In 2024, China became the largest source of automotive imports for the European Union, with import volumes reaching €12.7 billion (approximately RMB 102.86 billion). According to the EU, automotive imports from China surged by an astounding 1,591.3% between 2019 and 2024. However, on-the-ground research by Yiou Auto reveals that behind this hundred-billion-yuan market lies a reality filled with passivity, awkwardness, and neglect for Chinese car brands in the European market
Author | Botao Xu
Editor | Qiuhui Hao
In 2024, every minute, a Chinese-branded car was shipped to Europe.
According to data from the China Association of Automobile Manufacturers (CAAM), China exported 5.859 million vehicles in 2024, a year-on-year increase of 19.3%, further solidifying its position as the world’s largest car exporter.
On April 1, the European Union released its 2024 trade data for the automotive sector, showing that China had become the EU’s largest source of automobile imports, with an import value of €12.7 billion (approximately RMB 102.86 billion). The EU noted that between 2019 and 2024, car imports from China increased by an astonishing 1,591.3%.
From a data perspective, this seems to be a story of mutual pursuit. Europe is undoubtedly one of the most promising destinations for Chinese carmakers going global.
However, a recent field study by EqualOcean in Europe uncovered an awkward truth: although Chinese-brand cars are reaching Europe, they are not making it into consumers’ garages.
In the European market, the brand determines consumer willingness to buy, while the supply chain dictates a company's viability.
The reality is that Europe’s mainstream markets are firmly dominated by German (Volkswagen, Mercedes-Benz, BMW), Japanese (Toyota, Honda), and American (Tesla, Ford) brands. These companies have cultivated strong brand recognition over many years, creating formidable barriers to entry.
For European consumers, cars are not merely transportation tools—they are symbols of identity and lifestyle. This deep-rooted brand perception means that gaining consumers' trust as a newcomer is as difficult as snatching food from a tiger’s mouth.
Supply chain challenges are no less daunting.
Europe imposes high tariffs on imported vehicles. If Chinese automakers continue to follow the traditional model of “domestic production + complete vehicle export,” they will inevitably find themselves at a disadvantage in terms of pricing.
What’s more troubling is the rising local content requirement for vehicle assembly in Europe. The proportion of localized components needed to enjoy local incentives has risen from 20–30% to 45%, and may continue to increase in the future.
This trend directly erodes the cost advantage that Chinese carmakers rely on for survival, making it increasingly difficult for their traditionally “price-driven” strategies to gain traction in the European market.
For Chinese carmakers, unless they can break through the twin barriers of “brand recognition” and “supply chain localization,” their expansion into Europe will remain a “false proposition.”
Chinese vehicles may be entering Europe—but they are ending up in warehouses, not in consumers’ garages.
European Car Buyers: It’s Either Brand or Tech
“In Europe, you either buy a century-old brand or pay for groundbreaking tech. No one pays attention to a startup with no disruptive edge,” Maximilian, a Munich native, told Yiou Auto.
This statement lays bare the harsh logic of the European market: brand heritage and technological disruption are the core factors influencing car purchase decisions among European consumers.
European buyers exhibit strong brand loyalty. They either opt for century-old brands that symbolize tradition—like Mercedes-Benz, BMW, or Renault—or go for tech pioneers like Tesla, known for reshaping the automotive landscape.
In recent years, Elon Musk’s influence in the European market has somewhat declined, opening up room for other brands. However, filling that space is no easy task.
The precondition is clear: either have a powerful legacy brand or demonstrate significant technological innovation. Without either, it is extremely difficult to win over European consumers.
“If I had the budget, I would only consider German brands because they have a century of history and guaranteed quality. They’re expensive for a reason,” said Sophia, another interviewee from Munich. Her view echoes the sentiments of many German consumers.
This “old money mindset” is widespread across the European market.
For many Europeans, choosing a car is not just about buying a means of transportation—it’s a reflection of their recognition of quality, culture, and history.
Mercedes, BMW, and Audi are not just luxury brands; they represent German precision manufacturing, craftsmanship, and cultural heritage. Likewise, France’s Renault and Peugeot carry the pride of French industrial legacy. These brands are deeply embedded in the cultural fabric of European society. For a new brand to disrupt this perception requires more than just technology or a solid product—it demands time and emotional resonance.
For new brands—especially emerging Chinese new energy vehicle (NEV) brands—Europe is destined to be a tough survival game.
First of all, due to their short history, these brands face skepticism from consumers who worry about their long-term viability. Distributors and supply chain partners are also hesitant to represent brands that “lack historical credibility.”
Dr. Zheng Kang (郑康), a PhD from Zhejiang University and Director of the ATTC Automotive Technology & Industry Research Institute, told Yiou Auto: “European distributors prefer to represent brands that have already gained a firm foothold. The risk of volatility with new brands is just too high. Even during Nürburgring testing, many Chinese brands face much higher testing costs compared to local competitors.”
Nürburgring
Source: Car and driver website
The Nürburgring, often hailed as “the world’s most challenging test track,” is regarded as the ultimate proving ground for vehicle performance in the European market. Some Chinese car brands have spared no expense in conducting Nürburgring testing to enter Europe, yet their testing costs are significantly higher than those of local brands—undoubtedly adding financial pressure during the early stages of market entry.
In addition, European consumers have extremely high standards for vehicle design, performance, and environmental sustainability.
Chinese automakers must not only tackle technical challenges on the product side, but also significantly increase R&D investment to ensure their vehicles meet the European market’s stringent demands in areas such as handling, safety, and environmental compliance.
A more pressing issue is the overall cost of entering the European market, which is exceptionally high.
Investment in localized production:
Setting up factories or assembly plants in Europe requires massive capital outlays.
Building marketing channels:
Establishing brand awareness and a sales network is a long-term endeavor requiring sustained investment.
Creating an after-sales service system:
After-sales service is crucial for earning consumer trust in the European market. If service cannot keep up with customer expectations, the brand’s reputation will suffer significantly.
These factors, when combined, mean that the initial investment for new brands in Europe is extremely high. A single misstep could result in total failure.
Before Entering the European Market, Chinese Automakers Must Pay a “Toll”
Europe’s automotive supply chain is highly mature—but what exactly defines this maturity?
Take a 4S dealership, for example. Some have been working with local auto brands for generations, dating back to the owner’s grandfather. For a new brand to break through such a deep-rooted trust relationship spanning three generations is nearly impossible.
This creates substantial “hidden costs” for Chinese carmakers trying to build supply chains in Europe.
EqualOcean learned that in 2023, a Chinese automaker invested heavily to partner with a European local distributor, hoping to leverage the distributor’s network to break into the market. However, the Chinese brand ended up being placed in a marginal 4S dealership with virtually no access to market resources or meaningful support.
With no leverage or alternatives, Chinese automakers often have no choice but to swallow the loss.
During a visit to Munich, Dr. Zheng Kang personally visited a 4S dealership that carried a Chinese car brand—but the experience left him deeply disappointed.
The dealership was located in a remote rural area, far from any mainstream commercial districts, making it inherently disadvantaged in terms of location. Even more surprising was the reception: when Dr. Zheng entered the dealership to inquire about the Chinese brand—identifying himself as a Chinese national—the sales staff showed no enthusiasm, and even displayed overt indifference.
“We had assumed that a dealership selling a Chinese brand would at least show some enthusiasm when approached by Chinese customers. But the reality was that the salespeople couldn’t even be bothered to look at us directly. It was obvious they had no interest in the vehicle at all,” Zheng said, visibly disheartened.
Zheng’s experience is far from an isolated case.
Many Chinese automakers, upon entering the European market, have attempted to achieve rapid breakthroughs by partnering with local distributors—only to find that things don’t go as planned. European distributors are generally reluctant to take on new brands, especially those lacking in brand awareness and consumer trust.
Screenshot of Reuters News on the EU’s Localization Policy
Source: Reuters
In March 2025, the European Union announced plans for a new measure targeting electric vehicle (EV) manufacturing: core components such as power batteries must meet a specified threshold of local production.
This move effectively raises the “survival threshold” for Chinese auto brands. Once the new regulation is in place, if a company fails to meet the local content requirement, it may not only face higher tariffs but also risk losing market access altogether.
For new brands, this is undoubtedly a further blow.
Localizing the supply chain already demands substantial time and capital investment. The new regulation compresses the already narrow margin for error, placing even more strain on limited resources.
“We prefer to work with brands that already have a firm footing, because new brands carry a much higher risk of disruption,” said Sebastian, a European distributor who has run a 4S dealership in Munich for over 70 years, in an interview with Yiou Auto.
Most European distributors are extremely cautious when considering new brands.
They would rather continue representing legacy automakers with high brand recognition and more manageable risks than take a gamble on Chinese brands. Their concerns are not unfounded. Should a new brand face issues with product quality or after-sales service, it could damage the distributor’s reputation built over decades—or even collapse their entire local credibility system overnight.
The cost of entering the European market goes far beyond sales and marketing—the greater “hidden costs” lie in testing and certification.
Surprisingly, even seemingly basic issues have become stumbling blocks for Chinese automakers in Europe.
Incompatible charging station standards, mismatched plug designs, unlinked after-sales systems—details that might seem trivial—have significantly hindered vehicle rollout efficiency.
“There have been instances where well-known brands brought prototype vehicles to Europe for road testing, only to find the plugs incompatible with local charging stations. Such rookie mistakes not only delayed the test schedule but also embarrassed the brand in front of local partners. What’s worse, the cost of road testing and certification in Europe is several times higher than in China. Due to unfamiliarity with local procedures and unclear standards, these brands ended up wasting even more money,” one insider revealed.
The European market imposes highly stringent requirements for vehicle certification and road testing. Venues such as the Nürburgring—renowned as the “ultimate proving ground” for global automakers—pose high-cost, high-risk challenges for Chinese brands.
Even if a Chinese brand sets up a factory in Europe, that alone doesn't solve the supply chain problem. Establishing a plant is only the first step in localization; the real challenge lies in supply chain integration and management.
First, Chinese brands are far from familiar with the European supplier network, which frequently leads to delayed component deliveries. Europe’s supplier ecosystem is complex and has long lead times—any breakdown in the chain can disrupt the entire vehicle production schedule.
Second, the complexity of transnational inventory distribution dramatically increases the difficulty and cost of inventory management. In order to shorten delivery times, Chinese automakers often need to maintain inventory across multiple countries, which not only heightens logistics complexity but also drives up operational expenses.
Finally, the organizational efficiency of production cannot be easily replicated from China. The flexible manufacturing and integrated supply chain strategies that have worked well in China don’t fully apply to the European context, resulting in underwhelming production efficiency.
Many Chinese automakers have come to realize—only after building factories in Europe—that their production efficiency lags far behind that of their domestic operations, while supply chain costs are significantly higher.
Setting up a factory is only the beginning; the real challenges come afterward.
Tech Doesn’t Hold Value: Europe Is Starting to Say “No” to Tesla
In Europe, the used car market is far more developed than most people imagine—creating a natural "price ceiling" for new cars.
When purchasing a car, European consumers care not only about the configuration and price of a new vehicle, but also its future resale value.
“As a buyer, I don’t just care about what I spend today—I care about how much I can sell the car for in three years,” a prospective German car owner told Yiou Auto.
This “car = investment” mindset makes European buyers particularly sensitive to fluctuations in used car prices when choosing a new vehicle.
As previously mentioned, the erosion of trust in Tesla’s brand in Europe is not only tied to geopolitical factors—more directly, it stems from the brand’s unstable pricing strategy.
Frequent price cuts have brought new car prices down to—or even below—used car values, which has accelerated the depreciation of second-hand Teslas. Many European consumers who paid top dollar for a Model Y just a year ago have watched its resale value plummet with each new price cut. This hasn’t just frustrated existing Tesla owners—it’s also made potential buyers far more cautious.
“You don’t spend €50,000 on a car that’s worth €30,000 a year later,” complained a Tesla owner in the UK. “Buying a Tesla is like playing the stock market—its value rises or falls depending on Elon Musk’s mood.”
This growing distrust in residual value has led more consumers to turn to brands that offer better value retention and more stable pricing.
For European consumers, buying an electric vehicle isn’t just a current expense—it’s a long-term cost calculation.
“Buying an EV isn’t just about transportation—it’s about betting on a price forecast,” said Antoine, an EV buyer from Berlin. He told Yiou Auto that he gave up on Tesla specifically because he was worried about asset depreciation from constant price drops. “Residual value is just as important as maintenance cost,” he said. “If I don’t know how much the car will be worth in two years, I’d rather go with a more reliable brand.”
In the long run, resale value has become a crucial factor shaping European car-buying decisions. If a brand cannot maintain stable market pricing, consumer loyalty will quickly collapse.
In stark contrast to Tesla is the success of the Hyundai IONIQ 7—a strategic counterattack built on long-term brand investment and a Lifetime Warranty program.
Hyundai’s rise in the European market didn’t happen overnight. Once perceived as a “cheap Korean brand,” Hyundai has spent over a decade building its reputation as “reliable and high-value,” slowly earning the trust of European consumers.
A key pillar of this transformation was Hyundai’s Lifetime Warranty policy, which not only enhanced user trust but also directly addressed concerns over the long-term cost of EV ownership. Buying a Hyundai means not worrying about skyrocketing repair bills in a few years—or about a collapse in resale value.
Hyundai’s success is a powerful rebuttal to Tesla’s approach. European consumers are no longer buying just for “cutting-edge tech”—they increasingly prioritize price stability and long-term value retention.
By comparison, despite Tesla’s ongoing technological edge, the brand’s poor after-sales service, high repair costs, and frequent price cuts are dragging down customer satisfaction across Europe.
“Technology is a bonus, but price stability is the key factor,” said Luca, a new energy vehicle owner from Germany, to EqualOcean. “Driving a technologically advanced car is certainly exciting, but if it loses half its value in a year, that excitement fades quickly.”
When Price Competition Fails—Compete on Service, Time, and Trust
According to EqualOcean, recognizing the right direction is more important than blind effort. Pure battery electric vehicles (BEVs) are the future; plug-in hybrid electric vehicles (PHEVs) are best suited for small, niche players.
For Chinese automakers seeking a firm foothold in Europe, having a clear strategic direction and preparing for the long haul is the only way to unlock the market.
EqualOcean recommends that Chinese automakers focus squarely on BEVs and stop wasting resources on PHEVs. The European Union has already announced a full ban on internal combustion engine vehicle sales by 2035. PHEVs are merely a transitional solution and are destined not to be mainstream in Europe. Tesla’s success has already demonstrated that focusing solely on BEV technology is the key to winning the market.
With the Model 3 and Model Y, Tesla has not only captured half the European BEV market but also firmly planted itself in consumers’ minds as the symbol of an all-electric future.
By comparison, Chinese automakers already have significant cost advantages and technological capabilities in the BEV space. In critical areas such as power batteries, smart cockpits, and autonomous driving, Chinese companies not only got a head start but also now far outperform their European counterparts in cost control and technological maturity.
The real challenge lies in transforming these technological advantages into brand advantages—building a brand image in Europe that stands for premium quality, smart technology, and environmental sustainability.
Localization Is the Lifeline for Chinese Automakers in Europe
Polestar’s model is worth learning from. With headquarters in Gothenburg, Sweden, and R&D and design teams made up entirely of local European talent, the company aligns seamlessly with local aesthetics and consumer expectations. Meanwhile, it relies on manufacturing in China, fully leveraging the cost advantages of Chinese supply chains to deliver high-quality products at optimized prices. This “European design + Chinese manufacturing” model reduces production costs while aligning with European consumer psychology—successfully breaking the stereotype of “Chinese brands” in the region.
That said, Polestar’s path is not the only route.
Yiou Auto suggests that Chinese automakers should choose different localization strategies based on their market positioning:
Set up local design and R&D centers to gain deeper insights into local consumer needs.
Partner with local dealers to build localized sales and after-sales service networks, helping reduce the trust gap between consumers and brands.
Brand recognition is the biggest weakness for Chinese carmakers in Europe.
Polestar’s rapid market entry was made possible by the strong backing of Volvo and Geely. For those Chinese brands without existing brand influence, breaking into Europe requires building cultural relevance and brand visibility to cultivate long-term user engagement.
In this regard, participating in local culture, sponsoring sporting events, and supporting environmental initiatives are essential tools to penetrate the European market.
For example, Polestar’s involvement in the Formula E electric racing series helped tie the brand to the future of electric mobility, making it synonymous with technology and environmentalism in the eyes of European consumers. Chinese automakers can similarly use such tactics to gradually integrate their brands into consumers’ everyday lives, breaking the ice in brand perception.
Localization Isn’t Just About Design—It’s About Supply Chain Presence
The EU’s local content requirements for parts are rising—from 20% initially to around 40% today, and they may go even higher in the future. If Chinese automakers continue to rely on a model of “domestic production + complete vehicle export,” they will inevitably face risks including tariffs, high costs, and supply chain delays.
Again, Polestar’s localized supply chain strategy offers valuable lessons.
Though it manufactures in China, Polestar has established a robust supply chain management system in Europe to respond rapidly to local market needs and maintain competitiveness. For Chinese automakers, building a localized supply chain is no longer optional—it’s a necessary step for survival.
The European Market Is a Marathon, Not a Sprint
It took Tesla more than a decade to gain a firm footing in Europe. Polestar, too, owes its rapid ascent to the legacy and resources of Volvo. For Chinese automakers, Europe is not a market for “fast profits.” It’s a battlefield that demands patience, strategic investment, and long-term commitment.
The future path is already clear:
Focus on BEVs
Deepen localization
Build brand recognition
Optimize supply chains
Only by deeply and thoroughly executing these key strategies can Chinese automakers establish themselves in Europe’s fiercely competitive market—and achieve long-term, sustainable growth.
Based on its long-term insights into the overseas expansion of China’s new energy smart vehicle sector, the Yiou Auto Research Institute has released the “2025 Report on the Globalization of China’s New Energy Smart Vehicle Industry Chain – Belt and Road Edition.”
Click “https://www.iyiou.com/research/202503211504” to download the report.
For further information about the report, please feel free to contact the author, Chen Haonan, via email at: chenhaonan@iyiou.com.
