How BYD and Chinese peers are transforming Europe’s small EV market

Volkswagen, Renault and other EU stalwarts prepare a slew of smaller, cheaper EVs to fight an influx of Chinese models

Some of the world's biggest carmakers are squaring off for a titanic battle over small cars in Europe, as native stalwarts like Volkswagen and Renault fight to maintain their hold on the market against an influx of cheap electric vehicles (EVs) from BYD and its Chinese peers.

Last month, BYD , which surpassed Tesla last year as the world's largest EV maker, launched its Dolphin Surf compact hatchback in Europe. The company's most affordable model, known in China as the Seagull, is priced from Euro22,990 (US$26,128) with a 322km range to Euro24,990 with a 507km range. A promotion this month lowers the starting price to Euro19,990.

The compact segment was "the next frontier for electrification in Europe" and had huge potential, said Maria Grazia DaVino, BYD's regional managing director for Europe, at a launch event in Berlin.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge , our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

"It's a declaration of intentions from BYD that it is exploring the small car segment [in Europe]," said Felipe Munoz, senior analyst at Jato Dynamics. "It is a very competitive car, and can also shake the small car segment because of its price."

The car's introduction represents a big opportunity for European consumers to "finally" benefit from a competitive product, he said. "But it's also an alarm for the European carmakers, which have been struggling to come up with really competitive small cars."

The European EV market has accelerated this year as carmakers strive to meet European Union emissions regulations. New cars and vans must emit 15 per cent less carbon dioxide this year compared with 2021, and the reduction increases to as much as 55 per cent by 2030. Amid this push, EV sales increased 22 per cent year on year in the first four months of 2025, according to data from Rho Motion.

Add in the fact that cost parity between small EVs and internal combustion engine (ICE) cars is expected by 2028 or 2029, and the small car market in Europe is set for a revival after struggling since the Covid-19 pandemic. This shift could unlock new EV growth, said Stuart Pearson, global head of automobile equity research at BNP Paribas, in a media briefing last month.

European consumers favour smaller EVs for practical reasons as well as environmental and price factors. "Our cities are old, and the streets are narrow, so we need convenient cars for getting around - products priced under Euro25,000 that suit the European market," Vincent Piquet, CFO of Renault Group's EV division Ampere, told the Post last month.

A few Chinese-made models, like the Dacia Spring and Leapmotor's T03, are available in Europe for under Euro20,000.

"The introduction of Chinese OEMs [original equipment manufacturers] has encouraged European OEMs to focus on the development of smaller and more affordable EVs," said George Whitcombe, a research analyst for Rho Motion.

Over the past six months, European carmakers have released several smaller EVs, such as the Puma Gen-E, Renault 4 and Renault 5. Over the next 18 months, the VW ID.2 and Renault Twingo E-Tech will be notable debuts.

Japanese and Korean carmakers are also focusing on smaller, more affordable EVs for Europe. The Kia EV2, Nissan Micra and a small EV from Hyundai are all expected to launch in Europe before the end of 2026.

While exact prices for all these cars are not yet available, many are expected to start around Euro25,000.

According to Jato Dynamics, small cars accounted for around 20 per cent of new car registrations in Europe in 2024, roughly the same as a year earlier.

Matthias Schmidt, an independent European automotive analyst who has studied Chinese brands' prospects in the EU, said the smaller EV segment was set to grow further, with prices moving closer to Euro20,000. The adoption of cheaper lithium-iron-phosphate battery chemistry, which is already popular in China, would help carmakers cut prices, he added.

Compared with Western rivals, Chinese EV makers had a greater ability to cut prices thanks to lower production costs - despite tariffs from the EU and US, Whitcombe said. Companies like BYD also had stronger line-ups of vehicles, allowing them to appeal to a wider customer base, he added.

However, Chinese makers would face a challenge as European manufacturers launched more models targeting the low-cost, small EV segment because home-grown marques enjoyed strong brand loyalty, Whitcombe said.

BYD increased its market share in Europe to 3.4 per cent so far this year from under 2 per cent in 2024, according to data from Rho Motion. Tesla's share of European EV sales has halved in 2025 from a year earlier.

Meanwhile, Chinese companies like BYD and Geely are also making a play in the hybrid EV and ICE segments, in part to navigate the EU's 17 to 35.3 per cent tariffs targeting Chinese-made pure-electric EVs. More than two-thirds of the cars sold by Chinese companies in the first quarter were plug-in hybrids and petrol-powered models, up from just over 50 per cent a year earlier, Rho Motion's data showed.

"The cake will remain the same, but the Chinese will take away market share from the traditional carmakers in those segments," said Munoz of Jato Dynamics.

More Articles from SCMP

Ombudsman sets a new year zero by removing reports from website

Thanks to Trump, US threat of a ‘peaceful evolution’ recedes for China

China’s sixth-gen fighters: fresh photos hint at cruising capacity and drone control

Britney Wong doubles up again at Sha Tin as Cheval Valiant leads them a merry dance

This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.

Copyright (c) 2025. South China Morning Post Publishers Ltd. All rights reserved.