China is rapidly emerging as the global leader in electric vehicle (EV) manufacturing, thanks to favorable government policies, easy access to critical minerals and battery technology, and low-cost manufacturing capabilities. This has spurred the development of a large EV production industry in China, making it a formidable competitor to other parts of the world, including Europe. Despite this, some European automakers are focusing on developing more affordable EV models to attract consumers who may otherwise turn to Chinese offerings.

China, once not well-known for its car manufacturing, has become a major player in the EV market. The Chinese government began investing in EV research in the early 2000s and introduced incentives and subsidies for EV adoption in the 2010s. These policies, along with industrial reforms, have contributed to the rapid growth of the EV market, with projections suggesting the market will grow from $305.6 billion in 2024 to $674.3 billion by 2029. Chinese automakers are offering a wide range of affordable EV models to consumers worldwide.

In contrast, Europe's EV market has been growing steadily, but European automakers have struggled to compete with China, especially in the affordable EV segment. European EVs are generally more expensive due to higher manufacturing costs, reliance on China for critical materials, and strict EU regulations. Although governments in Europe initially provided financial incentives for EV adoption, many of these programs have ended, resulting in higher EV prices. However, this trend is slowly changing as more affordable EV models enter the market.

To meet stricter carbon emission targets introduced by the EU, several European automakers are now offering low-cost EVs. These new models, such as the Fiat Grande Panda, Citroën ë-C3, and Renault 5, have made EVs more accessible to European consumers. Industry experts predict that sales of affordable EVs will surge in 2025, after a slight decline in sales in 2024. European automakers are also looking to increase their competitiveness with Chinese manufacturers by unveiling more affordable models, like Volkswagen’s upcoming $20,500 entry-level EV, the ID.1, expected to launch by 2027.