German Precision vs. Chinese Speed – Who Wins the EV Race?

March brought record-breaking NEV sales and confirmed the rise of China’s domestic champions. But beyond the numbers, deeper shifts are unfolding: scale alone won’t save every startup, global giants like BYD are stumbling in Europe, and the West still has a long way to go in catching up with China’s software-first thinking.

In this edition of China EV Pulse, we take you from the latest market stats to sobering survival forecasts and hard lessons from BYD’s German adventure – before rounding things off with key insights from mobility expert Prof. Dr. Andreas Herrmann. His conversation with Electrive reminded us that Europe’s EV challenge goes far beyond technology: it’s a question of mindset, speed – and knowing where your own weaknesses lie.

Let’s dive in.

- Sebastian

Table of Contents

• Momentum Builds: China’s NEV Market Accelerates in …

• “The Probability of Survival Is Zero”: Tencent Pan …

  • Our take on “The Probability of Survival Is Zero”

• Fast in China, Stalled in Germany: BYD’s European …

  • Between admiration and frustration

• Beyond Hardware: What Europe Can Still Learn from …

Momentum Builds: China’s NEV Market Accelerates in March

Before April rushes past, let’s take a moment to reflect on March – a month that offered both impressive growth and a clearer picture of China’s shifting auto landscape.

Retail sales of passenger cars in China surged to 1.94 million units in March, marking a 14.4 percent year-on-year increase and a substantial 40.2 percent jump over February, according to the China Passenger Car Association (CPCA). This brought Q1 2025 to a total of 5.13 million units sold – up 6.0 percent compared to the same period last year.

Battery-powered momentum continued: nearly one in every two new cars sold was a new energy vehicle (NEV), with 991,000 NEVs sold in March alone – up 38 percent year-on-year. Exports of NEVs reached 143,000 units, driven by strong demand for pure electric vehicles, which made up 62 percent of shipments.

Leading the charge was BYD with 290,000 retail sales, while Geely made headlines with a 70 percent year-on-year leap. Domestic brands overall gained significant ground, now holding nearly two-thirds of the market – a 7.7 percent rise in share compared to last year. Meanwhile, joint ventures, particularly Japanese brands, continued to lose steam.

As April unfolds, we’ll keep tracking how these trends evolve – especially with new product launches, fresh export strategies, and the ongoing rebalancing between legacy players and emerging champions.

“The Probability of Survival Is Zero”: Tencent Panel Warns Nio, Xpeng, Li Auto

As March numbers confirmed the continued rise of China’s NEV sector, another conversation is gaining momentum: Can the current wave of EV startups survive the storm that’s coming?

While companies like BYD and Tesla dominate through scale, and Xiaomi enters the race with financial firepower, smaller brands face a much tougher path. At a recent Tencent News panel, industry veterans delivered a sobering message to Nio, Xpeng, and Li Auto: merge or risk extinction.

Professor Zhu Xican from Tongji University did not mince words: “If none of them go bankrupt within the next three years, the probability of their continued independent existence is zero.”

Zhu argues that the electric vehicle market in China has reached a point where only scale ensures survival. His benchmark: an annual sales volume of at least two million units. Anything below, and the company won’t be able to sustain the R&D costs needed to stay competitive. “If the R&D investment is small, technological progress stops. If the investment is high but output low – you die,” Zhu summarized.

Among the three, Zhu views Li Auto as the most stable. Its success with range-extended EVs gave the brand a niche that helped it avoid major missteps. Xpeng, on the other hand, focused too heavily on software early on and neglected hardware – a strategic flaw that has only recently been addressed with the arrival of Wang Fengying, former CEO of Great Wall Motor, in a leadership role. Nio, Zhu said, is too focused on building brand and atmosphere, while falling short on technical investments. “Atmosphere can’t build cars,” he concluded.

Li Yanwei of the China Automobile Dealers Association agreed with Zhu’s analysis. He believes Li Auto’s edge in the EREV segment could carry over into the all-electric space, provided the upcoming models match past successes. Still, he expects a brutal market shakeout. “There are too many brands – many must die,” he said. The biggest threat? BYD, whose scale and cost control leave little room for smaller players.

Industry analyst Yiran joined the chorus with a simple calculation: if two million units is the survival threshold and China’s future annual EV market is around 20 million units, then only ten brands can realistically survive.

Our take on “The Probability of Survival Is Zero”

The Tencent panel may sound dramatic – but the math is difficult to ignore. While Zhu’s statement that “independent survival is zero” might seem stark, the industry reality is one of razor-thin margins, skyrocketing R&D costs, and an ever-tightening battle for consumer trust. What once differentiated the China EV Big Three was bold vision and product innovation. But vision alone no longer pays the bills – scale, trust, and staying power are what matter now.

Fast in China, Stalled in Germany: BYD’s European Challenge

While Tencent's recent panel left little hope for the long-term independence of China’s top EV startups, another heavyweight is already battling on European ground – with mixed results. A recent in-depth report from the Frankfurter Allgemeine Zeitung (FAZ) highlights just how difficult BYD's journey into Germany has been, despite its global leadership in EV sales.

At first glance, BYD appears confident: a sleek flagship store in downtown Frankfurt showcases the powerful Yangwang U8 SUV, which will eventually challenge brands like Mercedes-AMG. A compact, affordable EV model is also expected to debut in the window soon – beating Volkswagen’s entry-level EV by more than a year.

But beyond the showroom’s polished surface, reality bites. In Q1 2025, BYD registered just 1200 new vehicles in Germany – a mere 0.2 percent market share. Despite leading global EV sales and outperforming Tesla in total deliveries, BYD’s presence in Europe’s biggest car market remains symbolic.

Between admiration and frustration

While insiders praise BYD’s lightning-fast product development – “improvements overnight” – others criticize an arrogant rollout. BYD underestimated the German market, assuming its product strength alone would drive sales. Its lofty targets – 50,000 cars in Germany by year-end – are viewed by experts as detached from reality. The current retail network barely supports these ambitions, with fewer than 30 dealerships and only one full-service center near Mannheim.

Since late 2024, former Stellantis executive Maria Grazia Davino leads BYD’s operations in Germany and four other European countries. Davino admits BYD faces an “experience gap” in Europe. Yet the pressure is immense: with two new factories in Hungary and Turkey soon able to produce 300,000 EVs annually, the company needs to scale fast.

Stella Li, BYD’s top international executive, insists that rapid growth is possible – citing Apple’s iPhone as a benchmark. But analysts remain skeptical. “Vision is important,” one source says. “But completely unrealistic goals destroy trust.”

Pricing, visibility, and distribution gaps

Perhaps BYD’s biggest misstep: its pricing. Despite significant manufacturing advantages, the company has failed to offer EVs at a cost advantage over European rivals. German dealer giant Burkhard Weller, currently negotiating with BYD, says: “If they don’t adjust leasing rates, they won’t hit their sales goals.”

Our take on high Hopes, low Numbers of BYD in europe

BYD’s products are competitive, its financial resources vast – and its ambition undeniable. But Germany is not China. This market rewards trust, long-term partnerships, and grounded execution. And that’s exactly what BYD is still missing.

Despite its global leadership in EVs, the brand remains largely unknown to German consumers. The trust that BYD assumes is already there still has to be earned – through consistent quality, a visible dealer and service network, and credible long-term commitment.

The company’s current approach feels caught between tech-fueled speed and a lack of local sensitivity. If BYD wants to win over Germany, it needs more than ambition. It needs to listen. The raw ingredients for success are there – but unless they align product, pricing, visibility, and presence, even a global EV leader might be left chasing shadows in Europe’s most important auto market.

Beyond Hardware: What Europe Can Still Learn from China’s EV Momentum

In our last article, we explored how BYD’s confidence meets the cold realities of the German market. But from a broader perspective, the gap between Europe and China may be even more fundamental – not just in market access, but in mindset. That’s the argument made by Prof. Dr. Andreas Herrmann, Director of the Institute for Mobility at the University of St. Gallen and visiting professor in Shanghai, in a recent Electrive.net podcast hosted by Peter Schwierz.

Speaking just ahead of Auto Shanghai 2025, Herrmann described China’s EV surge as a “mobility tsunami,” powered by constant innovation and aggressive competition. “What impressed me most,” he said, “was the strategic clarity – a focus on software, rapid update cycles, and customer surprise.” In contrast to German brands that still build from hardware up, Chinese companies like BYD operate from the battery and software layer down, a structural inversion with serious consequences for Europe.

The battery bottleneck – and a missed opportunity

Herrmann was blunt about Europe’s lag in battery production. “We can forget that topic,” he said. In his view, the technical capability isn’t there – and more importantly, the scaling advantage is long gone. “They are already so far ahead on the cost curve that we would have to produce millions of units just to catch up.” Without access to competitive battery tech, producing affordable EVs in Europe becomes extremely difficult, especially for the mass market.

At the same time, China's Generation Z is shifting preferences away from Western brands. “There’s a strong self-confidence now. Young people are proud of Chinese brands – and they value digital features over traditional prestige,” Herrmann observed. For European OEMs still focused on hardware, this poses a significant challenge in a rapidly software-defined market.

China’s weakness: branding and recognition

And yet, the story is far from one-sided. As we noted in our previous piece on BYD’s struggles in Germany, even strong technology and global scale are not enough when brand trust is missing. Professor Herrmann echoes this assessment: Chinese EV makers still struggle to build meaningful brands in Europe. “Many models still lack a clear identity. Even I sometimes can’t tell them apart,” he admitted.

He described branding and distribution as “the Achilles heel” of Chinese automakers – with too many concepts and too little emotional resonance for European consumers. This aligns with the broader issue we highlighted: without recognisable identities, coherent messaging, and a trustworthy retail presence, even the most advanced vehicles can miss their mark.

Herrmann sees the hiring of Western marketing professionals as a logical next step, much like the earlier wave of European designers who brought global aesthetics to Chinese cars. But he cautions: simply imitating Western branding won't be enough. “They need their own story – not just a borrowed one.”

Our take about thinking behind hardware and working on the base

Professor Herrmann is right to draw a line between Europe’s niche strength and its structural weaknesses. In the luxury segment – where brand heritage, craftsmanship, and driving dynamics matter – German manufacturers still stand tall. But for the mass market, the warning is clear: Europe must first deliver at home before pretending to shape expectations in China.

The transformation to software-driven, battery-centric vehicles is not optional. Neither is building digital sovereignty in key technologies. What China has achieved is not just scale, but strategic consistency. Europe must decide whether it wants to remain in the passenger seat – or start steering its own future.

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