For the first time in over a decade, i New Energy Vehicles (NEV) – which include 100% electric, plug-in hybrid and fuel cell cars – have been excluded from the list of strategic industries in China’s 15th Five-Year Plan (2026-2030).
The decision reflects a context of production overcapacity and a price war that has undermined the economic sustainability of many local manufacturers. After years of billions in subsidies and explosive growth, the domestic market appears saturated, pushing Beijing to reorient priorities towards sectors such as quantum technology, bio-manufacturing, nuclear fusion and hydrogen. This change of direction does not mean a total abandonment of electric mobility, but rather a downsizing of it national strategic role.
The expansion towards Europe
With the domestic market at a standstill, Chinese manufacturers are firmly looking to Europe as a natural outlet for excess production. Already today, China has become the world’s largest exporter of cars, and according to industry analysis, up to 5 million Chinese vehicles could invade the European market by 2025.
This scenario risks accentuating the so-called “according to China shock“, with European brands increasingly dependent on supply chains controlled by Beijing and with sharply declining profit margins. The combination of aggressive pricing, vertical integration and privileged access to critical raw materials makes Chinese manufacturers particularly competitive compared to Volkswagen, Stellantis, Renault and other historic players.
The challenges for the European automotive industry
For European industry, the Chinese move represents a threat but also an opportunity. On the one hand, the massive arrival of low-cost electric vehicles risks further eroding local production, already falling by 42% in Italy in 2024, and putting pressure on employment and the industrial supply chain.
On the other, the strategic retreat of Beijing could open up spaces for strengthening European industrial policies, with targeted incentives, selective duties and investments in alternative technologies such as hydrogen or new generation batteries. The real challenge for Brussels and for manufacturers will be to avoid a structural dependence on China, building a competitive and sustainable ecosystem that can withstand the impact of the new phase of automotive globalization.
Opportunities for the European automotive sector
The Chinese choice to reduce the strategic role of electric vehicles it could open up unexpected spaces for Europe. While on the one hand the massive arrival of low-cost Chinese models represents a threat, on the other, Beijing’s retreat from priority support for NEVs offers European manufacturers the opportunity to strengthen their industrial autonomy.
Brussels could use this moment to consolidate policies to support the local supply chain, encouraging the production of batteries in Europe, accelerating research on alternative technologies (hydrogen, solid-state batteries, synthetic fuels) and favoring partnership intraeuropee. Furthermore, the growing attention to sustainability and the perceived quality of the European product could become a distinctive competitive advantage compared to a Chinese offer often focused on price. Another positive aspect concerns the possibility of redefining the value chain: the dependence on Chinese raw materials and components remains high, but the new phase could push Europe to diversify suppliers, invest in recycling and develop a more resilient ecosystem.
In this scenario, European manufacturers have the opportunity to position themselves as leaders not only in technology, but also in the narrative of a car.”made in Europe” which combines innovation, safety and cultural identity.
At this point three fundamental questions arise spontaneously that I would like to discuss.
