What the EU needs is a proper mobility policy to reduce the demand for cheap Chinese crap for every day commuting.
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As it stands, there's no real way to compete on price with a country like China that can do so much processing of raw materials in-house, has practically unlimited, very cheap labour, very cheap energy, almost no environmental regulations, outright steals tech, and straight-up uses slave labour.
Some form of protectionism is likely needed.
That said, car companies have been pissing me off recently. The prices are insane, and I don't particularly want to give them even less of a reason to keep pricing competitive.