Major automakers unveiled a wave of new vehicles at the Munich IAA Mobility show on Monday, highlighting electric vehicles (EVs) and more affordable models as Europe’s automotive industry grapples with rising costs, tariffs, and stiff competition from Chinese manufacturers.
Facing challenging EU carbon emission targets for 2035, several European brands signalled a broader production strategy rather than focusing solely on EVs or alternative-fuel vehicles.
Volkswagen Chief Executive Oliver Blume told Reuters: "The main problem is that we have many crises at the same time," citing U.S. tariffs, challenges in China, and the high costs of potential restructuring.
Blume added that tariffs are costing the firm “several billion euros” this year, although Volkswagen is in talks with the U.S. government on measures, including an Audi plant, to mitigate the impact.
Porsche, VW’s luxury sports car brand, is also facing pressure on margins due to the combination of tariffs and weak Chinese demand.
Stellantis, the Franco-Italian carmaker, confirmed it will not limit production solely to EVs as it targets 2030 goals.
Jean-Philippe Imparato, head of Stellantis’ European operations, said EU carbon emission targets for 2035 are no longer achievable for any automaker, supporting the decision to maintain broader production options.
Affordable EVs are also a priority for European consumers, with companies racing to release models priced under EU€25,000 (A$44,675).
China’s BYD plans to produce its European EVs locally within three years to avoid EU tariffs, while plug-in hybrids are expected to dominate short-term sales.
Leapmotor, another Chinese EV manufacturer, unveiled its B05 hatchback, set to launch in Europe in the second quarter of 2026.
CEO Zhu Jiangming described it as a sporty coupe available in six colours, including Lightning Yellow and Morgan Pink.
Turkish EV startup Togg also debuted two models, including the T10X electric SUV and the T10F five-door sedan, with European sales starting in Germany at the end of September. Pricing for both vehicles has yet to be disclosed.
Tu Le, founder of consultancy Sino Auto Insights, said: "The Europeans have demonstrated that they are absolutely taking the Chinese seriously."
