China's automotive overproduction poses major threat to European markets

In April 2025, the Shanghai auto show highlighted China's dominance in the auto manufacturing sector, especially in electric vehicles (EVs). The event demonstrated a dramatic rise in sales for Chinese automaker BYD, which saw an increase of over 300% compared to the same month the previous year, with reported sales reaching 12,600 units. This growth signifies a strong foothold for Chinese manufacturers in the burgeoning European market, which is vital due to its emphasis on electric vehicles and sustainability. China has emerged as the world's largest exporter of sedans and SUVs, with over 4 million vehicles exported annually. Significantly, it has achieved substantial advancements in EV manufacturing, batteries, and charging technology. However, experts like Professor Stefan Bratzel have raised concerns about the implications of China's 'massive overcapacity.' This situation is primarily due to the influx of brands and heavy state backing for industrial growth. As a result, there could be significant challenges for European manufacturers to maintain their market share as they face increased competition. Despite these challenges, European manufacturers still retain brand power that is crucial for generating consumer excitement. Matt Schmidt, founder of Schmidt Automotive Research, emphasized that while Chinese automakers are making progress, the influence of established European brands could still safeguard their market position. Schmidt compared the potential emergence of Chinese brands in Europe to the experience of South Korean automakers such as Kia and Hyundai, who managed to secure a notable market presence by achieving a 7-8% market share. The European Union (EU) is reportedly engaging in discussions with China regarding possible measures to regulate the minimum prices of electric vehicles to promote fair competition. There is also talk of alternative arrangements that could incentivize Chinese manufacturers to share technology with European counterparts in exchange for increased access to the EU market. As these dynamics play out, it is evident that both sides are maneuvering to establish a balance in this competitive landscape, with the EU striving to protect its automotive sector while adapting to the rapidly changing global market forces.