Financial Times thread on cars made in China

Sander Tordoir, chief economist at the Centre for European Reform, shared a Financial Times-linked thread on X on May 22 about a question now running through Europe’s car industry: whether vehicles designed or built in China should be finished, assembled or fully produced inside Europe. The thread pointed to a widening split between policy goals and commercial pressures as European manufacturers deal with weak demand, idle factories and rising Chinese competition. The issue is no longer only imports. It is also where the next wave of cars for Europe will actually be made. Chinese carmakers and their European partners are testing several models at once. Some are shipping finished vehicles from China. Others are looking at knock-down assembly, shared production lines or outright purchases of underused European plants. Those choices matter because EU tariffs and some consumer incentives favor vehicles assembled in Europe, while Chinese supply chains still offer lower costs and faster development cycles. (x.com) ### Why are European factories suddenly part of the China car debate? European car sales fell from 15.3 million in 2019 to less than 13 million in 2025, according to the Financial Times report cited by Chin@Strategy. That drop has left manufacturers with excess capacity across the region, creating pressure to find new users for plants that would otherwise face cutbacks or closure. (france24.com) Stellantis said on May 8 it was considering a partial sale of its Villaverde site in Madrid to Leapmotor, its Chinese joint venture partner, and it already plans to let Leapmotor build a model at Zaragoza in Spain. AFP reported that an Opel-branded electric SUV could also be produced in Zaragoza in collaboration with Leapmotor. ### Which companies are already moving production or looking for sites? (chinastrategy.org) Chery bought a former Nissan plant in Barcelona in 2023 and plans to produce 200,000 vehicles a year there, AFP reported. The company also said last month it would open a research and design center in Paris focused on a small electric car for European production. Nissan is in talks with Chery over part of its Sunderland plant in Britain, according to the Financial Times report cited by Chin@Strategy. (france24.com) Ford has also reportedly agreed to sell part of its Valencia plant in Spain to Geely, the same report said. ### Why not just keep making the cars in China? EU trade policy is part of the answer. Chin@Strategy reported that electric-car tariffs on Chinese-made vehicles range from 17% to 35.3%, depending on the manufacturer, and that the European Commission is considering “Made in Europe” rules that would tie some incentives more closely to local production. (france24.com) AFP separately reported that incentives available only to European-assembled cars have become another hurdle for Chinese manufacturers trying to gain share. (chinastrategy.org) Location also affects labor politics and industrial policy. Selling plant capacity to a Chinese partner can preserve jobs in the short term and avoid politically difficult closures, but it can also deepen Europe’s dependence on Chinese technology, components and capital. AFP described Stellantis’ move as the first time a European carmaker had so openly presented this kind of production collaboration with a Chinese partner. (chinastrategy.org) ### How big is the Chinese presence in Europe already? Chinese brands accounted for 8.6% of the western European market in the first three months of 2026, nearly double a year earlier, according to automotive analyst Matthias Schmidt as cited by the Financial Times report. AFP, citing Dataforce, put the figures at 9% of overall European sales and 14% of electric-vehicle sales. (france24.com) Sander Tordoir and Brad Setser wrote in a May 2026 CER paper that China’s 2025 fourth-quarter car exports, annualized, had already hit 10 million vehicles, a level analysts had expected only by the end of the decade. Their paper said German and European manufacturers were being squeezed in China, in third markets and at home. ### What is the immediate decision facing carmakers now? Elvis Cheng, Xpeng’s managing director for north-eastern Europe, said this week at a Financial Times conference that one plant under discussion was “a little bit, I would say, old,” according to the report cited by Chin@Strategy. (chinastrategy.org) That remark captured the practical issue facing both sides: Chinese groups want European capacity, but not at any price or in any condition. (cer.eu) The next concrete moves are already visible in Spain and Britain. Stellantis and Leapmotor are advancing plans around Villaverde and Zaragoza, while Nissan’s Sunderland site and Chery’s Barcelona operations remain focal points for any further shift from China-based exports toward Europe-based assembly. (france24.com) (chinastrategy.org)