Germany-China Tensions over Chinese EVs: From Procurement to Protectionism
Sunidhi Sampige

On 20 December, German Finance Minister Lars Klingbeil made a public statement criticising Deutsche Bahn's (DB) decision to purchase approximately 200 electric buses manufactured by the Chinese company BYD. In his remarks, Klingbeil called for "healthy local patriotism" and asserted that publicly owned companies should give preference to either German or European manufacturers. Fudan University, Institute of International Studies, Director of the Centre for China-Europe Relations, Jian Junbo, pointed out that the buses in question are assembled in Hungary, thereby qualifying them for "Made in Europe" designation. Junbo stated that the DB controversy was one of political rather than industrial significance, while cautioning that the use of such language may not accurately represent the fine line separating legitimate industrial policy from protectionism. This dispute unfolds alongside the rapid rise of Chinese EV makers in Europe: in April 2025, BYD overtook Tesla in European EV sales due to models such as the BYD Dolphin Surf starting at around EUR 22,990, substantially undercutting many German offerings and sharpening fears of a structural loss of competitiveness.

This gives rise to two main issues:
1.Industrial competitiveness and market share pressures: The first issue is the pressure being placed on traditional German manufacturers by both sides of the Eurasian market. The Chinese automotive market used to be the backbone of German automakers’ global growth. However, in the last four years, reports indicate that Volkswagen has dropped its share of the market from about 24.3 per cent to 14.6 per cent, and that both BMW and Mercedes-Benz have seen the number of cars that they sell in China drop by about 13 per cent and 7 per cent, respectively; this is occurring while the local Chinese manufacturers and the US based Tesla are gaining market share within Europe. In addition, Chinese electric vehicle (EV) brands are beginning to expand in Europe; although they make up only about 0.1 per cent to 0.2 per cent of the total number of cars on Germany’s roads (which amounts to about 70,000 vehicles), they are growing so rapidly that they are drawing younger, more price-sensitive consumers into their market. The rapid growth of these manufacturers and their ability to draw in younger, more price-sensitive consumers means that they will be able to compete with traditional German manufacturers based not only on price but also on technology and design.

2.Protectionism, politics and Europe’s green transition: A second issue is finding a way to balance legitimate industrial policies against protectionist reflexes within Germany and within the larger European Union. Many newspapers have written extensive articles and analyses of the EU investigations into anti-subsidy investigations as well as tariff barriers against Chinese EVs. Brussels frames these actions as a necessity for countering state-backed dumping but simultaneously highlights the potential negative impact of excessive use of defensive tools (i.e., tariffs) on both the price of EVs, the time for mass adoption, and ultimately the success of climate change goals in Europe. In Germany, a popular concept of local patriotism regarding the award of public procurement has evolved into a divisive, identity-based conversation, turning the question of whether or not Germany should invest in innovation and competitiveness into a matter of who sells the best products based on geography. Within this context, it is likely that the outcome will create artificial obstacles for foreign companies while failing to identify and solve deeper systemic reform issues that threaten Germany's economic future.