Chinese automakers are expanding their European factories and supplier networks ahead of new “Made in Europe” rules

Chinese automakers are accelerating investments in factories and supplier networks in Europe ahead of the introduction of rules that would require the use of more locally produced components and services. The strategy could reduce the effectiveness of measures through which the European Union is trying to protect its automotive industry from competition from China.

The rules are included in the draft Industrial Accelerator Act and aim to stimulate European production. At the Paris Motor Show, Chinese automaker Changan announced that it plans to produce 180,000 vehicles annually in Europe by 2028 and 350,000 by 2030. The company is already negotiating with local suppliers and manufacturers and intends to begin European production in early 2027.

Xpeng, Chery and GAC are likewise preparing to expand production and supply chains, while Magna already manufactures Xpeng electric vehicles in Austria. The investments follow the introduction, in October 2024, of tariffs on electric cars produced in China, which prompted several companies to shift their focus toward plug-in hybrids.

The European proposal is generating disputes over the definition of local production. Turkey, the United Kingdom and Morocco are excluded from the current version, although they are integrated into the European automotive industry. Analysts warn that Chinese automakers are adapting quickly: the new rules may make their expansion more difficult, but will not stop it.