA European Championship. This endorsement from a top-tier sporting event will fully ferment in 2025.

In channel construction, BYD has abandoned the arrogance of a purely direct sales model and instead formed deep alliances with established local dealerships. Maria Grazia Davino, BYD Europe's head, explicitly stated that the company aims to double its European sales points to 2,000 by the end of 2026.

Looking at the vehicle details, its Seal U (Seal U) sold nearly 80,000 units throughout the year, with over 90% being PHEV versions, also securing the top spot in European plug-in hybrid sales.

As the earliest Chinese brand to enter the European market, SAIC MG achieved a total sales volume of 307,282 vehicles in Europe in 2025. MG's success logic lies in its extreme localization strategy. Through deep collaboration between its London Design Centre and Birmingham R&D Centre, European consumers perceive it as a "high-value local brand." Even under tariff pressure in 2025, the MG4 remained the top-selling electric vehicle among Chinese brands in Europe, with annual sales exceeding 20,000 units.

Leapmotor, on the other hand, is poised to be the dark horse in the European electric vehicle market in 2025, with sales skyrocketing from 771 units to 22,077 units. Leveraging Stellantis' global channels, Leapmotor aims to cover 500 outlets in Europe by 2026.

Chinese automakers are already shaking up the European market, a key global automotive industry hub.

"Gambling" in deep waters

A year ago, there were doubts about whether Chinese car companies could continue to advance in the European market.

In October 2024, the EU officially imposed anti-subsidy duties on imports of Chinese electric vehicles. This casts a shadow over the development of Chinese new energy vehicles, especially pure electric vehicles, in the European market.

Although the relevant policies were optimized on January 12 this year, Cui Fan, a professor at the School of International Trade and Economics at the University of International Business and Economics, believes that this optimization is "progress, but not that simple." The transparency requirements for Chinese car companies operating in Europe have been further strengthened.

This means that Chinese automakers can no longer rely on the simple export model for their European expansion, but must instead focus on both product competitiveness and production aspects.

An industry observer pointed out to Wall Street News that European consumers currently look to Chinese brands not only for cost-effectiveness, but also for functionality and range.

McKinsey's 2025 research indicates that Chinese automakers have gained recognition from European consumers through intelligent innovation. Chinese brands have democratized features previously exclusive to million-euro luxury vehicles, such as LiDAR, advanced Navigation on Autopilot (NOA), and intelligent interactive cockpits, by making them available in models priced between €30,000 and €50,000. Through OTA (Over-The-Air) updates and deep ecosystem integration, they offer a digital experience that differs from traditional mechanical aesthetics.

Chinese automakers are also accelerating their localization efforts. Leapmotor's "reverse joint venture" with Stellantis demonstrated a terrifying burst of power in 2025, achieving extreme price reductions by utilizing existing mature European factories (such as the Polish factory) for assembly. BYD's Hungarian factory is scheduled to begin production in the second quarter of 2026. Chery took over the former Nissan factory in Barcelona and plans to achieve a localization rate of over 80% by 2026.

SAIC Motor also clarified to Wall Street Insights that its goal for building a factory in Europe is far more than small-scale; rather, it is inclined to establish a large-scale production center to radiate the Mediterranean markets on both sides.

Bin Xu, head of UBS China equities research, told Wall Street Insights that Europe will be a key region for the future development of Chinese automakers. Currently, the market share of Chinese car companies in Western Europe is around 5%, but it is expected to reach 15% by 2030.

One detail he shared with Wall Street Insights is that in Nordic regions like Norway, despite the extremely cold weather, these countries are pushing for electric vehicles very aggressively and have a very high level of acceptance for Chinese brands. He believes that a further increase in the acceptance of Chinese brands will be seen across Western Europe in the future.

Refactor Anchors

For the capital market, 2026 will be a key year for the Chinese automotive industry to see valuation repair.

For a long time, the market has often given Chinese automakers low valuation multiples due to the impact of domestic price wars. However, with export volumes maintaining high growth rates in 2026, overseas markets have become the mainstay for Chinese automakers to truly drive overall profits.

A CFO of a leading automaker told Wallstreetcn.com that the profit per vehicle in overseas markets can currently be two to three times that in the domestic market.

According to incomplete statistics from Wall Street News, overseas gross profit margins have for the first time surpassed domestic ones in certain segments, with overseas gross profit accounting for 25%-30% of the total for Chinese manufacturing listed companies. The gross profit margins of overseas businesses for car manufacturers such as BYD and Changan generally exceed 25%, while domestic margins remain between 12% and 17%.

As BYD, SAIC, and other companies achieve localized production in Europe, their value will not only be reflected in export figures but also in their control over critical nodes in the global supply chain. This model is similar to Toyota in the 1980s, which realized global profit repatriation 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 market, this high-profit, high-growth overseas business is driving the upward movement of PE valuation centers for high-quality Chinese automotive assets.

In 2025, Chinese automakers' capital expenditure (CapEx) in Europe reached a historical peak, with cumulative investments exceeding €20 billion in factory construction and R&D centers. While large-scale infrastructure investments put pressure on free cash flow in the short term, from a long-term financial model perspective, this is a necessary step to achieve localized brand value.

Chinese brands are no longer content with simply selling cars, but are now exporting a complete set of intelligent, green, and efficient solutions for future mobility. By establishing factories and R&D centers in Europe, and cultivating deep service networks, Chinese automakers are becoming an indispensable part of the European automotive industry.

There's no turning back from the age of great navigation. The explosive growth of 2025 proved that Chinese automobiles have the ability to disrupt the market, while the rooting down and valuation recovery in 2026 will determine whether these brands can truly grasp the value anchor of the next decade. The so-called age of great navigation is actually Chinese automakers using a more certain overseas future to hedge against uncertain domestic involution. When Chinese automakers begin to redefine the game, the gears of industrial change have only just begun to turn.