To conquer Europe, the high ground of the automotive industry, Chinese companies are collaborating with all available forces to reduce barriers to European entry and rapidly establish Chinese automotive brand ecosystem chains in Europe.

In the past 20 days, the automotive industry's sense of crisis in Europe has reached new peaks. Marked by the recently concluded Munich Motor Show, Chinese automotive companies' European expansion plans have entered a phase of successive implementation. On September 25, Horizon Robotics announced raising 5.8 billion yuan, primarily for expanding overseas market operations. On September 26, XPeng Inc. officially announced its entry into five European markets. Recent days have brought even more news: Xiaomi officially announced establishing a R&D center in Munich, and CATL is reportedly preparing to send 2,000 personnel to Europe for battery manufacturing.

Under pressure from Europe's high tariffs, Chinese automakers' European localization has accelerated comprehensively this year. Currently, various forms of cooperation across production and sales segments are rapidly materializing, including partnerships with Magna (known as the "contract manufacturing emperor"), joint development with Bosch and other global tier-one suppliers, and collaborations with leading European dealer groups for market promotion. To conquer Europe, the automotive industry's high ground, Chinese companies are collaborating with all available forces to reduce European entry barriers and rapidly establish Chinese automotive brand ecosystem chains in Europe.

These partnerships, while establishing lightweight asset models for Chinese automotive brands' European entry, will also initiate the export of Chinese electric intelligent products to European markets. Simultaneously, user education and technology "incubation" processes for the European market will formally commence. Will they adapt to Europe's pace, or change Europe's rhythm? The internationalization challenge for Chinese new energy vehicles has just begun.

**Cooperative Networks Enable Light-Asset European Entry**

Considering the high costs and compliance risks of exporting complete vehicles to Europe, localized production has become an inevitable choice for Chinese new energy vehicles. However, not every automaker chooses to build factories independently in Europe. The latest disclosed European production plans both employ "surrogacy" light-asset models.

Leapmotor leverages its financial backer and joint venture partner Stellantis Group's Spanish factory for production, planning to begin manufacturing Leapmotor electric vehicles by 2026. XPeng Inc. partners with European parts giant Magna, utilizing its Austrian factory to produce XPeng electric vehicles, with G6 and G9 models entering production this year. Reports suggest Guangzhou Automobile is also exploring possibilities for Magna contract manufacturing.

Supported by localized production, XPeng Inc. will simultaneously enter five European countries. Beyond entering the Austrian market in October, it will also enter Switzerland through partnerships with the Hedin Group. Additionally, XPeng will enter Hungary, Slovenia, and Croatia, planning operations through joint ventures established with AutoWallis Group and Salvador Caetano Group.

Notably, XPeng's chosen partners are not new to Chinese brands. Swedish dealer group Hedin has collaborated with BYD since 2022, conducting sales in Sweden and Germany. In August last year, Hedin sold its German subsidiary to BYD, including multiple showrooms. Both AutoWallis and Salvador Caetano are dealer groups with deep Central and Eastern European experience. The former already serves as European distributor for NIO, BYD, MG and other brands, while the latter primarily handles Spanish and Portuguese markets as distributor for brands like Voyah.

In fact, given Tesla's troubled German factory construction experience, most Chinese automakers maintain sufficient risk awareness regarding European production and are exploring low-cost European entry paths beyond independent factory construction. Last year, Chery Automobile revitalized Nissan's Spanish factory through joint ventures with Spanish automaker Ebro, with the first vehicle rolling off production lines by year-end. Chery became the earliest Chinese automaker to achieve localized European production.

The concentrated implementation of automaker European entry plans means automotive component localization must also accelerate. At the Munich Motor Show, the collective overseas expansion of China's new energy automotive industry chain has attracted attention. In choosing European entry paths, supply chain companies similarly prioritize "cooperation" as their first choice.

Battery leader CATL currently operates three European production bases. Its German and Hungarian factories represent independent investments under construction, while the Spanish factory currently being built resulted from late-2022 cooperation with Stellantis Group. Reportedly, exploring cooperation possibilities with ACC and other leading European battery manufacturers remains CATL's primary approach.

More representative is autonomous driving company Horizon Robotics' "ride-sharing overseas" strategy. Bosch, Continental, and Japan's Denso serve as tier-one suppliers and "honored guests" of global automakers. Through joint ventures and cooperation with these companies, Horizon jointly develops autonomous driving systems adapted to multinational automaker products, thereby becoming overseas suppliers to multinational automakers. At the Munich Motor Show, Horizon conducted joint exhibitions with Bosch, Continental, and Denso, announcing the official establishment of its Munich-based European headquarters—a move effectively declaring its new European identity. Currently, Horizon's joint venture with Continental Group, Smart Driving Continental, has initiated full-scenario road testing across multiple European locations.

Reportedly, Horizon not only seeks to expand its "circle of friends" but also organized gatherings during Munich, inviting multiple Chinese intelligent driving supply chain companies to collaborate with global investment giants and leading European suppliers in strategic planning. The atmosphere of "win-win cooperation" reached unprecedented levels.

Naturally, heavy European investment strategies remain choices for some companies. In early September, recently announced automaker Dreame Technology reportedly plans European factory construction. Public information indicates that near Tesla's Berlin Gigafactory in Germany, Dreame Automotive will collaborate with BNP Paribas to construct a luxury vehicle factory.

**How to Activate the European Market?**

Large-scale initiation of European localized production by Chinese new energy vehicles also means product strategies and user interaction in Europe will enter market validation phases. Facing European users' strong wait-and-see attitudes toward smart electric vehicles, how should Chinese companies customize product strategies?

Throughout September, Europe generally experienced conflicted emotions of both concern and welcome toward Chinese electric vehicles. On September 10, when European Commission President von der Leyen firmly stated in the European Parliament that "we cannot allow China to dominate Europe's electric vehicle market," 116 Chinese automakers and suppliers exhibited electric intelligent products as "protagonists" at the Munich Motor Show, with attending European audiences expressing amazement at Chinese electric vehicle seat touchscreen adjustment functions. The European Automobile Manufacturers' Association President headed directly to the AITO booth on opening day, engaging with Seres President He Liyang.

Simultaneously, on Munich street bus stop advertising screens, BYD Dolphin's zero-down-payment car loan advertisements played alongside European automotive brand new vehicle ads, displaying the market competition between Chinese and European automotive industries.

Many German automotive industry professionals, when interviewed by domestic and international media, acknowledged that Chinese new energy intelligent vehicles have achieved generational leadership compared to European local automobiles. However, purchasing intentions remain divided. Some European users express that Chinese automotive technology functions are highly attractive and represent one of their target choices, but more users indicate they will wait and see, while others state they will not purchase, citing support for European local automotive industry during this special period.

Currently, Europe's new energy vehicle penetration rate stands at only 20%. Complex factors including insufficient policy incentives, energy price increases, lack of automotive software technological capabilities, and excessive non-technical constraints on local automaker transformation have slowed European automotive industry transformation pace. Therefore, whether this market's potential can be activated determines Chinese automakers' European development prospects.

In response, most automakers choose to launch European versions. BYD, Chery and other automakers have also conducted new vehicle development specifically for European markets, with Chery even establishing entirely new brands and logos in Europe. Additionally, to avoid pure electric vehicle high tariffs and cater to European user car-buying preferences, Chinese automakers have begun extensively exporting plug-in hybrid models and premium small cars. Mid-to-high-end intelligent models equipped with the most advanced technology are simultaneously targeting Europe, establishing Chinese brands' technological coordinates.

As an autonomous driving solution provider, Horizon observes more pronounced generational gaps in Chinese-European automotive consumption. Horizon technical personnel indicate that medium and low computational power chips represent products most suitable for European needs, therefore initial collaborative system development will focus on basic intelligent driving assistance functions.

"Regarding electric vehicles, European customers still have quite a few concerns," stated a CATL business manager. Due to some European highways having no speed limits and some regions experiencing cold winters, driving range and low-temperature resistance capabilities represent user concerns. Additionally, Europe's popular leasing models mean users care significantly about electric vehicle residual values and asset preservation rates. Therefore, CATL has customized power batteries specifically for European customers, focusing on improving "safety, low-temperature charging efficiency, residual value, and service life" indicators.

However, some automakers insist on "comprehensive" technology education for European users, with XPeng Inc. representing this approach. "We insist on China-global consistency," stated XPeng Chairman He Xiaopeng, indicating that from this year forward, all XPeng-developed vehicles are globalized, without separate "European versions." Moreover, XPeng only sells vehicles priced between 40,000-100,000 euros in Europe.

"(Vehicles sold in China and Europe) are 90% identical, with only software and minor upgradable configuration differences. I hope to bring XPeng's characteristics to Europe as much as possible. Perhaps with some preliminary incubation perspective." He Xiaopeng believes that while European users may not necessarily accept this now, partners do. He believes European customers' views on automotive technology, performance, and aesthetics will ultimately align with Chinese customers. "Just like discussing intelligent driving assistance in China in 2020—basically no one believed it, but it eventually reached mass production."

Notably, whether building factories in Europe to produce new energy vehicles or exporting intelligent electric technology, Chinese new energy vehicles in Europe represent more than unidirectional export. "(Chinese automotive European entry) crucially depends on whether we can collaborate with local companies to achieve supply chain and manufacturing localization. Europe needs to establish comprehensive supply chains," stated the aforementioned CATL business manager. The process of co-building localized supply chains with European companies will also involve learning and absorbing European automotive manufacturing technology. As the automotive industry's birthplace, Europe still possesses manufacturing concepts and capabilities that China finds difficult to match. Therefore, Chinese new energy vehicles entering Europe also represents long-awaited deep "exchanges" between Chinese and German automotive technologies.