Maria Girich, Researcher of the International Best Practices Analysis Department at the Gaidar Institute, spoke about the reasons for weakening of the European auto industry, growing competition from China, and possible options for the industry's development, in a commentary for “Vzglyad”.
The expert cited China's advantage in electric vehicle production costs as one of the main factors putting pressure on European manufacturers. According to the International Energy Agency, electric vehicle production in China is more than 30% cheaper than in developed economies. Moreover, only in 2025, the cost of Chinese electric vehicles had decreased by another 8-10%. The size of the Chinese market also plays a significant role: in 2025, the country accounted for approximately 75% of global production and 40% of trade in electric vehicles.
High electricity prices remain an additional challenge for European industry. In 2025, electricity for energy-intensive industries in the EU was, on average, twice as expensive as in the US and more than 50% more expensive than in China. According to Maria Girich, this has a particularly severe impact not on the auto assembly industry, but on automotive suppliers, i.e., metallurgy, glass, plastics, parts, and component manufacturers.
The European Union is attempting to curb Chinese competition through trade restrictions. In 2024, the EU imposed additional tariffs on Chinese electric vehicles and later continued to develop a system of requirements for batteries and their carbon footprint. However, as the expert noted, trade barriers do not eliminate the difference in production costs. Moreover, Chinese companies may adapt their export structure or move production directly to Europe.
According to Maria Girich, a more effective solution for the EU might be to localize Chinese production in Europe rather than isolate the European market.
"The main risk for the EU is not that Chinese cars will completely displace European brands, but that Europe will gradually lose its high-tech and fast-growing automotive sector. Tariffs may slow the growth of Chinese imports, but they will not make production of European electric cars cheaper. Therefore, the most rational approach seems to be a shift from market protection to a localization policy: access for Chinese manufacturers to the European market in exchange for locating factories, producing batteries and components in the EU, creating jobs, using European suppliers, and developing R&D. In this case, competition with China could transform from a threat to the European auto industry into a source of investment and technological development," Maria Girich emphasized.