Illustration: Xia Qing/GT
As European carmakers are grappling with cost challenges amid the green transition, the pending US vehicle import tariffs are further weighing on the European auto industry. At this juncture, policymakers in the bloc may need to consider primarily the potential benefits of industrial cooperation with Chinese companies.
EU carmakers, including Porsche, BMW and Mercedes-Benz, are making a fresh push into new hybrids and upgraded combustion engine cars even as they increase the rollout of electric vehicles (EVs), in a bid to address the cost challenges as they navigate their slower-than-expected transition toward making EVs mainstream, according to a report by the Financial Times on Sunday.
European companies are struggling to make profitable and affordable EVs, particularly due to the high cost of batteries, which is slowing down the progress of the green transformation of the European automotive industry, according to an article by the European Parliamentary Research Service in October. EVs accounted for 13.6 percent of total sales in the bloc in 2024, a drop from 14.6 percent in 2023, according to data from the European Automobile Manufacturers' Association.
Additionally, European carmakers are facing new pressures from tariff threats from the US. Last week, the US announced plans to impose import tariffs on cars, starting at about 25 percent, with the possibility of further increases within the year. For European carmakers, this substantial increase in tariff rates would exacerbate existing pressures.
Europe has set ambitious goals for its green transformation, but the current situation of carmakers indicates that the road is not smooth. Finding ways to reduce costs in the green transition has become an urgent task. Given the advantages in cost controls demonstrated by Chinese EV makers, Europe needs to reconsider how to collaborate with China in this area to advance industrial development.
There are misleading narratives in foreign media outlets regarding the competitive advantage of Chinese EVs. For example, some reports suggest that Chinese EV manufacturers have reduced costs primarily due to a "bruising price war," while others are attributing it to so-called subsidies. However, neither is accurate. In reality, Chinese companies are lowering costs through technological advancements, particularly by investing in and improving cutting-edge technologies.
There are more profound reasons. The cost advantage of Chinese EVs is also based on the foundation of the mature and complete domestic supply chains, the vast scale of the economy and market, and the continuous industrial chain upgrading. These factors collectively provide Chinese automakers with a significant cost advantage compared with overseas competitors.
From a cooperation perspective, China and Europe have strong complementarities in the EV sector. The cooperation between Chinese enterprises and the European automotive industry is expected to bring significant positive impacts amid the current challenges of cost issues and US tariff pressures faced by Europe.
European automakers have advantages in branding and traditional technologies, but they lag behind in EV development. China has accumulated rich experience in EV technology, battery manufacturing and infrastructure development, along with a large market and cost control capabilities. Both sides can engage in deep collaboration in areas such as technology research and development, battery production, and infrastructure construction, jointly reducing costs.
Despite the trade frictions caused by Europe's protectionist tariffs on Chinese EV companies, Chinese companies have not changed their open approach or their efforts to expand industrial cooperation with their European counterparts.
For instance, a delegation of about 30 Chinese enterprises headed to Germany on Monday for a three-day visit, led by the China Council for the Promotion of International Trade (CCPIT), aiming to strengthen communication and exchanges and deepen practical cooperation with European enterprises, especially carmakers and car industrial chain key players, the CCPIT said.
Cooperation between Chinese enterprises and the European automotive industry can not only help European car manufacturers address the cost challenges of the green transformation and respond to the threat of US tariffs, but also enhance their competitiveness in the global market, creating broader development opportunities for both sides. Such mutually beneficial cooperation is not just a temporary solution to current challenges, but also a proactive attempt to promote the sustainable development of the global automotive industry.
The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn
