The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Katrina Hamlin

HONG KONG, Nov 3 (Reuters Breakingviews) - Swanky cars will be the next front for Chinese carmakers’ push into Europe. Despite the European Commission imposing tariffs of as much as 45% on battery-electric vehicles last year, Chinese automakers have nearly doubled sales in the bloc so far in 2025. Now BYD 002594.SZ and compatriots will take aim at the premium segment. Fresh tech and competitive pricing mean they can vie with BMW BMWG.DE, Porsche and peers on their home turf.

Brussels’ duties, which kicked in last October, haven't presented a major roadblock. Chinese-brand battery electric vehicles lifted their market share across 25 European Union markets to 7.6% in the first eight months of 2025, from 7% in 2024, according to JATO Dynamics. Automakers are also shifting to other power trains, especially hybrids, swerving around levies. All in all the total volume of Chinese brands’ sales in those 25 countries increased 94% to over 300,000 in January to August from the same period last year, the data shows.

Chinese manufacturers have compelling reasons to sell more in the West. Back home automakers face overcapacity – factories can make twice as many cars as local drivers buy each year, per AlixPartners, driving brands to slash prices. Exports often offer fatter margins, despite duties: BYD has been able to raise prices on the continent to double or even triple their China levels.

China Inc found early success in Europe with mass market models such as SAIC Motor's 600104.SS MG4 and LeapMotor's 9863.HK T03, which cost around 30,000 euros ($34,986.00) and 20,000 euros, respectively. Yet premium cars with superior performance and higher trim, such as Porsche's Taycan or Mercedes-Benz' MBGn.DE EQS, are becoming increasingly tempting targets.

The Middle Kingdom itself gives a hint of what may come. There, weak consumer demand has caused premium brand sales to decline for 19 consecutive months up to August 2025, according to Bernstein. But the real losers have been legacy marques. Porsche’s China deliveries fell 28% in the first half of 2025 compared to a year earlier. Mercedes’ China unit sales dropped 14% in the same period, while BMW’s deliveries fell 16%. Overall, German brands' sales volume fell 7% in the first half of the year, while locals grew theirs by a quarter, according to Automobility.

In particular, Chinese brands have quickly taken a larger share in the premium EV segment, and already account for more than half of sales, according to data from state-backed Seres’ 601127.SS prospectus for its Hong Kong IPO. Last year, its AITO marque became the country's best-selling brand for models priced above 500,000 yuan ($70,195.14), per Bloomberg.

Now BYD and compatriots are eager to repeat the trick on European roads. The next wave of brands entering or expanding on the continent includes fancier models from the Shenzhen-based group’s Denza, Chairman Mao Zedong’s old favourite Hongqi, MG maker SAIC’s IM brand, Xpeng 9868.HK, Geely Automobile’s 0175.HK Zeekr and more. Upstart Xiaomi 1810.HK, which analysts surveyed by Visible Alpha expect to deliver nearly 400,000 cars this year in China despite only selling its first car in 2024, is also preparing to come to Europe.

Auto executives on the continent are not quaking with fear. There is a consensus that their more mature marques’ familiarity and history give them a durable advantage over the newcomers. More than 90% of buyers consider heritage an important consideration when purchasing a luxury car, according to a survey by McKinsey earlier this year. The same survey showed 71% of respondents, who were spread across Africa, Asia, the Middle East and Europe, were unlikely to consider a Chinese car for their next purchase.

However, a decade ago these arguments would have held water in China too. Moreover, Beijing's homegrown brands can leverage other strengths.Technology is one. True, many Chinese carmaker innovations, such as karaoke machines and built-in fridges, don’t dazzle in London or Berlin. But advances such as super long-range batteries - some BYD hybrids can travel over 1,000 kilometres on a single charge - and fast-charging systems could have wide appeal.

Value for money is another lure. Xiaomi has compared its new electric SU7 Ultra to Porsche's Taycan Turbo, but it charges only around a third of the price in China. In practice, many carmakers won’t venture very far beneath established peers’ prices for fear of eroding their brand value, but they can compete on price by stacking vehicles with more luxurious features. Denza's slick, futuristic cockpits with wraparound screens deliver a 「wow effect」 that status-conscious buyers will relish, according to JATO analyst Juan Felipe Munoz-Vieira.

They also have the benefit of learning from Europeans’ earlier experience in China, where companies like Volkswagen VOWG.DE have increasingly adopted an 「in China, for China」 motto, crafting products to suit specific local tastes. Chinese marques including Hongqi touted their 「in Europe, for Europe」 strategy at this year’s Munich auto show; Xpeng said that it is opening a local research and development centre, and Xiaomi is also hiring researchers based in the region, job ads show.

If the current tariffs don't hold China Inc back, European politicians could consider more trade barriers. They could hike levies, introduce minimum prices and quotas, or impose stricter rules on connected vehicles, for example. The Chinese players will still have other options though, such as localisation. Polestar Automotive A4N1y.F, Xpeng and BYD are among those advancing plans for production in the region. The latter reckons it will be able to make all Europe-bound cars locally as soon as 2028.

Premium carmakers are already smarting from the price war in China and Donald Trump's tariffs. Mercedes-Benz and Porsche are expected to generate EBIT margins of just 6.8% and 8.5% respectively next year, roughly half the level they achieved in 2023, according to analysts polled by Visible Alpha. The next wave of China's automobile assault means they will have more lean years ahead.

Follow Katrina Hamlin on Bluesky and LinkedIn.

(Editing by Neil Unmack ; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on HAMLIN/katrina.hamlin@thomsonreuters.com; Reuters Messaging: katrina.hamlin.thomsonreuters.com@reuters.net))