London, 4 August 2026 — EBM Newsdesk Analysis — By Anthony Gill
European carmakers are letting Chinese competitors build cars inside their own factories. Stellantis, which has capacity to produce at least 800,000 more vehicles in Europe each year than it can sell, is putting Dongfeng’s Voyah brand into its plant at Rennes and offering space at two Spanish sites. Chery will start building electric vehicles this year at a former Nissan plant in Barcelona. Geely has taken an idle hall at Ford’s plant near Valencia. BYD has been discussed for half of Volkswagen’s showpiece factory in Dresden.
The industry logic is not complicated. European plants run at roughly 55% of capacity, and AlixPartners has estimated the continent has eight factories more than it needs. An idle assembly line costs money whoever is standing on it. But the arrangement solves a European accounting problem by handing a Chinese competitor the one thing tariffs were designed to withhold.
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Duties on Chinese-made electric vehicles run as high as 35%. A car assembled in Barcelona or Rennes is not a Chinese import. It is a European product with European plates, European workers and a European supply chain, and it pays nothing.
That is the whole prize. Chinese brands sold 285,000 cars in Europe in the first quarter, up 88% year on year, taking 8.6% of the western European market — close to double the previous year’s share, achieved while still paying the tariff. Removing it changes the arithmetic entirely.
The tenant also acquires things that do not appear on a lease. Local jobs, supplier relationships, dealer networks, and the ordinary familiarity of being built down the road. Simon Vessey, an industry consultant, has called it the beginning of a transfer of ownership of a significant part of Europe’s automotive manufacturing base.
The Contradiction
Here is the part that should trouble Brussels.
Volkswagen, Stellantis and Renault — together roughly 60% of European car output — have jointly written to the Commission asking for a Made in Europe rule requiring 70% of vehicles sold in the EU to source 70% of their value within the region.
The same companies are renting their factories to the firms that rule is meant to constrain. One hand asks for protection while the other sells the means of circumventing it. That is not hypocrisy so much as desperation, but the effect is identical: a policy designed to defend European manufacturing is being undermined by European manufacturers, for cash.
Meanwhile EU car exports to China fell 43% in 2025, and Chinese-built cars now account for about 7% of EU sales. The moat is leaking at both ends, and, as with Europe’s slower trade responses, the proposed Industrial Accelerator Act may arrive after the question has been settled on the ground.
The Verdict
My view is that these deals are individually rational and collectively a mistake, which is the hardest kind of problem for a regulator to solve.
No executive can be criticised for filling a plant running at 55%. The alternative is closure, redundancy and a fight with the unions that Volkswagen has already lost once. Renting the space is the responsible short-term decision every time.
But the cumulative effect is that Europe keeps the employment and surrenders the platform. The host firm becomes dependent on technology its tenant controls, and dependency is difficult to reverse once the supplier relationships and the software stack belong to somebody else. That is the same structural question running through Europe’s technology sovereignty debate and Beijing’s European diplomacy.
Europe spent two years arguing about whether to let Chinese cars in. It is now letting them in through the loading bay, and charging rent for the privilege.
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