Citi: Chinese Carmakers Could Take 15-30% of European Market by 2035

Citi analysts anticipate that by 2035, Chinese automotive manufacturers may secure a market share of 15% to 30% in Europe, increasing from approximately 10% this year. This potential growth is dependent on the EU's tariff increases and local production mandates. Under their baseline scenario, existing EU regulations could facilitate a 30% market share for Chinese firms by 2035. Conversely, if tariffs on Chinese electric vehicles are extended to include plug-in hybrids, their share might be limited to 25%. The strictest limitation would arise from the 'made in Europe' stipulation in the proposed Industrial Accelerator Act, potentially reducing their market presence to 5% within two years and stabilizing it at 15% by 2035. This comprehensive 'made in EU' policy would necessitate local assembly and supply chains, undermining China's cost benefits. The note, released on Wednesday by analysts led by Harald Hendrikse, cautioned that European manufacturers could face a decade of volume declines and restructuring. In this scenario, other Asian carmakers, particularly from Japan and South Korea, might see their market share drop from 20% last year to below 16% by 2035. The swift growth of Chinese brands like BYD and SAIC's MG has raised concerns among European politicians and manufacturers.