European Plants Sit on 2.5 Million Units of Slack Capacity as Chinese Rivals Circle

A fresh analysis from AlixPartners, carried out alongside Berylls, has put a hard figure on a problem Europe’s car industry has been slow to confront: roughly 15 assembly sites across the continent are operating under 60% utilisation, adding up to about 2.5 million units of capacity that nobody is using. That vacant production space is drawing attention from Chinese manufacturers looking for a soft landing into the European market.

The consultancy points to several pressures converging at once rather than a single cause. European automakers are carrying costs they cannot push through to buyers, while Chinese competitors enjoy a cost edge of around 35%. On top of that, battery raw materials remain largely outside Europe’s control, and the expense of developing software-defined vehicles keeps climbing. The financial strain shows in the numbers: EBITDA margins for European automakers slipped to 6.9% in 2025, down sharply from 13.2% four years earlier.

Trade barriers have reshaped the flow of Chinese cars rather than halting it. Chinese brands accounted for 10.7% of Western European sales between April and June 2026, a jump from under 6% a year earlier. AlixPartners projects those brands will hit 3.8 million European sales and a 20% share by 2030, with their assembly footprint outside China approaching 3.4 million units. Building locally only closes part of the gap — a Chinese-built EV costs about US$20,000 to make, against US$31,000 for a European equivalent, and the report expects the battery, material and energy components of that difference to stick around.

For suppliers, the picture is arguably tougher. European powertrain suppliers posted operating margins of just 3.2% in 2025, and the study gives them about three years to either throw their weight behind software platforms or resign themselves to fighting purely on hardware price.

The underlying message is one of urgency rather than doom: the report calls on automakers and suppliers to decide the fate of their weakest sites within 24 months, suggesting these idle plants could overwhelm balance sheets by 2028 if left unresolved.