European policymakers have observed Chinese automakers entering the market steadily, offering affordable, high-quality vehicles that challenge the continent’s longstanding automotive dominance. Critics warn that this shift threatens Europe’s cherished industry legacy, especially after the recent new China shock.
The automotive sector, a cornerstone of Europe’s industrial output, directly and indirectly supports over 13 million jobs across the EU.
However, recent assessments suggest that European manufacturers may soon achieve cost parity with their Chinese counterparts, with some analysts projecting equality as early as 2028 or 2029. While optimism is tempered by caveats, the previously insurmountable gap appears to be narrowing.
Harald Hendrikse, Citi’s European head of automotive research and author of a May note outlining the 2028‑2029 timeline, says achieving this goal depends on two factors: accurate implementation of the “Made in Europe” provisions in the forthcoming Industrial Accelerator Act (IAA) and sustained access for Europe to Chinese technology and expertise.
Hendrikse emphasized, “The key point is that Chinese companies are fully open to collaborating with Western manufacturers, enabling rapid transfer of even newly developed Chinese technologies to Europe.”