The European EV market has been booming, with sales of EVs increasing by 137% in 2020 compared to 2021, and over one million EVs sold in the region. Fully battery electric vehicles accounted for 12.1% of the 9.1 million units sold in EU markets in 2022, according to figures from the European Automobile Manufacturers' Association (ACEA). 


Ambitious goals set by nations such as Germany, France, and the Netherlands to phase out gas-powered cars are driving market development even further. The growth of Chinese EVs in Europe offers a possible chance for Asian EV companies, with Chinese automaker BYD becoming Europe's third-largest EV manufacturer in 2020, trailing Tesla and Volkswagen.

Among European countries, the Netherlands stands out as an attractive market for Asian EVs due to its ambitious goal of achieving at least 55% CO2 reduction by 2030, with the government focusing its policy on 60%. The nation is a perfect site for EV growth, as it has the most charging stations in the EU. However, navigating the EU's regulatory landscape, including emissions regulations, safety standards, and data privacy laws, can be challenging for companies unfamiliar with the region. 

Why are Asian EVs gaining popularity in Europe

The data clearly shows an increase in the market share of EVs originating in Asia. The question remains, what has been the key to this relative success? If we analyze the circumstances, there is no single key factor to which we can attribute the sudden increase of Asian EV units sold in Europe. It can be better explained as a combination of factors, of which we can highlight the affordability, improved quality, and a decisive shift in the perception of the average European consumer towards Asian EVs.


On average, Asian EVs are more affordable than their European counterparts. The difference is not necessarily explained by the lower quality of the Asian vehicles. In fact, it can be objectively stated that, by many standards, an EV produced in China, for example, is generally more affordable than an EV of similar quality produced in Europe. Many reasons could be sketched to explain the competitiveness achieved by Chinese manufacturers. Besides the obvious one, namely, that the costs of labor are significantly lower than in Europe; the economies of scale play an important role. Indeed, China has an immense domestic market with good purchasing power. This gives Chinese manufacturers access to millions of potential buyers, which allows them to produce at a very large scale, thus lowering their production costs. 

In addition, China has a well-developed supply chain for EV components. From basic raw materials to industrialized components. This is particularly true with rare earth metals, which are essential for batteries and electronic elements of vehicles, which has enabled the surge of huge manufacturers of batteries like CATL that has a 37% market share of the EV’s batteries worldwide. This holds also true for steel of which China is the largest producer worldwide (more than 1 billion tons per year). The efficiency of the supply chain is further pivoted by vertical integrations and strong partnerships, which given the scale of businesses involved, results in better control of the costs, quality, inventories and planning of demand.

Lastly, the factor of innovation is not to be neglected. China has set up a very strong research infrastructure that directly benefits the commercial sector. This investment, which has been backed up by heavy governmental support, has allowed EV manufacturers to incorporate breakthrough technologies to improve the technical specs of their models, for a fraction of the price. 

Asian EVs manufacturers have gone a long way in improving the quality of their models, but the quality factors alone with affordability are not sufficient to explain the growth. An additional decisive factor has been the safety features that brands like BYD, Xpeng, NIO and MG, for instance, have included in their models. Indeed, their models have achieved consistently Euro NCAP five-star ratings, putting them at the top-notch in safety standards, together with worldwide reputable European automakers.

What should they consider next?

The EU has implemented far-reaching legislation in the field of ESG that constitutes a strong call for corporate responsibility in the field of sustainability and human rights standards. The Corporate Sustainability Reporting Directive (already approved, currently in transition period), and the proposal for a Carbon Border Adjustment Mechanism are just a few examples. The first aims to achieve strong transparency in the supply chain of products introduced in the EU market and imposes extensive reporting obligations to achieve it; while the latter will impose additional compensation for emissions-intensive products in the form of rights payable for the import of certain products.

From the side of privacy, the EU is arguably the strictest jurisdiction. Several regulations are in place, both at the European and national level. They are applicable to the data gathering and processing performed by the digital components of the EV. The most important piece of legislation to keep in mind is the General Data Protection Regulation GDPR, which sets out numerous obligations regarding the collection and processing of personal data. But besides the mere compliance, it is also crucial to be extra transparent and communicative about the data management policy to break certain prejudices that the average European consumer may have. An example is the case of Tesla with the Dutch Data Protection Authority (DPA). The DPA noticed that Tesla's Sentry Mode, which utilizes external cameras to capture activity around parked cars, was gathering personal data without the drivers' prior consent. The cameras were constantly filming, and material was retained for up to an hour. Following the case, Tesla disabled the cameras by default and limited recordings to a maximum of 10 minutes. 

The European Union has also put much emphasis on the field of cyber security, a concern that is also shared by European consumers. In that regard, the EU is currently debating the future Cyber Resilience Act and the Network and Information Security Directive 2, which will set strict standards for products with digital components, of which EVs are one. Cyber security is particularly important if the EV is equipped with technology for the collection and processing of biometric data and or for the (semi) autonomous driving of the vehicle.
Compliance with these regulations is not only important from a legal perspective, but also from a commercial viewpoint because they happen to coincide with current European consumers’ concerns. 

Closing notes

To effectively penetrate the Dutch and European markets, Asian electric vehicle (EV) companies must establish strong partnerships with European business experts. These partnerships are essential for navigating the intricate regulatory landscape and gaining access to the local market. Compliance with privacy regulations and ethical use of data should also be prioritized, as European consumers are increasingly concerned about the protection of their personal information and the responsible application of artificial intelligence.
By collaborating with European businesses, Asian EV companies can develop innovative solutions that cater to the needs of European consumers while adhering to European standards. This collaboration will help in addressing compliance requirements, tailoring products to European preferences, and understanding the concerns and priorities of European consumers.