European carmakers can regain a significant part of the EU electric vehicle market lost to China-made EVs if the bloc maintains its car CO2 targets while also levying tariffs, according to a new forecast by Transport & Environment (T&E). European carmakers are set to launch a range of more affordable EVs this year and in 2025 in order to meet the targets.
Imports from China – including Tesla, BMW and Volvo – are on track to reach a quarter of EVs sold in Europe this year, T&E finds. But this could decrease to 20% market share in 2025 and 18% the following year if both tariffs on China-made EVs, and the EU emissions standards next year, go ahead.
However, China-made EVs could expand their foothold to 27% of the European BEV market next year if the EU delays the 2025 CO2 targets and relies only on tariffs, T&E estimates. Some European carmakers have called on the bloc to postpone or soften its standards next year. This would cause BEV sales by EU manufacturers to stagnate as they would continue to focus on more profitable combustion engines and delay the roll-out of affordable electric cars.
Julia Poliscanova, senior director for vehicles & emobility supply chains at T&E, said: “Higher EV tariffs are right but only in tandem with the car CO₂ targets. They are part of a coherent industrial policy to boost electric car production in Europe. However, the EU risks having the worst of both worlds if it delays the 2025 CO2 targets while limiting the affordable models imported from China.”
EU tariffs on EVs from China have had a mixed impact so far, according to T&E analysis of the EV-Volumes database. MG had its largest ever drop in BEV market share in Europe, falling from 4.1% share in August 2023 to 2.4% in August 2024, the research shows. BYD continued to expand its EU share though at a slower pace than before, growing from 1.6% in August 2023 to 2.9% BEV market share in the same month this year. Geely increased its market share from 1.3% in August last year to 2% in August 2024.
Beyond EVs, the EU also needs a more coherent approach to its homegrown battery industry, T&E said. Domestic battery producers have experienced setbacks, driven by global market dynamics and cheap Chinese batteries.
Unless action is taken, 59% of the battery production planned for Europe is at risk of not going ahead, T&E estimates, and would likely be scrapped. This would lead to a loss of billions of investment and close to 100,000 potential jobs. T&E called for an EU investigation into battery cells to enable trade defence measures.
Julia Poliscanova said: “It makes no sense to jeopardise the billions of investment in EU gigafactories while keeping the lowest battery tariff in the world at just above 1%. The EU needs to look seriously at trade defence measures while also supporting domestic production with an EU Battery Fund and policies that reward clean battery manufacturing.”
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T&E briefing: EU’s Trade Defence - Where’s next for EU’s EV and battery trade policy
