Tariffs on E-Cars from China Shift Production Back to Europe

The shift is particularly evident at Tesla: for example, the share of China-produced Tesla vehicles in the total European electric vehicle market fell from 23 to 19 percent over the comparison period. The decline is considered an indication that manufacturers are responding to the changed trade conditions by withdrawing production capacity from China or at least not expanding it further.

Production in Germany Grows, but Sales Are Weak

At the same time, European in-house production is rising. According to data from the German Association of the Automotive Industry (VDA), production of pure electric cars (BEVs) within Germany rose by 15 percent to 1.22 million units last year. However, according to VDA statistics, this happened "bei gleichzeitig einbrechendem Absatz". Whether this is due to the relocation of production capacity from China is not evident from the VDA data.

A more nuanced picture emerges among Chinese manufacturers themselves. "Insbesondere die Autobauer BYD und Geely hätten ihre Importe nach Europa trotz der Einführung der Zölle seit 2024 deutlich steigern können", the T&E study states. This is mainly due to the high overproduction of these companies in China, according to the association's investigation. The figures are based on production and sales data from the provider GlobalData.

BYD and Geely Defy the Tariffs

SAIC is an exception: "Ausnahme bilde das Unternehmen Saic, dessen Absatzzahlen in Europa seit 2024 stark zurückgegangen seien." According to T&E, this is because tariffs on SAIC's e-cars are almost twice as high as those on vehicles from BYD or Geely. This is because the EU concluded in an investigation that SAIC benefits from state subsidies in the value chain to a greater extent than its competitors.

In addition, Chinese manufacturers have increasingly focused on plug-in hybrids (PHEVs) for their exports from China: "Chinesische Marken halten nun einen Anteil von 13 Prozent am PHEV-Markt der EU, gegenüber 3 Prozent im Jahr 2024", it said. This shift indicates that manufacturers are trying to circumvent the tariff barriers on pure electric cars by placing greater emphasis on hybrid vehicles.

Chinese Plants Emerging in Europe

Since the EU investigation into subsidies in 2023, ten planned production facilities of Chinese manufacturers on the European continent have become known, according to the association. These locations are seen as a further sign that Chinese conglomerates are committed to local production in Europe in the long term in order to avoid tariff costs and be closer to the sales market.

Overall, the study paints a picture of two opposing trends: While Western manufacturers are reducing their dependence on China in e-car production, Chinese providers are increasingly seeking the route via direct imports – especially of hybrid models – or via the establishment of their own plants in Europe. The further tariff rates and investment decisions in the coming months will show which of the two strategies prevails in the market.

Outlook and Assessments

The German Association of the Automotive Industry also pointed to its own survey, according to which German BEV production increased significantly in 2024. Whether the increase is solely attributable to trade policy or whether other factors such as general market developments also play a role was left open by the VDA data.

Analysts view the development with mixed signals. JP Morgan Chase & Co. most recently rated Volkswagen (VW) vz as "Neutral," dated July 10, 2026. According to observers, the market valuation of established European manufacturers depends heavily on whether they succeed in translating the increased production capacities in Europe into growing sales figures – because the domestic market is simultaneously showing weaker demand.