China could reduce, or even eliminate, subsidies to carmakers
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China could reduce, or even eliminate, subsidies to carmakers
- The 4th Plenum of the 20th Central Committee of the Communist Party of China adopted the proposals of the Central Committee of the Communist Party of China on the preparation of the 15th Five Years Plan for Economic and Social Development (2026-2030 plan). However, this plan, unlike its predecessor (14th Five Year Plan – 2025-2030), no longer mentions new energy vehicles (NEVs, including battery electric vehicles).
- Economists specializing in China have deduced that one consequence could be the gradual reduction, or even the elimination, of the massive subsidies that have supported this sector. This position of the Chinese government stems from the maturity reached by Chinese carmakers and the Chinese automotive market. BEVs, PHEVs and F-HEVs represent almost half of all sales in 2025. carmakers like BYD, Geely and Chery dominate the Chinese market and are making progress throughout Europe and Southeast Asia.
- The Chinese government's policies have fostered the creation of world-class carmakers and a comprehensive ecosystem encompassing batteries, components, and assembly. However, behind this undeniable success lies a weakness. More than 150 carmakers are currently operating in China, the majority of which hold only a tiny market share. Subsidies have encouraged an oversupply relative to actual demand, leading to fierce price wars among carmakers. Eliminating subsidies could lead to the demise of the weakest carmakers and encourage a process of natural selection within the Chinese automotive industry, where only the most powerful and profitable players survive.
The US is planning to relax CO2 standards on vehicles
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The US is planning to relax CO2 standards on vehicles
- Biden administration had introduced new emissions standards for new vehicles in the United States starting in 2027, aiming for a 50% reduction in CO2 emissions by 2032. These standards strongly encouraged the electrification of the vehicle fleet, with a target of 67% of sales being battery electric vehicles by 2032. However, these standards have been gradually relaxed and are therefore less strict than initially planned, in order not to unduly constrain the American automotive industry.
- In March 2025, the Environmental Protection Agency (EPA) announced plans to implement new emissions standards for light vehicles sold in the US between 2027 and 2032. Current standards would be relaxed and revised to offer more flexibility to carmakers.
- The main adjustment concerns the 50% reduction in CO2 emissions by 2032 compared to 2026 levels. Carmakers will have more time to achieve these targets, particularly due to industrial constraints and the costs associated with electrifying their vehicles. New projections from the US government predict that 30% to 56% of new vehicle sales will be battery electric by 2032.
Stellantis chooses Spain to produce Leapmotor models
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Stellantis chooses Spain to produce Leapmotor models
- The Stellantis Group acquired a 20% stake in the Chinese company Leapmotor in October 2023. In 2024, Stellantis had the small electric Leapmotor T03 (A-segment) assembled from CKD kits at its Polish plant in Tichy, but this initiative ceased in March 2025, after the CKD production of nearly 3,300 units for the European market. The Leapmotor T03 is now imported from China.
- A new attempt to produce Leapmotor vehicles in Europe was confirmed at the end of 2024, this time for the electric B10 SUV (C segment), which could have greater sales potential in Europe than the T03. The Leapmotor B10 is 4.52 m long, 1.89 m wide, and 1.66 m high. It is equipped with a 177 hp or 215 hp electric motors, paired with either a 56.2 kWh or 67.1 kWh battery, allowing a range of 360 or 430 km depending on the motor.
- The Eisenach (Germany) and Trnava (Slovakia) plants were among the possible choices, but ultimately the Zaragoza (Spain) plant was selected to produce the Leapmotor B10. This plant is suffering from the notorious poor sales of the Lancia Ypsilon, whose sales volumes should have compensated the transfer of the Citroën C3 Aircross and Opel Crossland (renamed Frontera) to the Trnava plant in Slovakia. This has not been the case at all. Production of the B10 will begin in the first half of 2026 and will be accompanied by that of the Leapmotor B05 (C-segment), a hatchback sedan based on the same platform as the B10. The Leapmotor B05 is slightly smaller than the B10 SUV, measuring 4.43 m long, 1.88 m wide, and 1.52 m high.
- It's rumored that Opel might rebrand the Leapmotor B10 SUV to integrate it into its own lineup, positioned between the Frontera (4.39 m) and the Grandland (4.65 m). However, this low-cost approach seems questionable in terms of brand identity. Given its vehicles' market positioning, Inovev forecasts 10,000 Leapmotors assembled in Spain by 2030 and 50,000 by 2035.
Chinese brands are taking advantage of the European market increase in 2025
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Chinese brands are taking advantage of the European market increase in 2025
- The European automotive market at the end of September 2025 (30 countries = EU + UK + Switzerland + Norway) is showing signs of recovery, after a first half that ended with a 1% decline compared to the first half of 2024. At the end of September, the European market recorded a slight increase of 1.5% compared to the first nine months of 2024 (+146,500 sales).
- It should be noted, however, that this positive growth is solely attributable to the month of September (+10.7%), due to strong seasonal demand in the UK, as growth at the end of August did not exceed 0.3%. This growth could exceed 3% by the end of the year if the pace observed in September 2025 continues throughout the year. The most impressive phenomenon in September 2025 is the doubling of sales of Chinese brand cars, which went from 67,000 units in September 2024 to nearly 130,000 units in September 2025 (representing 10% of the European market including Volvo, Lotus and Smart, subsidiaries of the Chinese group Geely).
- In total, nearly 790,000 Chinese-branded cars were sold in Europe during the first nine months of 2025 (+214,500 sales compared to the first nine months of 2024, versus +68,000 sales for non-Chinese brands), representing a 5.4% market share year-to-date. It can therefore be said that Chinese brands boosted the European market in 2025.
- As a result, sales of 100% electric cars made a significant jump in September 2025 (+22%), driven by Chinese brands, with a market share of 21% for the month and 18% over the 9 months.
BYD chooses Spain for its third European assembly plant
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BYD chooses Spain for its third European assembly plant
- China's largest carmaker, BYD, has announced plans to build a third assembly plant in Europe before 2030, following its existing plants in Hungary (Szeged) and Turkey (Manisa), and has chosen Spain as the future location. Relations between Spain and China have recently improved. For example, Spain abstained from voting in the European Union last year on tariffs imposed on electric vehicles produced in China and imported into Europe.
- The announcement of a third BYD assembly plant in Europe reflects the carmaker's genuine optimism. By 2030, this will give it a production capacity of 450,000 cars per year on the continent (150,000 cars per year for each plant), whereas it will only sell 150,000 in Europe in 2025, even in the most optimistic scenario. However, it is true that BYD is experiencing one of the strongest growth rates in the market, with a 300% increase in the first nine months of 2025. Nevertheless, it would need to triple its sales in Europe by 2030 to fully utilize its three European assembly plants.
- BYD's strategy is to produce all its electric cars sold in Europe locally by 2030, thus avoiding European tariffs and duties. BYD's factories in Hungary and Turkey are expected to begin production in 2026, a few months behind the initial schedule. However, BYD’s announcements should be taken with caution, as the Chinese carmaker’s statements regarding selected sites, production volumes, and launch plans may be subject to change.
- Note: BYD's sales growth in September 2025 is due to strong seasonal demand in the UK and the increased supply of BYD vehicles in Europe, including the Sealion 7.
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