Accelerating sales in Europe might be welcome news for its car dealers but might be an existential threat for some of its automakers as electric vehicle sales spurted in the first half of 2026 including a worrying and expanding Chinese element.

According to Reuters, quoting industry data, EV sales in the European Union rose 40.5% in the first half of 2026 compared with the same period last year to more than 1.2 million and a market share of 20.7%.

Schmidt Automotive Research said Chinese EV sales will hit 1.3 million in Western Europe for all of 2026, accounting for a market share of 10.3% compared with last year’s 740,000 (6.3%), and on to 1.9 million by 2030 (14.0%). Founder Matt Schmidt expects the current pace of Chinese expansion to calm down as European manufacturers raise their game with new attractive and competitive products.

Western Europe includes the five biggest markets of Germany, France, Britain, Italy and Spain.

“We expect that in the second half of the year, only limited gains in Chinese penetration will be sustainable as the market environment becomes more competitive, increasingly driven by incumbents rather than by Chinese brands,” Schmidt said.

New entrants in the sub-€30,000 ($35,000) market include the Renault 5 E-Tech, Citroën ë-C3, the Fiat Grande Panda and the Volkswagen ID.2. More expensive Chinese rivals include the BMW iX3 "Neue Klasse", Mercedes-Benz CLA Electric, Audi A6 e-tron, Renault’s Alpine A390 and the Range Rover Electric.

“We know exactly what is wrong”

Experts worry that if the Chinese challenge is to be parried, it requires quick action. They aren’t confident action is imminent, and they aren’t as sanguine as Schmidt about Europe’s prospects .

“We know exactly what is wrong. We have known for at least three years. What is genuinely in short supply is the collective nerve to act on the diagnosis at the speed the numbers actually demand,” said Paul Bennett, Managing Partner at Madox Square LLP .

Bennett said European manufacturers will have to not just beat the Chinese but seek alliances with some of them.

Global brand giant Stellantis has led the way with its affiliation with Leapmotor of China.

Bennett said European suppliers need to consolidate and scale up in battery technology. Germany needs to reform its corporate governance.

Companies like Volkswagen have for years been criticized by investors for being on the side of the workforce, not the shareholders.

He said the EU needs to improve its trade policy rather than expecting tariffs to smooth out the problems.

“None of these actions alone saves the European automotive industry; executed together and quickly, they might,” Bennett said. He is also Senior Advisor at Genpact Banking and Capital Markets.

“Stop Diagnosing, Start Fixing, Ideally Yesterday”

“(this) is a competitiveness crisis that only faster products, lower costs, smarter partnerships and braver governance can fix. We have spent three years diagnosing exactly that. The manufacturers, suppliers, unions and policymakers who move first, and move together, will still have an industry in ten years. The ones still commissioning studies will not,” Bennett said in a publication on LinkedIn called “ China Automotive in Europe: Stop Diagnosing, Start Fixing, Ideally Yesterday”

Pedro Pacheco , auto analyst with consultants Gartner, reckoned there was still time for Europeans to act, but the threat would accelerate.

“The good news for European and Japanese (manufacturers); most Chinese manufacturers are still in the beginning of their journey in Europe. At this phase it is easy to double sales, but that won’t happen when they start grabbing more market share. Their progress will become harder from a certain point onwards. But Chinese combined already held 14.2% of the Western European auto market,” Pacheco said in a LinkedIn post.

Chinese PHEVs wiping the floor

Pacheco said the Chinese are concentrating on plug-in hybrids, where there are no EU tariffs, and which “are wiping the floor with everyone else.” When planned local European Chinese production of EVs gets into high gear, then the threat will be really serious, he said.

BYD is building a major car factory Hungary to produce vehicles like the Dolphin Surf. Chery plans to make Omoda and Jaecoo brands in Spain and seeks a deal with Nissan in Britain to use part of its Sunderland facility to make vehicles. Leapmotor’s alliance with Stellantis will build EVs in Spain. SAIC also plans to use Spain to make MGs. XPeng has partnered with Magna to assemble vehicles in Graz, Austria.

“Japanese automakers and low-quality brands have many reasons to fear for their European sales. For the current main players in the European market, there is only one alternative. Instead of praying for a dilution of the 2035 ICE ban, start making more competitive EVs and better put that on top of the agenda. This means also in terms of cost,” Pacheco said.

Some experts believe Europe’s current crisis is self-induced, as the EU insisted on a rapid removal of internal combustion engine vehicles and their replacement by EVs in the name of saving the planet, fully aware that China had a huge lead in EV manufacturing technology and efficiency.

“an IMAX-level Trojan Horse scenario”

Investment researcher Evercore ISI thinks the EU and European manufacturers have been asleep at the switch, too welcoming, and need to act fast.

“EU Policy/(manufacturers) responses, thus far, have been alarmingly accommodating as we see an IMAX-level Trojan Horse scenario where China investment is being welcomed to aid weakened (manufacturers) and much-needed European capital investment. Only recently has France (not Germany) been raising the alarm. ⎯ “Shrink to Survive” has been the EU’s policy vs a Tech-forward “Innovate to Thrive” competitive approach,” Evercore ISI said in a report,

“Investors are acutely aware of China’s EV lead and rapidly growing exports. What we believe is far less appreciated is what comes next: China increasingly exporting not just cars, but its Technology Stack: AV/ADAS software, development models, vertical supply chain and deflationary cost curve. We see three under-appreciated themes: 1) AV/ADAS Goes West, 2) the birth of “Auto 3.0” in China (Huawei/Xiaomi), & 3) the “Reverse JV.” Data/security may ultimately become the West’s last line of defense against this digital Trojan Horse,” according to Evercore ISI.

Schmidt sees some positive developments for European manufacturers through 2030.

Chinese sales plateau in 2028

“ As Chinese brands expand into all 18 Western European markets, we expect the volume trajectory to continue upwards towards 1.8 million units on an annualised basis (in 2028), then plateau.”

“That would equate to just over 14% market share and would result in Chinese importers accounting for an equal share to that achieved by Japanese (manufacturers) in their peak year, 2007. We don't expect the Chinese market share to surpass this level due to increased competition and product rollouts from incumbent peers that are currently in transition (introducing EVs to meet CO2 compliance) and moving to more competitive cost structures.”

“The potential of an EU Small Affordable Car Initiative and the Industrial Accelerator Act (IAA) , which are likely to introduce protectionist local-content measures for European models, is intended to help Europeans maintain market share,” Schmidt said in a report.