A Changing Road: European Carmakers and the Rise of Chinese Rivals

The global car industry is currently experiencing a major shift in power. For many years, European companies led the market, but today, Chinese carmakers are growing quickly and gaining influence. This change is becoming very clear as Chinese brands look for ways to build their vehicles directly inside Europe, while traditional European manufacturers struggle with lower sales and empty factory space.

According to The Guardian Business, Chinese car sales in western Europe have grown significantly. In the first three months of the year, these vehicles made up 8.6% of the market, which is nearly double the amount from the same time last year. Matthias Schmidt, an automotive analyst based in Berlin, noted this rapid increase as a sign of the changing landscape. As these Chinese companies, such as BYD, Geely, and Xpeng, look to expand further, they are now searching for places to manufacture their cars within Europe.

For European carmakers, this situation creates a difficult choice. Many companies have seen their total sales drop from 15.3 million in 2019 to less than 13 million in 2025. This decrease, combined with new US tariffs — taxes on goods brought into a country — has made it harder for European brands to sell their cars abroad. As a result, these companies have more factory space than they actually need. Instead of closing these sites and firing thousands of workers, some European manufacturers are choosing to rent or sell their extra space to their new Chinese competitors.

This trend is already visible across the continent. For example, Nissan is currently in talks with the Chinese brand Chery to share part of its factory in northern England. Meanwhile, Ford has reportedly agreed to sell a portion of its plant in Spain to Geely. Stellantis, which owns brands like Fiat and Peugeot, has also started working with a Chinese partner called Leapmotor to build cars in its Spanish facilities. Antonio Filosa, the chief executive of Stellantis, stated that he believes a strong partnership can be beneficial for both sides.

However, not every deal is easy to make. Elvis Cheng, a director at Xpeng, recently shared his thoughts on working with European partners. He noted that some of the older factories currently available in Europe are not suitable for modern car production. While Xpeng is still interested in finding a location in Europe, the company is also considering building its own new factories from the ground up. Similarly, Thomas Schäfer, the chief executive of the Volkswagen brand, mentioned that finding the right buyer for older factories is not always simple, noting that there is not always a line of companies waiting to take over these sites.

Behind the scenes, the mood among European car executives is more cautious. One executive at a large manufacturer told The Guardian Business that Chinese companies are now very credible and represent a serious threat to traditional brands. This competition is not limited to cheap, mass-market cars; it also reaches into the luxury car market. Despite these private concerns, many European bosses continue to say publicly that these partnerships are a necessary step to stay competitive in a changing global economy.

Looking ahead, the future of the European car industry remains uncertain. While selling factory space provides immediate cash and protects jobs in the short term, it also helps Chinese rivals establish a stronger presence on European soil. Some companies are trying to balance this by looking for partners outside of China as well, hoping to keep their options open. As the market continues to evolve, European manufacturers must decide if these partnerships are a smart way to survive or if they are simply helping their rivals grow faster at their own expense. For now, the door remains open, and the shift in the global car market shows no signs of slowing down.