Chinese automakers expand European presence as US market turns hostile

Chinese automakers are intensifying their focus on Europe for their electric vehicle (EV) and hybrid exports as they continue to face high tariffs and trade restrictions in the United States under Trump administration policies.

According to a Bloomberg report, China’s automakers are preparing a new crop of hybrid and all-electric vehicles specifically for the Europe market, and they plan to use next week’s Munich auto show to kick off the next phase of their expansion in the region.

Among brands to be represented at the show are BYD Co., Xpeng Inc. and Zhejiang Leapmotor Technology Co., and they are expected to show off new models as they work to broaden their lineups and double down on the gains they have made in recent years.

A marriage of function and convenience

This push into Europe is intensifying as an EV price war grows more intense on the Chinese home turf, and the once lucrative US market becomes a hostile battleground due to trade hurdles.

Despite all that, this time is perfect for the expansion as EVs and hybrids are growing in importance in alignment with Europe’s desire to phase out the sales of new combustion-powered cars over the next decade.

There are currently lingering trade tensions between Beijing and the EU following their decision last year to impose tariffs on EVs imported from China but Chinese automakers have continued to grow anyway.

Not only have they come up with ways to add more hybrid and combustion models without triggering the duties, they have also formed local sales partnerships and committed to transfer some production to the region.

All that has made them credible threats to the dominance of carmakers like Volkswagen AG and Stellantis NV, which have been cutting costs to defend their margins in a barely growing European auto market.

The tariffs have also spurred collaboration, as Chinese manufacturers work together to navigate the new rules while European firms link up with Chinese rivals to stay ahead in areas like software and battery technology.

Will the US auto industry suffer following the shift?

Chinese automakers previously considered the US a lucrative market. However, since Trump stepped in with his policies, it has become more difficult for them to do business and thrive.

Some argue that China’s automakers shifting their attention to Europe will cost the American people, but Trump clearly hopes that local companies can step up as worthy replacements.

However, the president’s plan has some hurdles to overcome in the form of division in the US courts. It also just happens that the majority of the automakers in the US specialize in regular vehicles.

President Trump and his Republican Party have also proposed cuts to electric vehicle incentives, which experts believe could significantly hinder American car manufacturers’ competitiveness against their Chinese counterparts.

Tesla is currently the only American company ranked among the world’s 10 largest electric vehicle makers, but even Musk has lost ground to BYD and Geely, according to recent reports.

Europe has shown a willingness to deal with China over the years, and that has become even more apparent in the face of Trump’s tariffs. This means more cars will be produced and exported to consumers there.

Already U.S. automakers have steadily lost ground in Asia, Europe and Latin America in recent years with many consumers in those countries instead buying cars from Chinese companies as they offer a wide array of affordable electric and hybrid vehicles.

General Motors (GM) and Ford now earn a large majority of their profits in the United States and analysts have said their global sales could be reduced to rounding errors in the coming years if current trends persist.

“The United States needs to decide if they want an auto industry that can compete globally,” said Greg Dotson, an associate professor at the University of Oregon School of Law and former Democratic chief counsel for the Senate Committee on Environment and Public Works.

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