Chinese electric carmakers are taking on Europeans on their own turf — and succeeding

A man polishes an Atto 3 car from Chinese car maker BYD at the International Motor Show in Munich, Germany, on Sept. 4, 2023. The car has gained in popularity among Europeans.Janssen, like many other Europeans, is concerned about the environment, but he was also drawn to electric vehicles thanks to generous government subsidies for those willing to give up their gas-powered cars.

"China's auto industry has really fundamentally changed over the last 30 years, dating back to 1994 when issued its first auto sector industrial policy," says Scott Kennedy, senior adviser and Trustee Chair in Chinese Business and Economics at the Center for Strategic and International Studies. "I'm talking things like assisted driving. So all of these things that help you keep the lane and help you drive semi-autonomous. The takeaway rate on those features is much higher China than it is in the U.S., for example."

With sales of more than 12,000 units last year, the Atto 3 was not only BYD's top seller but also the best-selling electric compact SUV in Europe. Although the Model Y is larger and more powerful than the Atto 3, the difference has been critical in persuading customers like Janssen.Visitors look at a Geely Panda Mini on the opening day of the 20th Guangzhou International Automobile Exhibition in Guangzhou, in China's southern Guangdong province on Dec. 30, 2022.

At the heart of European concerns is the heavy subsidies that China's government has steered towards its auto industry. China controls a vast majority of the refining of materials that go into EV batteries. That means imposing additional tariffs on Chinese imports could risk retaliatory actions from Beijing, which in turn could lead to less affordable electric vehicles for everyone.The U.S. has long been concerned about the dependence on China for batteries and the potential threat from the country's automakers.

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