Chinese carmaker BYD’s European flagship showroom in Paris is located just steps away from the iconic Avenue des Champs-Élysées. It spans 6,000 square feet across two levels, a bright and spacious layout that conveys luxury long associated with premium European brands.
“Our customers used to buy BMWs and Porsches,” said BYD dealer Estelle Zhang. “But today, they think our cars are even further ahead technologically.”
Chinese cars are sweeping Europe, swerving around tariffs. BYD and other Chinese brands are making even greater advances in the UK than on the continent. The big loser is American EV champion Tesla. Despite the dangers to their domestic car industry, Europe believes that they have no alternatives and are softening trade barriers.
The thaw is visible in a series of top-level European pilgrimages to Beijing. French President Emmanuel Macron visited late last year. British Prime Minister Keir Starmer and Finnish Prime Minister Petteri Orpo went in January, ahead of a likely trip by German Chancellor Friedrich Merz.
Stung by the rapid deterioration of transatlantic relations, Europeans are seeking a reset. They continue to see China as a “systemic rival,” and criticize Beijing for supporting Russia’s war against Ukraine and flooding global markets with subsidized exports. But in many sectors — such as solar, wind, and EVs — Europe needs controlled cooperation with Chinese firms, through joint ventures, local production, and technology transfers, rather than simple dependence on imports.
“Europe is trying to diversify,” said Rosalie Klein, an Asia policy officer at the Paris-based Institut Montaigne think tank. “It’s about reducing strategic dependencies across the board, including on long-standing partners, such as the US. And allowing some Chinese companies to bypass tariffs under strict conditions doesn’t mean Europe suddenly trusts China more; it is simply a pragmatic, case-by-case approach.”
Europe imposed 35% tariffs on Chinese EVs last year, only to see BYD and other Chinese car companies drive around them. Chinese manufacturers absorbed the cost. They began exporting hybrids and plug-ins, which did not face the duties. From August 2024 to August 2025, Chinese plug-in hybrid sales in Europe increased fourteenfold.
The attraction is clear: Chinese cars perform well and are cheap. While European carmakers have struggled to produce affordable EVs — their average price is closer to €50,000 — the average starting price for a BYD electric vehicle in Europe ranges between €30,000 and €45,000, with smaller models like the Dolphin starting around €20,000 to €34,000.
BYD delivered more than one million vehicles outside of China in 2025, more than double the previous year’s total. In December 2025, one in ten cars sold in Europe was Chinese, outselling established European names such as Audi and Renault.
Chinese cars are gaining even more ground in Britain, which never imposed tariffs. Since no major mass-market British carmaker remains, a dozen Chinese automakers — led by BYD, Chery, and Geely — accounted for 13% of new car registrations in Britain, roughly double their market share a year ago, according to data from the Society of Motor Manufacturers and Traders.
The biggest loser is American EV maker Tesla. Tesla’s European sales fell by 40.2% year-on-year, reducing its European market share to just 0.7%. Tesla’s product lineup is aging, and its aggressive price-cutting strategy has hurt the resale value of existing cars, making fleets wary of the brand’s long-term value. Analysts also cite drag due to Tesla owner Elon Musk’s right-wing politics.
Chinese carmakers are doubling down on their advance by building European plants. BYD is opening plants in Hungary and Turkey, which enjoy a free trade deal with the EU. Battery maker CATL is building its first European plant there, too, while Ford is discussing a deal with Geely, another Chinese giant, to offer access to its European factory space.
In response, the European Commission is now poised to replace tariffs in exchange for Chinese carmakers agreeing to cap exports and set minimum prices. German carmakers pushed for the change. They export to China and have built up significant supplier bases there. Volkswagen sells China-made Cupra EVs to Europe, and it became the first automaker to agree to a minimum price, in return for the Commission suspending a 20.7% tariff.
Bringing down barriers carries risks. In 2013, Brussels exchanged tariffs imposed on Chinese solar panel manufacturers for minimum prices, which kept consumer costs artificially high while doing little to restore European competitiveness. Chinese solar companies continue to dominate Europe’s market today.
Even if minimum prices put the brake on Chinese cars, the continent risks having to import the key component of EVs: batteries. After Swedish battery maker Northvolt filed for bankruptcy last year, no major European battery producer remains in business.
“Europe is dealing with the lack of a secure battery supply chain, rigid regulation for EVs, and heavy bureaucratic burden for European carmakers,” Felipe Munoz from Car Industry Analysis said. “If we don’t catch up in terms of battery supply production, Europe will remain dependent on Chinese batteries.”
Expect a balancing act. While the US keeps Chinese vehicles off its highways, they will keep driving on the autobahns and autoroutes.
William Echikson is a Nonresident Senior Fellow with the Tech Policy Program and editor of the online tech policy journal Bandwidth at the Center for European Policy Analysis (CEPA).
Maria-Doriana Gheorghe is an intern with the Tech Policy program at the Center for European Policy Analysis. She is completing a master’s in public policy at Sciences Po in Paris.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
