China dominates Europe EVs: Why are Indian automakers gambling billions?

While Tata Motors, TVS, and Bajaj are snapping up struggling European firms to gain design and engineering expertise, rivals like Maruti Suzuki, Hero MotoCorp, and Ultraviolette are pushing premium electric models into the continent through existing dealer networks to lay the foundations for future growth.

Yet, the timing is fraught: Europe’s auto sales have slowed to a crawl, Chinese EV rivals like BYD are racing ahead, and some Indian forays of the past—like TVS’s Norton bet and Ashok Leyland’s decision to shut its UK plant—have not yielded the best returns.

Prong 1 – The buyout spree

In terms of buyouts, the latest European buy is TVS Motor’s €5 million (about ₹52 crore) acquisition of Italian design and engineering firm Engines Engineering S.p.A. on 25 September to set up a global design hub in Bologna, Italy, and upgrade its premium offerings.

A few months ago, Tata Motors and Bajaj Auto had concluded their biggest-ever global takeovers as well. The former bought the commercial vehicle business of Italian firm Iveco S.p.A. for $4.4 billion (about ₹38,000 crore) in July, while the two-wheeler maker took full control of Austrian motorcycle brand KTM in an €800-million (about ₹7,778-crore) deal in May.

The shopping spree is driven by European automakers’ struggles, exacerbated by US tariffs in a slowing economy. Industry executives assert that this window of opportunity in Europe can help Indian original equipment manufacturers (OEMs) diversify geographically and acquire advanced engineering capabilities.

“We are expanding our ability to deliver premium, connected, and electric vehicles that set new global benchmarks," said TVS chairman and managing director Sudarshan Venu in a statement announcing the Engines Engineering acquisition.

Moreover, the management highlighted that the deal will complement its British business Norton Motorcycle Co. Ltd, which it acquired in 2020 for €16 million (about ₹153 crore then).

“Opportunities like these do not come when you want—you move when they arise," said Tata Motors chief financial officer P.B. Balaji on 31 July, addressing investor concerns about the rationale behind the Inveco acquisition amid a struggling European market. “There was a very small window to get this business."

“It is a meaningful, large acquisition… There is an understanding between the two companies to build a business of scale and size," Balaji added.

Meanwhile, analysts believe that while Europe is not an attractive destination for auto sales yet, Indian OEMs can look to gradually grab a share in the region’s EV market.

“Tech is still largely in Europe, China, South Korea, Japan, and the US. So, based on valuation, there would be acquisition opportunities in the non-growing markets among these markets," said Subhabrata Sengupta, partner at Asia-focused strategy consulting firm Avalon Consulting.

Prong 2 – Export growth

In parallel, several Indian automakers—including Maruti Suzuki India Ltd, Mahindra & Mahindra Ltd, Hero Motocorp Ltd, and TVS-backed Ultraviolette Automotive—are using the opportunity to expand exports of their premium EVs to the region through existing distribution networks.

For instance, Maruti Suzuki exported 2,900 units of its e-Vitara to the region before its India launch. The country’s largest carmaker has repeatedly emphasized that near-term EV growth will come from exports, as it will be some time before the domestic EV market matures.

“We are growing better because exports have been very buoyant. In the coming year, exports are expected to grow by 20%. This is going to be the main driver for our production, sales, and profits," R.C. Bhargava, chairman of Maruti Suzuki, said in April, adding the carmaker will mostly export its EVs initially.

The country’s largest two-wheeler maker—Hero MotoCorp—is also entering Europe, with planned launches in the UK, Germany, France, and Spain in 2025-26, aiming to boost exports of its electric scooter Vida VX2.

TVS-backed electric bike maker Ultraviolette, too, sees the European market as an important growth destination. “What we see is, acceptance of EV as a concept and acceptance of more sustainable forms of mobility is much higher [in Europe]," Niraj Rajmohan, co-founder and chief technology officer at Ultraviolette, told Mint in an interview on 22 September.

In August, Mahindra and Mahindra said that it was looking to export its EVs to the UK following the India-UK free trade agreement.

Not so easy

Not an easy market in the best of times, Europe is now struggling to hold on to auto sales growth. According to the European Automobile Manufacturers' Association, electric car registrations in the region fell 1.3% to less than 2 million units in 2024.

As for e-two-wheelers, a May report by market research firm Global Market Insights Inc. projected that the European e-bike market would expand at a compound annual growth rate (CAGR) of 3.8% to reach $25.1 billion in 2034 from $17.5 billion in 2024.

This crawl has come on the back of slowing economic growth — the European Union’s (EU’s) gross domestic product (GDP) growth fell from 6.3% in 2021 to 1% in 2024, affecting consumer sectors like automobiles, showed data from Trading Economics.

Plus, analysts said Chinese competition is getting particularly intense in the passenger vehicle segment, with giants like BYD making their mark in the region.

In the EU, BYD holds a 3.1% market share in battery electric vehicles (BEVs). According to a 26 June Elara Capital note, its exports to the EU and the UK have nearly doubled in 2025 year-to-date.

“We believe China’s OEMs can gain incremental global PV market share in the next 3-5 years, thereby putting pressure on legacy OEMs," the note said.

Further, Indian automakers have a negligible presence in Europe, with only component makers making $6 billion in revenues from the region. Among car makers, only Tata Motors has seen some degree of success in its 2008 acquisition of British luxury car brand Jaguar Land Rover (JLR). In 2024-25, JLR contributed 71% to the company’s consolidated top line.

Look elsewhere

Companies like truck and bus maker Ashok Leyland, which decided to shutter its UK manufacturing plant of ECVs owing to low demand in the region, are looking at other regions.

“The growth that is there is largely going to be in the southern hemisphere," Amandeep Singh, president-light commercial vehicles, international operations, defence and power solutions, Ashok Leyland, told Mint in an interview on 26 September. “And that’s where we are focused because of the demographics, changes that are happening, and government policies, particularly in West Asia. Now Africa is also coming back."

He noted that most European countries recorded low single-digit increases in automobile sales. “These are saturated markets. To play these markets, what we are thinking is to do it through the EV. Because when the market shifts from ICE to EV, market disruption will take place, and that’s the time really for the entry," Singh added.

“The European market is not growing, hence acquisition in MEA (Middle East and Africa) or Latin America may be attractive from a growth perspective," added Sengupta of Avalon Consulting.

The European business slowdown has also weighed on TVS, which has so far invested upwards of ₹1,000 crore in Norton but has still not made any money from it.

“Increased losses from subsidiaries (excluding TVS Credit) need to be monitored," said Rishi Vora of Kotak Institutional Equities in a note after the company’s March quarter results. “The company continues to incur losses on the Norton Motorcycle as it continues to undertake costs of the development."