Chinese automakers are rapidly expanding their manufacturing footprint in Europe, with projections suggesting up to 1.5 million vehicles could be built annually on the continent by 2035. European lawmakers are now working to ensure that this growth benefits local suppliers through new regulations. The Industrial Accelerator Act (IAA) is expected to introduce quotas for European-made parts in vehicles assembled by Chinese brands.
Chinese Brands Ramp Up European Production
This year, approximately 90,000 vehicles from Chinese brands such as BYD, Leapmotor, and Chery are expected to be built in Europe. These vehicles are being manufactured in both new facilities and existing plants that had previously been underutilized.
According to Global Mobility, annual production of Chinese-branded vehicles in Europe is forecast to reach 1 million units by 2030 and 1.5 million units by 2035. This marks a significant increase from current levels and highlights the growing presence of Chinese automakers on the continent.
Lawmakers Aim to Boost Local Manufacturing
European policymakers are seeking to strengthen the region’s industrial base by encouraging automakers to source more components locally. The Industrial Accelerator Act (IAA) is being developed to introduce quotas for European parts in vehicles built across the continent.
Economist Sander Tordoir noted that without such measures, there is a risk that Chinese companies could operate assembly plants in Europe that rely almost entirely on imported components, providing minimal economic benefit to local industries.
Chinese Automakers Expand Local Operations
BYD is preparing to start production in Hungary and is considering an additional plant in Spain. Meanwhile, Jaecoo and Omoda vehicles are already being built in Spain, and Leapmotor will soon begin manufacturing EVs at the Stellantis site in Zaragoza. Geely is also set to produce vehicles in Valencia through a partnership with Ford.
The primary motivation for Chinese brands to build vehicles locally is to avoid import tariffs. However, if the IAA requires a higher percentage of European-made components, companies with vertically integrated supply chains, like BYD, may need to reassess the value of further investment in local production.
Competitor Comparison
Chinese brands are increasing their market share in Europe, competing directly with established European, Japanese, and Korean automakers. In 2025, Chinese brands held approximately 7.4% of the European market, having doubled their share from the previous year. This rapid growth puts pressure on traditional manufacturers to adapt to changing market dynamics and regulatory requirements.
Historical Context
In the first half of 2025, total vehicle sales in Europe reached 8,962,000 units, a decrease of 4.6% year-over-year. Despite the overall market decline, Chinese brands managed to double their market share between 2024 and 2025, reflecting their aggressive expansion and increasing acceptance among European consumers.
Why this matters
The projected surge in Chinese vehicle production within Europe could reshape the region’s automotive industry, influencing supply chains, employment, and technology transfer. By introducing local content requirements, European lawmakers aim to ensure that the economic benefits of this growth are shared with domestic suppliers and workers.
For Chinese automakers, adapting to these new regulations will be crucial for maintaining their momentum in the European market. The outcome of these policy changes could set a precedent for how global automakers approach local manufacturing in other regions.
What this means for buyers
Consumers in Europe can expect a wider range of vehicles from Chinese brands, potentially at more competitive prices as local production ramps up. However, buyers should watch for changes in vehicle specifications and features as manufacturers adjust to new local content rules. Those considering a Chinese-branded vehicle may benefit from waiting to see how these regulatory changes impact pricing, availability, and after-sales support.
Key Specs
- Projected Annual Production by 2035: 1,500,000 units
- Chinese Vehicles Built in Europe (2026): 90,000 units
- Market Share of Chinese Brands in Europe (2025): 7.4%
- Total European Vehicle Sales (H1 2025): 8,962,000 units
- Year-over-Year Sales Trend (2025): -4.6%
Source
Images sourced from: carscoops.com, time.com
