Car Wars: America Profits, Europe Falters, Has China Already Won?

Detroit is rediscovering the immense profits in petrol-powered trucks, Europe is cutting jobs and cherished models while funding a painful transition, and China is building electric cars at a scale and price the old guard cannot match. Who is winning the Car Wars?

Have you seen the news from the car industry lately? There is a very clear trend emerging, and it looks like some have played a solid hand while others are flailing about trying to find a way out of the quagmire. Or is this really a rabbit and tortoise situation?

In America, the traditional car giants appear to have rediscovered how to make serious money. Ford, General Motors and Stellantis are leaning once again on petrol-powered pickups, SUVs, commercial vehicles and, yes, even the gloriously old-school V8.

Across the Atlantic, some of Europe’s oldest and most respected manufacturers are cutting jobs, closing factories, shrinking production and deleting cars that once defined everyday motoring.

Meanwhile, China keeps breaking records. It is building more electric cars, more batteries and, increasingly, more of the technology inside tomorrow’s vehicles than anyone else on Earth.

So what is actually going on?

The global car industry is not travelling down one road. It is splitting into three completely different futures.

America is making money from the cars people still want today. Europe is spending billions trying to build the cars legislators believe people should buy tomorrow. China is already producing those future cars at scale, often at prices neither side can currently match.

And that raises the uncomfortable question: has China already won the global car industry?

At its simplest, this is the state of play:

Region	What pays today	What it is trying to build	The danger
America	Petrol pickups, SUVs and commercial vehicles	Lower-cost EVs developed at a slower, more commercially cautious pace	Today’s profits become tomorrow’s complacency
Europe	A pressured mixture of combustion, hybrid and premium models	EV platforms, batteries, software and charging ecosystems	Funding two industries while losing affordable cars and market share
China	Huge domestic volumes plus rapidly growing exports	A vertically integrated electric and software-defined car industry	Overcapacity, tiny margins, political resistance and a brutal shakeout

America rediscovers petrol profits

Donald Trump’s return to the White House in January 2025 dramatically changed the direction of American automotive policy.

On his first day back in office, Trump signed an executive order promising to eliminate what he called the “EV mandate”. That description bundled together Biden-era emissions rules, EV incentives, government purchasing policies and California-led measures intended to push manufacturers towards zero-emission vehicles.

The direction of travel quickly reversed. Federal EV tax credits ended after September 2025, California’s attempt to enforce progressively higher zero-emission sales was blocked, and in February 2026 the US Environmental Protection Agency rescinded the 2009 greenhouse-gas Endangerment Finding, removing the legal basis for federal greenhouse-gas standards on new motor vehicles and engines.

Some of these actions may continue to face legal challenges, but the message to Detroit could hardly be clearer.

Ford, GM and Stellantis had already committed tens of billions of dollars to batteries, EV factories, new platforms and software. Those investments could not simply be put back in the box and returned for a refund. However, reduced regulatory pressure, the disappearance of EV incentives and continued protection against Chinese imports gave them breathing room to slow the transition and concentrate once again on profitable combustion-powered vehicles.

Market conditions were already encouraging this. American EV demand was growing more slowly than manufacturers had forecast, while customers continued paying handsome prices for big trucks and SUVs.

Trump opened the door wider and Detroit drove a V8 straight through it.

Now, believe me, I love a V8 as much as the next petrolhead. Probably more, if I’m being entirely honest. But it is worth remembering the scale of America’s consumption. Transport accounts for about 28 per cent of direct US greenhouse-gas emissions. Passenger cars and light-duty trucks produce 57 per cent of transport emissions, with medium- and heavy-duty trucks adding another 23 per cent.

This is not a trivial contribution from a small country. America remains one of the world’s largest emitters and should accept greater responsibility for the consequences of its energy and vehicle consumption.

Nonetheless, car companies are making the most of the opportunity and, commercially speaking, you can hardly blame them. Their job is to build what customers buy and make money doing it.

Ford: the trucks are paying the bills

Ford’s latest figures capture the strange divide inside one company.

In the second quarter of 2026, its Ford Blue division, containing traditional combustion-powered cars, SUVs and trucks, generated $1.1 billion in earnings before interest and tax. That was up 72 per cent year on year.

Ford Model e, the electric division, lost $919 million during the same three months.

F-Series pickups, Broncos, commercial vehicles and expensive off-road derivatives continue to generate the cash. Model e is improving and Ford is developing lower-cost electric platforms, so this is not the abandonment of EVs. But the immediate message is unmistakable: petrol trucks are paying the bills while Ford works out how to make electric cars profitably.

GM’s electric ambition meets market reality

General Motors tells a similar story, although GM has a particularly long history with electric vehicles.

It launched the pioneering EV1 in 1996, and then the range-extender Chevrolet Volt in 2010. In late 2016 it began producing the Chevrolet Bolt EV, one of the first relatively affordable mass-market electric cars capable of travelling more than 200 miles on a charge.

By 2021, GM had committed $35 billion to electric and autonomous vehicle development through 2025. It created the Ultium battery platform, invested in enormous battery factories and announced an ambition to eliminate tailpipe emissions from its new light-duty vehicles by 2035.

During this electric push, GM even retired the Chevrolet Camaro. The final sixth-generation car left production in January 2024, leaving one of America’s most famous muscle cars without an immediate successor. Chevrolet insisted it was not the end of the Camaro story, but the symbolism was hard to miss: while billions poured into electric Hummers, Cadillacs and SUVs, the Mustang’s great petrol-powered rival quietly disappeared from the showroom.

EV demand then grew more slowly than GM anticipated. The company remains America’s second-largest EV seller, so it is emphatically still in the race, but petrol-powered pickups and SUVs are again doing much of the financial heavy lifting.

GM reported second-quarter 2026 revenue of $48 billion, adjusted earnings of $3.9 billion and net income of $1.3 billion. It held an industry-leading 43 per cent of the US full-size pickup market.

That tells you where the money is going: Chevrolet Silverados, GMC Sierras, Tahoes, Suburbans and Yukons. Large, expensive vehicles carrying large, delicious margins.

Stellantis: Hemi economics

Then there is Stellantis. Yes, it is headquartered in Europe, but Chrysler, Dodge, Jeep and Ram still make it one of Detroit’s traditional Big Three.

For readers more familiar with the badges than the corporation, Stellantis was created in 2021 by the merger of France’s PSA Group and Fiat Chrysler Automobiles. Its vast European portfolio includes Peugeot, Citroën, DS, Opel, Vauxhall, Fiat, Abarth, Alfa Romeo, Lancia and Maserati. Add Jeep, Chrysler, Dodge and Ram and you begin to appreciate just how many familiar marques live under one increasingly crowded roof.

Stellantis reported second-quarter revenue of €43.5 billion, up 13 per cent, with North American revenue jumping 32 per cent. European revenue was essentially flat and the European operation recorded a negative adjusted operating margin.

What powered the wider recovery? Ram pickups, Jeep SUVs, the Dodge Durango, the Chrysler Pacifica and, significantly, the return of the Hemi V8 to the Ram 1500.

Customers voted with their wallets and Stellantis decided to cash in on cubic capacity.

Detroit’s profit picture at a glance

Company	Latest headline numbers	The vehicles doing the heavy lifting	What it tells us
Ford	Ford Blue Q2 EBIT: $1.1bn; Model e loss: $919m	F-Series, Bronco, Ford Pro commercial vehicles and expensive off-road derivatives	The traditional business is funding the electric transition
General Motors	Q2 revenue: $48bn; adjusted EBIT: $3.9bn; GM North America margin: 8.6%	Silverado, Sierra, Tahoe, Suburban and Yukon	GM remains in the EV race, while big petrol vehicles supply the financial muscle
Stellantis	Q2 revenue: €43.5bn, up 13%; North American revenue up 32%	Ram pickups, Jeep SUVs, Dodge Durango and Chrysler Pacifica	Returning to popular American products, including the Hemi V8, has revived momentum

America’s apparent solution therefore looks deceptively simple: sell people the vehicles they still want, then use at least some of the resulting profit to develop what they might want next.

It makes commercial sense. Fuel remains comparatively affordable, roads and parking spaces accommodate enormous vehicles, and the pickup is simultaneously a work tool, family car, status symbol and cultural icon.

But it could also become a trap.

A company earning billions from petrol trucks has little incentive to disrupt its most lucrative products. Every extra year spent protecting today’s profits gives China another year to improve its batteries, software, factories and supply chains.

America may be winning the current profit cycle while losing the long-term industrial race. It is the hare stopping for lunch because the tortoise looks comfortably far behind, only this tortoise has a battery megafactory and an alarming development cadence.

Europe is paying for two car industries

Europe faces the nastiest problem of the three.

Its manufacturers must continue developing engines, hybrids and existing models while simultaneously funding dedicated EV platforms, battery supply chains, software systems and charging ecosystems. They are effectively paying for two car industries at once.

Add high energy prices, expensive labour, mounting compliance costs, fierce Chinese competition and a market still smaller than before the pandemic, and the results are beginning to show.

Volkswagen Group’s operating result fell 11.6 per cent in the first half of 2026 to €5.9 billion. Its operating margin was just 3.8 per cent. Volkswagen has agreed to reduce its German workforce by more than 35,000 by 2030, cut German production capacity by 734,000 vehicles and pursue more than €15 billion in annual savings.

Ford has retired the Fiesta and discontinued the Focus, two cars that once defined ordinary European motoring, while announcing plans to cut roughly 4,000 European jobs. Audi ended vehicle production at its Brussels plant in February 2025.

The European pressure points look like this:

Company or market	What has happened	Why it matters
Volkswagen Group	H1 2026 operating result fell 11.6% to €5.9bn; operating margin was 3.8%	Even Europe’s industrial giant is earning too little from an enormous operation
Volkswagen in Germany	More than 35,000 jobs to go by 2030; capacity reduced by 734,000 vehicles	Restructuring has moved from boardroom presentations to factories and livelihoods
Ford Europe	Fiesta and Focus discontinued; roughly 4,000 planned job reductions	Affordable European hatchbacks and the jobs supporting them are disappearing together
Audi Brussels	Vehicle production ended in February 2025	Factory closure shows the transition can erase entire manufacturing sites
EU new-car market	Registrations rose 5.7% in H1 2026	Customers are still buying cars; established manufacturers are struggling to capture enough of the value

Yet this is not simply a story of Europeans refusing to buy cars. EU new-car registrations rose 5.7 per cent in the first half of 2026. The crisis is about which cars customers choose, where the profit goes and what it costs established manufacturers to compete.

Small cars deliver narrow margins, yet safety equipment, emissions compliance, software and electrification make every model more expensive to develop. That helps explain why affordable cars disappear while manufacturers push us towards premium SUVs, where the margins are plumper.

The customer asks for a reasonably priced hatchback. The industry replies with another electric crossover costing forty grand.

Bizarrely, Europe has been killing the genre of car it was best known for: the compact, practical, affordable family hatchback. Ford’s Fiesta and Focus have effectively made way for the Puma crossover, available in petrol-hybrid and electric Gen-E forms.

There is another complication. Volkswagen, BMW and Mercedes once sold enormous numbers of profitable cars to China, helping to finance their global operations. They built cars there and supplied expertise. Chinese companies learned quickly, achieved European standards of perceived quality, then overtook the old guard in production scale, battery technology, software and development speed.

Chinese customers understandably began choosing Chinese brands.

Now Volkswagen is partnering with Xpeng. Stellantis owns a major stake in Leapmotor. Western manufacturers increasingly want Chinese platforms, batteries, software and speed.

China went from pupil to partner, from partner to supplier, and from supplier to master.

China is winning, and winning hard

Let us put China’s position into perspective.

According to the International Energy Agency, more than 13 million electric cars were sold in China in 2025. They represented close to 55 per cent of all new cars sold there and six out of every ten electric cars sold worldwide.

China also produced about 16 million electric cars in 2025, nearly three-quarters of global EV production, while exports of Chinese electric cars more than doubled to over 2.5 million.

Then consider Chery. On 25 July 2026, the group passed 20 million cumulative global vehicle sales, just 29 years after it was founded. In the first half of 2026 alone it exported 943,817 cars.

If Chery itself is not yet familiar, its rapidly spreading family probably will be: Omoda, Jaecoo, Jetour and Exeed, plus iCAR and Lepas. Different badges, same Chinese manufacturing powerhouse.

BYD delivered the other symbolic shock. In 2025 it sold 2.26 million battery-electric vehicles, overtaking Tesla’s 1.64 million to become the world’s largest seller of pure EVs. Include BYD’s plug-in hybrids and its total electrified passenger-car sales exceeded 4.5 million.

The company once dismissed in the West as a maker of cheap Chinese cars has overtaken the brand that transformed the EV industry.

China’s scale in numbers

Measure	Latest figure	Significance
Electric-car sales in China, 2025	More than 13 million	The world’s largest EV market by a considerable distance
EV share of Chinese new-car sales	Nearly 55%	Electrification has already moved into the mainstream
China’s share of global electric-car sales	Six in ten	Most of the world’s EV customers are now Chinese
Electric cars produced in China, 2025	Around 16 million	Nearly three-quarters of global EV production
Chinese electric-car exports, 2025	More than 2.5 million	Export volume more than doubled in a year
Chery cumulative global sales	20 million by July 2026	Achieved just 29 years after the company was founded
BYD versus Tesla pure-EV sales, 2025	2.26m versus 1.64m	BYD took the annual global BEV sales crown

China’s advantage extends far beyond labour costs. It has enormous domestic scale, controls large sections of the battery supply chain, shares components across multiple brands, updates cars rapidly and treats software as central rather than decorative.

Western legacy manufacturers must protect factories, dealers, engines, platforms and decades of established working practices. Chinese EV makers largely started with a clean sheet.

That does not make every Chinese car brilliant. China has a brutal price war, weak margins and far too many manufacturers. Some will disappear. Serious questions remain around long-term parts support, repairs, depreciation, data, software, quality consistency and political influence.

The approaching consolidation could be savage. Yet even failed companies will leave behind engineers, factories, intellectual property and hard-won knowledge for the survivors.

Why Chinese cars are absent from America

If China has conquered so many markets, why is it almost absent from the United States?

Because America has built a wall.

Tariffs make Chinese EVs commercially unappealing, but national-security rules create an even larger barrier. From model year 2027, US regulations prohibit Chinese-controlled manufacturers from selling connected passenger vehicles in America, even if those cars were assembled in the United States or used connectivity hardware from elsewhere. Restrictions on covered Chinese vehicle software also begin with the 2027 model year, while hardware prohibitions follow later.

These rules enjoy support across America’s political divide. A future president might soften the overall approach, but a complete opening is far from guaranteed.

Canada, however, has opened a crack. From March 2026 it allowed an annual quota of 49,000 Chinese EVs at the normal 6.1 per cent tariff, replacing the previous 100 per cent surtax.

Those cars cannot simply be re-exported into the US. North American trade rules require sufficient regional content, while US connectivity restrictions would still apply. But Canada could become a beachhead: somewhere for Chinese manufacturers to establish brands, service operations and credibility in North American conditions.

Possible route into North America	What makes it attractive	What stands in the way
Direct Chinese-brand imports to the US	Fastest route to offer Chinese value and technology	Punitive tariffs plus connected-vehicle restrictions
Sales in Canada	Establishes brands, servicing and a North American track record	Initial quota of 49,000 cars and no simple onward route into America
Chinese technology under a US badge	Gives Detroit faster access to proven batteries and EV platforms	Programme must be genuinely US-controlled and compliant on software, data and hardware
North American assembly	Creates local jobs and may satisfy regional-content rules	Factory location alone does not overcome Chinese ownership or connectivity restrictions

There is another route, and this may be the ultimate twist. China could enter America without Chinese badges.

Detroit has done this before. GM’s Geo Prizm was closely related to the Toyota Corolla, while the Geo Tracker was a Suzuki Vitara. The Chevrolet Aveo came from Daewoo. Ford sold the Kia-built Festiva and Aspire, and the Ford Probe was based on Mazda MX-6 engineering. Chrysler offered numerous Mitsubishi-derived cars, including the Dodge Colt and Dodge Stealth.

Imagine the modern version: an American manufacturer licenses a Chinese electric platform or battery system, replaces the connectivity hardware and software, stores data under US control, adds sufficient North American content and assembles the vehicle in Michigan, Mexico or Ontario.

The styling could come from Detroit. The body could wear a Ford, Chevrolet, Dodge or Jeep badge. To the customer it would appear American, but much of the clever technology underneath would have originated in China.

That route would still have to satisfy strict American ownership, supply-chain and connected-vehicle rules. It would not be a simple rebadging exercise. But a genuinely US-controlled programme using licensed Chinese know-how is more plausible than ships full of BYDs suddenly sailing past the tariff wall.

Three clocks, one winner?

We now have three different clocks running.

1. America is making money today from petrol-powered trucks, SUVs and commercial vehicles.
2. Europe is taking the financial pain of transition today while trying to preserve its industry for tomorrow, and desperately hoping some of it will still be standing at the end.
3. China is using scale, competition and manufacturing power to build an advantage that compounds every year.

Let’s be honest: China is winning, and winning hard.

Its victory is not inevitable. China faces overcapacity, wafer-thin margins, political resistance and a looming industry shakeout. America could use today’s truck profits to create genuinely affordable electric cars for tomorrow. Europe still possesses immense engineering expertise, famous brands, brilliant designers and formidable manufacturing capability. Partnerships could help Western manufacturers catch up quickly.

Japan has its own difficulties, although its stronger bet on hybrids remains a useful hand in the short to medium term.

Right now, however, China appears to be holding the best cards. It dominates EV manufacturing and battery production, is gaining market share around the world and can enter Western markets through exports, local factories, joint ventures, licensing or partnerships with the very companies it threatens.

And what does that mean for us as motorists?

For the average driver, much of it is good news. More competition should mean better technology, greater choice and lower prices.

But it also raises serious questions about jobs, industrial independence, national security, repairability, data, long-term support and the survival of familiar manufacturers.

That last point is particularly hard for petrolheads like me to swallow. We may love the badges and histories, but nostalgia is not an industrial strategy.

China may not yet have won the entire global car industry. But it has built the strongest position in the race for what comes next, while America celebrates today’s profits and Europe struggles to decide what it is transitioning towards.

The old order is not dead. It is, however, running out of time.

What do you think? Would you buy a Chinese car? Have the legacy manufacturers lost their way, or will their engineering experience and trusted brands carry them through? And is America’s return to petrol-powered profit a sensible pause, or a dangerously comfortable dead end? Let me know in the comments.

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