European EV Leadership: from Playing Catch-up to Winning with Innovation

At IAA Mobility earlier this month, European automakers sent a clear message: they are determined to defend their position in the electric vehicle market against the rapid rise of Chinese brands such as BYD and Geely, which are increasingly gaining significant market share.

In an interview with the Financial Times, Thomas Schäfer, CEO of Volkswagen, emphasized, “We are dominant in Europe and will defend it by all means,” highlighting the pressure European companies face as they contend with Chinese EV competitors. He added that their new vehicle range is “very competitive,” acknowledging that Chinese manufacturers would face challenges breaking into the European market.

European giants like Volkswagen, BMW, and Mercedes-Benz are introducing new models, sleek designs, software upgrades, and competitive pricing. Yet the reality is that incremental improvements are no longer sufficient.

Chinese OEMs are Expanding Rapidly in the European Market 

According to Schmidt Automotive Research, Chinese brands captured a record 5.7% market share in the UK and Europe in the second quarter of 2025, rising to 10.7% in the EV segment. BYD alone now holds 3.8% of the European EV market, up from 2.5% the previous year.

These numbers indicate that Chinese competitors are expanding rapidly, capturing market share and exerting significant pressure on traditional European companies, which must now reassess their strategy.

The Chinese Challenge Extends Beyond Price Competition

The challenge, however, extends beyond price competition: Chinese manufacturers deploy advanced production processes, plan local factories in Europe, and invest heavily in user experience and service integration.

It has become increasingly difficult for European carmakers to maintain leadership through incremental upgrades alone.

Competing on those terms alone is a losing battle for Europe. Unless the European automakers find a way to extract more performance, safety, and reliability from every battery cell, even the most advanced chemistries and factories will not be enough to sustain leadership.

How European Automakers Can Create Differentiation?

This is where innovative efforts should focus: not on a manufacturing or chemistry arms race, but on making every cell count. By enhancing both current and future cells using innovative thermal and safety architectures, European automakers can leapfrog and create lasting differentiation.

Two-phase immersion technology is the foundation of this approach: battery cells are immersed in dielectric fluid that transforms into vapor, enabling unparalleled heat dispersion. The result is a combination of safety, fast charging capability, and extended lifecycle efficiency that conventional cooling systems cannot achieve.

Two-phase immersion ensures that every cell—regardless of chemistry—is utilized to its full potential, delivering the performance, safety, and sustainability advantages Europe urgently needs to maintain leadership in the EV race.

The Carrar architecture also enhances battery reliability and lifetime through its modular design, durable fluids, and efficient thermal loop architecture.

Beyond safety and performance, our architecture contributes to clean energy goals and ESG compliance, reducing energy loss, enabling more efficient battery use, and supporting sustainable electrification.

Providing a Genuine Competitive Edge for European EV Makers

The advantage of two-phase Immersion is that it meets market reality: fast charging, high-power performance under heavy loads, increased safety, and longer battery life – providing a genuine competitive edge that enables European automakers to respond to Chinese competition through innovation rather than tactics.

The required change is not only technological. European automakers must recognize they need to integrate technology, service, and user experience. Adopting two-phase Immersion can maintain an advantage by combining innovation with a high-quality, safe driving experience.

Europe’s EV race will not be won by competitive pricing or minor upgrades alone, but by automakers who adopt innovative solutions.

The two-phase Immersion architecture delivers safety, performance, and a competitive advantage that enables Europe to retain its leadership in the global electric vehicle market.