“I think it is doomed,” the Czech told Radio Free Europe (RSE), explaining the main reason he left the job.
“The industry is doomed.” Thomas asked that his last name not be used in this story.
The storied European car industry is facing the threat of a flood of high-quality Chinese vehicles with extremely low prices – some as low as 10,290 euros in certain markets – which have started arriving on the continent, especially after the Covid-19 pandemic.
Experts warn that this influx threatens the industry that has been the foundation of European production for decades.
Despite tariffs imposed by Brussels in 2024 of up to 35 percent on some Chinese electric cars (EVs), with an additional 10 percent duty, sales of Chinese vehicles in Europe almost doubled between 2024 and 2025, with more than half a million Chinese models sold in the first nine months of the year.
Chinese EV giant BYD has reported a 225 percent year-on-year increase in sales, becoming the EU’s leading EV maker for several months in 2025, despite tariffs. Other manufacturers have circumvented EU trade barriers on EVs by supplying vehicles with internal combustion engines and hybrids that are not subject to the same tariffs.
Beijing’s auto industry dates back to the 1950s, but its manufacturers have long had a reputation for poor quality and clumsy design, limiting their international influence.
All that changed recently
Before the global economy ground to a halt in 2020 due to the coronavirus pandemic, Thomas says technical experts in the European car industry dismissed Chinese brands, saying: “They’re terrible, they don’t know how to build cars. It’ll take them 20, 30, 40 years to get to our level, and then we’ll be way ahead.”
“What happened is they basically overtook us in five years,” he said.
“Now their cars are really amazing.”
A series of circumstances
Chinese manufacturers have enjoyed a cost advantage for years thanks to cheap, mostly coal-based energy and a labor force with minimal rights. But recently, a series of circumstances has caused Chinese cars to become significantly cheaper than Western ones.
In response to the Kremlin’s invasion of Ukraine in 2022, the EU banned steel imports from Russia. China, meanwhile, has massively increased its imports of high-quality metals from that country.
In addition, China’s auto industry has taken advantage of the huge advantage of mass production over the past decade, which has allowed it to significantly reduce costs.
The country’s car industry was already the largest in the world by 2009, but manufacturers mostly focused on the oversaturated domestic market. That changed when intense price wars within China forced manufacturers to look for markets outside the country. In 2023, China has overtaken Japan to become the world’s largest car exporter, producing tens of millions of vehicles each year.
There are also alleged subsidies
China denies supporting carmakers, but an EU investigation in 2024 found that public money was “detected throughout the entire supply chain”, from the mines that extract raw materials to the ships that transport finished electric vehicles to Europe.
The United States has imposed 100 percent tariffs on Chinese electric vehicles in 2024 after its investigation concluded that the US auto industry was “materially harmed” by some subsidized Chinese models.
Paul Bennet, a partner in the British consulting firm for the automobile industry Madox Square, told RFE/RL that the rapid penetration of Chinese vehicles into the European market may not be just a matter of business.
“Overall, while the economic benefits are clear, the geopolitical aspects of this strategy should not be overlooked,” he said. “In my view, it’s probably part of a broader effort by China to reshape global economic dynamics and strengthen its position on the world stage.”
While some insiders say Europe still has a chance to fight back, time is running out. Bennett wrote in September that the future of the continent’s auto industry, which employs around 13.2 million people and supports millions of other jobs in dependent businesses, now “hangs in the balance”.
Customs evasion
Under current market rules, a Chinese vehicle produced within the EU would not be subject to the same tariffs as one imported from outside the bloc. Chinese manufacturers react quickly and take advantage of the opportunity presented to them.
China’s BYD is in the process of setting up a $4.6 billion factory in Hungary, and cars are already being produced in Barcelona through a joint venture between Spain’s Ebro-EV Motors and China’s Chery brand. Negotiations are underway on further production bases in other EU countries, including Italy and Poland.
In addition, Chinese car brands have already established production facilities in Serbia.
Bennet told RFE/RL that Serbia was likely chosen due to a number of factors, including Belgrade’s free trade agreements with Russia and the EU, and Serbia’s potential future membership in the European Union, which makes the country “an attractive long-term investment that potentially offers easier access to EU markets in the future.”
Many European car brands, meanwhile, are facing a shrinking consumer base for their cars in China – once a key market – as well as domestically, as sales of imported Chinese cars rise in Europe.
Bennett called on car manufacturers to put pressure on the European Commission to introduce an obligation for Chinese firms to operate in the EU through joint ventures in which European brands would have a majority stake.
Others called for the EU and the US to open their markets to each other, excluding China.
Beijing and Brussels also continued negotiations on a guaranteed minimum price for Chinese electric vehicles on the European market, with the aim of limiting price cuts by domestic manufacturers.
Industry veteran Thomas worries that if current trends continue, Europe’s wider industrial base could be threatened. He fears “far greater consequences than we can imagine now, such as the loss of industrial self-sufficiency and technical know-how, which would lead to enormous security risks in the future.”
The automotive sector, he says, remains “the biggest industrial driver and cradle for young engineers, with careers in defence, research and development”.
Thomas says he finds it hard to imagine a political solution to the economic challenge facing European carmakers.
But he adds: “I hope I’m wrong, I really hope I’m wrong.”
(Vijesti.ba)
