Paris Auto Show and the Industry in High Alert Mode
October 2026
The 2026 Paris Mondial de l’Automobile just showcased the resilience of Europe’s automotive industry, with OEMs unveiling new products and concepts to counter a tsunami of Chinese products. Yet, behind the large stands and nostalgic designs, a more fundamental question remains: can European automakers be competitive against these new payers? Discussions at the annual PFA Summit reinforced the urgency to address the challenge, with industry leaders calling for stronger European industrial policies, regulatory flexibility, and some protection.
These events took place while electrification is accelerating due to rising fuel prices and increased BEV offerings. Across the region, BEVs reached 29% (38% in France) in August vs. 20% a year ago and 23% YTD. That month, HEVs stood at 38% and PHEVs at 11%. In parallel ICE vehicles (gas and diesel) amounted to 24% down from 33%. The electrification momentum keeps building up.
A Chinese Tsunami Is Building Across Europe
The momentum of Chinese OEMs is impossible to ignore. About 15 Chinese brands now capture more than 10% of the European market, roughly twice their share in 2025 and more than the Japanese brands combined. Their market share even approaches 25% for PHEVs. Moreover, recent Chinese exports to Europe reportedly far exceed their current sales, suggesting a willingness to accelerate their expansion.
BYD illustrates the speed of this transformation. Its French sales volume is approaching half that of the Volkswagen or Toyota brands, while it ranked 11th in September, ahead of several established manufacturers. MG ranked 12th. Kia, Audi, and Hyundai followed in positions 13 to 15. Chinese OEMs are no longer marginal players competing primarily on price: they are becoming mainstream competitors across multiple segments and their physical presence at the Mondialclearly reflected this stance.
Chinese OEMs combine competitive costs, strong battery expertise, shorter development cycles as well as increasingly sophisticated vehicles. On the flip side, their products mostly feature bland design and lack brand awareness. Nevertheless, the implication is clear: European manufacturers face a structural competitive challenge, not just a temporary surge in imports.
The Paris Motor Show: Europe Strikes Back
The 91st edition of the Mondial, 128 years after the first opus, demonstrated that the European automotive industry is far from conceding defeat. Around 40 regional brands participated, in addition to approximately 20 Chinese and two Americans, Lucid and Tesla, with small booths. This represented a significant recovery from the 2022 edition, which attracted a much narrower selection of international manufacturers, and an expansion compared with 2024. For reference, there were 9 Chinese brands in 2024, all located in a dedicated hall.
European OEMs reclaimed exhibition space, showcasing ambitious product strategies. Renault and Stellantis each deployed approximately 5,000 m2, underlining their determination to confront the Chinese OEMs on their turf. Both groups emphasized concept vehicles and smaller, more affordable cars. Stellantis presented about 60 vehicles from eight brands, and nine concepts. Renault built on the recent electric R5, R4, and Twingo, presenting its E-Space and gorgeous Alpine A310 (see above) concepts.
Stellantis also explored the emotional territory with a Citroën 2CV concept, a BEV developed with Leapmotor to be launched in 2028 priced around 15k€. The group presented other reinterpretations of iconic models such as the eT16 (see below with 2 CV and Alfa Romeo concepts).
This neo-retro strategy is more than a styling exercise. European OEMs are seeking to establish an emotional connection with customers, partly to offset the cost differential with Chinese competitors. This should give Europeans extra time to catch up, although today price is the first criteria when buying a car.
Chinese Manufacturers Are Blanketing the Market
One striking difference for this show was the distribution of Chinese brands throughout the exhibition halls. Rather than being confined to a dedicated area as in 2024, they were distributed throughout the halls, among their European competitors. For instance, Cherry and its sub-brands Omoda, and Jaecoo faced Volkswagen, Skoda, and Cupra while Zeekr, Denza, and Aito were next to Mercedes-Benz, taking aim at the German brand (see below)
Their products also reflected a significant evolution. Previous Chinese offerings often emphasized either very large vehicles or cheap small electric cars. This year, the range was considerably broader, with more models tailored to European tastes, essentially in the 20 to 50k€ range.
Certain brands are clearly moving upmarket. Xpeng presented a large, three-row electric SUV starting at €75,000. Denza, its sister brand within the Geely group, had a 180k€, 1600 hp convertible on display (see below). Aito showcased an extensive, luxury-oriented lineup ahead of its planned European entry in 2027. The appeal for higher margins is tempting.
The PFA Summit: A Call for European Industrial Sovereignty
The annual PFA Summit provided a complementary perspective on the European industry's challenges. Executives broadly agreed that it needs faster adaptability, swifter execution, and a coherent European industrial strategy. Its stakeholders are clearly ready to fight and demand a level playing field.
Antonio Filosa, Stellantis CEO, called for greater flexibility in emissions regulations, including averaging CAFE calculation to avoid the abrupt 2030 regulatory step. He also advocated incentives for small electric vehicles, as well as local-content and technology-transfer requirements.
Oliver Blume, Volkswagen Group CEO, highlighted the emerging alignment between VW, Stellantis, and Renault, which account for 60% of European production. Their common objective is to ensure that vehicles sold in Europe are electric, affordable, and manufactured in the region. A local-content threshold of around 70% is central to this proposal.
Christophe Périllat, Valeo CEO, emphasized the strategic importance of speed and flexibility, no longer just scale and cost management. He sees AI as a major differentiator, particularly in R&D and manufacturing, but also in products. Already 35% of the suppliers’ code lines are AI-generated.
François Provost, Renault CEO, reinforced the need for affordable EVs, more flexible CO₂ targets, and a stronger European industrial ambition. He advocated regulatory support for small electric cars priced below €15,000 and welcomed the recently agreed cap on Chinese hybrid imports.
Finally, Stéphane Séjourné, the European Commission's Commissioner for Prosperity and Industrial Strategy, stressed the scale of the EU's commercial imbalance with China (1b€ per day) and the need for a pan-European industrial strategy. French Industry Minister Sébastien Martin similarly emphasized the importance of promoting “Made in Europe.”
The common message was that Europe cannot rely on regulations alone, nor can the industry solve the problem by itself. Competitiveness requires coordinated action across industry, public policy and investment, and yes, some protection to give the industry time to catch up.
Protection Is Necessary and Localization Inevitable
Two years ago, the EU increased duties on Chinese BEVs which now amount to 27 to 45% depending on the company, while Tesla faces 18%. Other powertrains have remained subject to the standard 10% tariff. This creates an incentive for Chinese OEMs to expand their hybrid offerings, illustrating the limitations of measures focused on a single technology.
To circumvent this new tactic, the EU just negotiated an agreement to cap Chinese hybrid-vehicle imports at 350,000 annually, starting in December 2026. This will likely force the impacted OEMs to accelerate their localization in Europe which has already begun.
BYD is currently ramping up its Hungarian factory. SAIC has announced plans for Spanish production. Chery intends to use Nissan's former Barcelona facility. Stellantis’ partners Leapmotor and Dongfeng will leverage the OEM's Spanish and French operations respectively. Moreover, Xpeng and GAC assemble their cars at Magna Steyer Puch in Austria.
This evolution presents both a threat and an opportunity. Assembly alone does not suffice. While R&D will remain overwhelmingly in China, local content will be critical. A threshold around 70%, as advocated by several major OEMs and suppliers, is critical to preserve jobs. In the battery space, an extra requirement of technology transfer should be mandatory to help Europe catch up … as China did from 1980 to 2010.
The Road Ahead
The 2026 Paris Mondial demonstrated that European players retain powerful brands, substantial industrial capabilities, and the ability to excite customers. Yet the growing Chinese presence is creating chaos in the industry — while offering more affordable products to Europeans.
Europe must address its own competitiveness shortcomings. Regulatory reactiveness and stability, faster development cycles, investment in batteries, and support for affordable EVs are essential. Protection without a profound transformation would be pointless.
As explored in my book, Mobility Revolution: How AI, EVs, Robotaxis, and New Modes Radically Transform the Ecosystem, the automotive industry's transformation extends well beyond electrification. Competitiveness will increasingly depend on the integration of technology, industrial capabilities, and new business models. Europe's challenge is to turn today's pressure into a catalyst for renewal before the competitive gap becomes impossible to close.
Marc Amblard
Managing Director, Orsay Consulting