Spurred on by recent geopolitical events and oil shocks, Chinese manufacturers are rapidly expanding their electric vehicles (EV) market share in Europe, with brands such as BYD, MG (SAIC), XPeng, Nio and Chery selling over 100,000 battery electric vehicles (BEVs) in the first half of 2025[i], accounting for around 8% of the region’s EV market, with forecasts pointing toward 15% in the coming year. Their appeal is driven by prices that are typically 20% lower than European-made rivals[ii], supported by growing local production and distribution.
Battery packs remain the central technological and economic driver for EVs, often accounting for up to 40% of the total vehicle cost. With Chinese manufacturers now reshaping competition, consumer choice and the wider automotive landscape in Europe, established OEMs have been put on notice to rethink their assumptions about battery supply chains, chemistry choices and other long-term cost strategies.
Battery pack cost is a core profitability lever for EVs
For mass‑market EVs, profit margins are extremely tight, with battery pack cost often determining profit or loss. Industry analysts and recent OEM filings confirm that battery costs above US$100/kWh[iii] make it difficult to sell mass‑market EVs profitably, while volatility in raw material prices has already pushed some models into negative margins[iv].
As a consequence, automakers are pursuing multiple strategies to drive costs down:
- Scale: Building out large-scale production capacity, partnering with multiple suppliers, and locating gigafactories near assembly plants.
- Design simplification: Moving towards cell-to-body (CTB) or cell-to-chassis (CTC) architectures, enables OEMs to further reduce significant cost and weight by integrating more components into the battery structure.
- Manufacturing yield: Investing in process optimisation, automation and quality control to reduce scrap rates and rework.
Even modest improvements in manufacturing yield or pack design can translate into meaningful model-level profitability gains, particularly in highly competitive European segments. Understanding where those gains are most achievable – by chemistry, segment and region – is fast becoming a strategic necessity[v].
Raw materials
Lithium, nickel, cobalt and graphite are fundamental to most mainstream battery chemistries, and price movements can quickly affect the value chain. Concentration of both mining and refining capacity into just a small number of countries further increases geopolitical and regulatory risk.
Chinese players often have deeper integration across the value chain, from upstream raw materials to cell manufacturing, which translates into significant cost advantages and a greater resilience to volatility, especially when entering new markets like Europe with aggressively priced vehicles.
For both European and global OEMs, the challenge is therefore twofold: access to critical materials on acceptable terms, and sufficient flexibility in product and chemistry roadmaps to absorb any future shocks. Here, granular forecasting of material demand, regional EV adoption and chemistry mix becomes invaluable.
Battery chemistry evolution
As battery chemistries continue to evolve, EV cost structures and product positioning are reshaping. LFP (Lithium Iron Phosphate) is gaining momentum due to lower material costs, a strong safety record and improved energy density, while high-nickel chemistries (NCM, NCA) are ideal for premium and long-range EVs but suffer greater exposure to volatile nickel and cobalt pricing.
However, sodium‑ion chemistry offers abundant raw material and low supply risk, with early applications most likely in affordable, short‑range EVs. Solid-state batteries are also setting future expectations for safety, energy density, and cost, and automakers are already factoring in potential adoption into present investment decisions[vi].
Closely tracking how these chemistries proliferate by segment, OEM, and region is essential for making informed, long-term platform, supply chain, and capital allocation decisions.
Rethinking EV battery strategy in Europe
Chinese manufacturers’ expansion into Europe is amplifying the impact of battery costs, material volatility and chemistry shifts, squeezing prices and accelerating the technology cycle. To keep up, OEMs, suppliers and investors need more than headline forecasts: they require integrated insight that connects technology, demand, regulation and competition at a detailed market and powertrain level. GlobalData’s Automotive Intelligence Centre (Auto IC) is designed to provide exactly that foundation. Within it, the Global Hybrid & Electric Vehicle Sales Premium Module offers:
- A 13-year forecast on hybrid and electric drivetrains
- Trends by segment, geography, EV type and sales volume
- Granular insight into key technologies, including batteries and e-motors
- Assessments of major OEMs, including market share and strategy
- Analysis of the regulatory and competitive factors shaping demand
For strategy, product and procurement teams navigating the next decade of electrification, this combination of data and context is critical. Explore the Auto IC and access the Global Hybrid & Electric Vehicle Sales Premium Module, by clicking here. And for more information on how the Iran war is driving Europe toward Chinese EVs, download our new Analyst Briefing below.
[i] GlobalData: European Light Vehicle Powertrain Forecast Report: Quarter 2, August 2025.
[ii] https://www.verdict.co.uk/eu-to-examine-chinas-automakers-in-electric-vehicle-probe/
[iii] GlobalData: Thematic Intelligence Technology: Batteries, November 2023.
[iv] GlobalData: Thematic Intelligence: Critical Minerals, June 2023.
[v] GlobalData: Analyst Briefing: Sourcing strategies for Battery Electric Vehicle battery packs – a Chinese case study, June 2024
[vi] GlobalData: Global Light Vehicle Battery Forecast Quarter 4, 2025. Published February 2026.
