A new in-depth report by the Financial Times describes a profound change that is redefining the global automotive industry.
Faced with the high costs of the transition to electric and the growing difficulty of remaining competitive, major international manufacturers are increasingly exploiting China as a production and export platform for their vehicles.
What was once just a large market opportunity has turned into a true strategic manufacturing base, with significant economic and geopolitical consequences.
The new global automotive production geography
At the heart of the phenomenon, the FT emphasizes, is the choice of many foreign car manufacturers to transform Chinese plants, often managed in joint ventures, into production hubs for global export.
According to the Rhodium Group, foreign companies already represent about two-fifths of Chinese cars headed to Europe. As Zhang Yu of Automotive Foresight explains, China’s manufacturing advantage is now clearly superior.
Brands like Volkswagen, BMW, Nissan, and Hyundai are increasing shipments from plants with unused capacity to third markets.
While the United States has almost completely closed its doors with tariffs up to 100%, Europe remains an attractive target despite its own tariffs up to 45%. Volkswagen itself has not ruled out this possibility.
A historic realignment
Yuqian Ding of HSBC compares this evolution to the shift of American production from Michigan to Mexico over the past forty years.
Today China is no longer just a low-cost producer, but a technological leader with a complete supply chain that is difficult to replicate elsewhere.
Western managers argue that this strategy will reduce costs, access more advanced technologies, and strengthen overall competitiveness. Critics, however, see it as a sign of weakness: a desperate attempt by struggling European companies, with declining sales and semi-empty plants, while Chinese cars flood their domestic markets.
Chinese export figures
China is now the world’s largest car exporter. The numbers provided by the FT are telling: passenger vehicle exports rose from less than one million in 2020 to over 7 million in 2025. In the first four months of 2026, they have already reached 3.1 million units, a 61% increase compared to the same period last year.
Deliveries to Europe alone increased by 29% in 2025 and 72% in the first quarter of 2026.
A particularly significant figure is the composition of exports: electric and plug-in hybrid models now represent 44% of the total, compared to 7% five years ago. This demonstrates that China’s competitive strength is no longer based solely on costs but increasingly on technological leadership.
Strategies of Chinese manufacturers and foreign joint ventures
Groups like Geely (owner of Volvo, Polestar, and Zeekr) and Chery are accelerating decisively. Chery’s Jaecoo 7 model became the best-selling car in the UK in March, after just 14 months on the market. The goal is to move from a mere outlet for internal overcapacity to a source of higher margins abroad.
Foreign manufacturers have also adopted this logic. Tesla has long exported Model 3s produced in Shanghai, while Nissan aims to reach 300,000 vehicles exported from China by 2030, with models developed together with Dongfeng destined for Latin America, Southeast Asia, and potentially Europe.
The FT summarizes the emerging formula as “in China, for China, to global.”
The double-edged sword for Europe
Producing in China costs at least 30% less than in advanced countries, with reductions up to 50% for some electric vehicles, according to Volkswagen.
For European manufacturers, however, this choice is double-edged: many domestic plants operate below 50% capacity.
For this reason, some groups are seeking hybrid solutions. Stellantis will produce Dongfeng electric vehicles at the Rennes plant, and Opel will use Leapmotor technology in Spain. However, this creates a dependency that increases strategic risk.
Strategic concerns
Experts like Sander Tordoir of the Centre for European Reform warn that engineering, production, and innovation risk becoming increasingly concentrated in China. Volkswagen’s Robert Cisek openly acknowledges that China sets the pace of innovation: either embrace it or risk falling behind.
Managers from the Dragon, for their part, admit they still learn from European manufacturers in terms of premium quality and international management, but proudly claim the world’s most complete supply chain for electric vehicles and unparalleled development speed.
The European response
Faced with this wave, the European Commission has proposed the Industrial Accelerator Act, which introduces local content requirements (“Made in Europe”) to access public subsidies. The goal is to push for at least 50% of the main electronic systems to be produced in the EU by 2030.
However, many analysts doubt the effectiveness of these measures. The dilemma is complex: overly strict measures could harm the very European manufacturers, now deeply integrated with Chinese technology.
