We run very fast. We make decisions in five minutes.
A quiet but consequential transfer of industrial power is underway in Europe, as Chinese automakers — emboldened by speed, scale, and state support — move from exporting cars to building them on European soil. Faced with shrinking sales, American tariffs, and politically fraught factory closures, European manufacturers are selling or leasing their own plants to the rivals who are displacing them. What is unfolding is not merely a market shift but a renegotiation of who holds the future of one of the continent's most defining industries.
- Chinese brands have nearly doubled their Western European market share in a single year, reaching 8.6%, and are now moving to manufacture locally rather than simply export.
- European carmakers are trapped between collapsing sales volumes — down from 15.3 million vehicles in 2019 to under 13 million — and the political impossibility of mass factory closures.
- Rather than shutter plants, companies like Ford, Nissan, and Stellantis are handing capacity to Chinese rivals, a pragmatic but symbolically loaded concession.
- Volkswagen's CEO admitted no buyers are lining up for its excess factories, even as its own technology partner Xpeng publicly dismissed one of its facilities as outdated.
- BYD's executive captured the underlying competitive edge plainly: 'We make decisions in five minutes' — a pace that European industrial hierarchies are structurally unable to match.
- EU tariffs and 'Made in Europe' incentive rules are being prepared as countermeasures, but some executives argue the smarter play is to welcome Chinese production and capture the jobs it brings.
At an industry conference in London, the executive running Xpeng's European operations dismissed a Volkswagen factory as outdated — an awkward remark given that Volkswagen is both a shareholder and technology partner in Xpeng. But the moment crystallised something broader: Europe's automotive industry is in visible retreat, and China's is filling the space it leaves behind.
Chinese vehicles now hold 8.6 percent of the Western European market, nearly double their share from a year ago. BYD, Chery, Geely, Changan, and Dongfeng are no longer content to ship cars from abroad — they want to build them here. And European manufacturers, battered by falling sales and surplus factory capacity, are beginning to let them.
European car sales have fallen from 15.3 million vehicles in 2019 to under 13 million last year. American tariffs have further eroded export revenues. Closing factories would mean mass layoffs — politically toxic and financially complex. Selling or leasing capacity to Chinese competitors offers a less painful exit. Nissan is in talks with Chery over its Sunderland plant. Ford has agreed to sell part of its Valencia facility to Geely. Stellantis announced that two of its Spanish plants will produce vehicles for the Chinese brand Leapmotor.
Yet even this path has limits. Volkswagen's brand chief admitted that finding buyers for its excess plants remains difficult, and reports of a new owner for its Dresden factory — the first it has closed in 88 years — turned out to be false. Behind closed doors, European executives describe Chinese producers as credible competitors across every segment. Publicly, they speak of mutual benefit.
BYD is nearing completion of a factory in Hungary, though subcontractors on the project have faced allegations of labour law violations — claims the company denies. Its executive vice-president was direct about the company's preferred mode of operation: 'We run very fast. We make decisions in five minutes.' That decisiveness may be the most durable competitive advantage of all.
The European Commission is weighing new rules to restrict import incentives and has already layered tariffs of 17 to 35 percent on Chinese vehicles. But some European executives argue the more effective response is to encourage Chinese firms to produce locally, sourcing components within Europe and creating jobs in the process. Chery's UK chief executive has outlined a four-stage plan toward British manufacturing — and in March, the company's Jaecoo 7 became the top-selling car in the United Kingdom. The landscape is shifting faster than the policy meant to manage it.
At a conference in London this week, Elvis Cheng, who runs Xpeng's European operations, was asked about a factory Volkswagen had offered to sell. His response was blunt: the facility was outdated. The remark landed awkwardly—Volkswagen is both a shareholder in Xpeng and a technology partner—but it captured something larger happening across the continent. Europe's car industry, once the world's standard-bearer, is in visible retreat. China's is advancing.
The numbers tell the story plainly. Chinese vehicles now account for 8.6 percent of the Western European market in the first quarter of 2026, nearly double what they held a year earlier. Companies like BYD, Chery, Geely, Changan, and Dongfeng are no longer content to ship cars from across the world. They want factories here. They want to build in Europe.
European manufacturers, facing a crisis of their own, have begun opening doors they might once have locked. European car sales have collapsed from 15.3 million vehicles in 2019 to less than 13 million last year. American tariffs have strangled export revenue. The result is a continent full of underused factories and desperate balance sheets. Closing plants means firing thousands of workers—politically toxic and financially messy. Selling capacity to Chinese rivals, by contrast, solves the immediate problem. Nissan is negotiating with Chery to hand over part of its sole European plant in Sunderland, England. Ford has agreed to sell a portion of its Valencia facility in Spain to Geely. Stellantis, which owns Peugeot, Fiat, and Vauxhall, announced last week that two of its Spanish plants would manufacture vehicles for Leapmotor, a Chinese brand.
Yet even this path is not assured. Thomas Schäfer, chief executive of Volkswagen's core brand, admitted that finding buyers for excess capacity remains difficult. Reports that a new owner had emerged for Volkswagen's Dresden factory—the first German plant the company has closed in 88 years—were false, he said. "I don't have anybody knocking on the door," he told the same conference where Cheng delivered his critique.
Cheng indicated that a deal with Volkswagen remained possible if the right location could be found, though he emphasized that building a new factory from scratch was also under consideration. Behind closed doors, European executives acknowledge the threat is real. One senior manufacturer described Chinese producers as "very credible" competitors capable of challenging traditional carmakers across every segment, from mass market to luxury. Publicly, however, European leaders frame Chinese investment as potentially beneficial. Antonio Filosa, Stellantis's chief executive, spoke of partnerships that could benefit both sides. Markus Haupt, who runs Seat and Cupra within the Volkswagen Group, suggested that if Chinese firms operated under the same labor and material costs as European producers, competition would become genuinely fair.
BYD, the world's largest maker of electric vehicles, is nearing completion of a factory in Hungary, though subcontractors on the project have faced allegations of labor law violations. The company denied wrongdoing, stating it prioritizes worker protections and legal compliance. BYD's executive vice-president, Stella Li, made clear in a recent interview that the company prefers to operate independently. "I think it's better to run by ourselves," she said. "We run very fast. We make decisions in five minutes." That speed—the ability to move and decide faster than traditional European hierarchies allow—may be the deepest competitive advantage.
The European Commission is considering new rules that would restrict imports from receiving certain electric vehicle incentives, layering additional tariffs of 17 to 35.3 percent on top of existing duties meant to offset Chinese government subsidies. Yet some European executives argue the better strategy is to invite Chinese manufacturers to produce locally and source components within Europe. That would create jobs and attract investment. Chery, operating under the brands Omoda and Jaecoo, has already made its ambitions clear. Its UK chief executive, Gary Lan, announced a four-stage plan culminating in British production. The company is currently in stage two, with a research center coming soon. By next year, he suggested, there would be more to announce about manufacturing vehicles in Britain. Chery's Jaecoo 7 became the top-selling car in the UK in March, a symbolic moment that underscores how quickly the landscape is shifting.
Notable Quotes
It's a little bit, I would say, old.— Elvis Cheng, Xpeng's managing director for north-eastern Europe, on a Volkswagen factory offered for sale
I think it's better to run by ourselves. We run very fast. We make decisions in five minutes.— Stella Li, BYD executive vice-president, on why the company prefers independent operation
The Hearth Conversation Another angle on the story
Why would a European carmaker sell a factory to a Chinese competitor? Isn't that handing over market share?
It's not really a choice anymore. European sales have fallen by two million vehicles since 2019. They have more factories than they can fill. Closing a plant means laying off thousands of workers and absorbing massive costs. Selling to a Chinese company at least generates cash and avoids the political disaster of a shutdown.
But doesn't that just accelerate their own decline?
Probably. But the decline is already happening. The question for these companies is whether they'd rather manage a slow contraction or face a sudden collapse. Selling capacity buys time, even if it's time they're using to compete against the same buyers they just helped.
What's different about Chinese carmakers that makes them move so fast?
They're not carrying the weight of legacy operations. No pension obligations, no union agreements, no 88-year history of doing things a certain way. BYD's executive said they make decisions in five minutes. European companies make decisions in committees that meet quarterly.
Is there anything European manufacturers can do to compete?
The tariffs and new regulations might slow Chinese growth slightly. But if Chinese firms build factories in Europe and hire European workers at European wages, the tariffs become irrelevant. Then it's just a straight fight on product and price.
And who wins that fight?
That's the question keeping European executives awake. They're betting that Chinese companies will want to partner rather than dominate. But the Chinese executives are saying they'd rather run things themselves.