With U.S. roadblocks, EV makers pivot to Europe at IAA

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With U.S. roadblocks, EV makers pivot to Europe at IAA

Published: 03 Sep. 2025, 06:00

SARAH CHEA
[email protected]

Audio report: written by reporters, read by AI

The images of Neue Klasse concept EVs from BMW [BMW KOREA]

With Donald Trump poised to terminate federal EV subsidies in the United States as early as Sept. 30, global automakers are shifting gears — steering toward Europe, where incentives are still rich and the welcome mat for EVs remains firmly in place.

This year’s IAA Mobility 2025 is shaping up to be more vibrant and ambitious than ever, with Korean manufacturers like Hyundai Motor and Kia, alongside Chinese EV giants BYD, Leapmotor and Chery, expected to unveil new electric models aimed squarely at European consumers — potentially filling the void left by their retreat from the increasingly hostile U.S. market.

Held biennially as the world’s four largest auto shows, the IAA has struggled to retain its prestige amid shifting industry dynamics. Now, which is slated to kick off on Sept. 9 in Munich, it seeks to reclaim relevance with an electric and autonomous future front and center.

Sketch of Hyundai's Concept Three, which could tentatively be dubbed the Ioniq 3, will be first unveiled at the upcoming IAA Mobility 2025 in Munich. [HYUNDAI MOTOR]

Tariffs in the United States, tail winds in Europe
Hyundai, returning to the IAA stage for the first time in four years, is set to unveil a concept model of its upcoming electric SUV tentatively dubbed the Ioniq 3. The vehicle, the smallest in its Ioniq all-electric brand series, is designed specifically for European consumers who favor smaller-sized cars.

Developed primarily at Hyundai’s European Technical Center in Germany, the Ioniq 3 is anticipated to compete directly with market rivals including Renault’s electric R4 and Volkswagen’s upcoming ID.2.

Kia is also set to host its own booth at the IAA to showcase the EV2, a compact electric SUV dedicated to Europe. First revealed in Spain last year, Kia CEO Song Ho-sung stated that the EV2 would be priced around 30,000 euros ($35,000), positioning it as a more accessible entry into the European EV market. Following the European rollout of the EV4 and the midsize EV5 later this year, the EV2 is slated for launch in 2026.

BMW iX3, its first Neue Klasse EV, under camouflage. The model will be unveiled at IAA Mobility 2025, which kicks off on Sept. 9 in Munich. [BMW]

BMW is set to unveil the all-new iX3 — the first production model built on its next-generation “Neue Klasse” EV platform — at the IAA Mobility 2025. The Neue Klasse reimagines BMW’s iconic kidney grille, marking a stylistic shift for the brand. The iX3, embodying this fresh aesthetic, is slated to enter full-scale production by the end of this year at its new dedicated factory in Debrecen, Hungary.

This shift to Europe is largely in response to the impending rollback of U.S. federal tax incentives under the Trump administration’s policy agenda, which abolished tax credits of up to $7,500 for an EV purchase. The credits will be terminated on Sept. 30.

“Hyundai and Kia’s EV sales in the U.S. decline by as many as 45,000 units annually, translating to a profit loss of roughly $1.95 billion due to the end of EV subsidies,” the Federation of Korean Industries said in a recent report.

In contrast, the European EV market is expected to maintain its strong upward trajectory, buoyed by generous and sustained government subsidies across the continent. The British government currently offers subsidies of up to 10 percent of the purchase price for new EVs priced under 37,000 euros, while Germany has introduced a tax credit scheme that allows businesses to deduct up to 75 percent of the purchase price of EVs. Italy recently rolled out a subsidy program that offers up to 11,000 euros per vehicle.

Kia's EV2 concept car, which will hit Europe in 2026 at 30,000 euros ($35,000) [SARAH CHEA]

China’s EV blitz hits Europe
A total of eight Chinese automakers, including major players such as BYD, XPeng, Leapmotor and AITO are staging a strong comeback at this year’s IAA Mobility, after skipping the 2024 Paris Motor Show amid escalating EU tariff tensions.

AITO, the EV joint venture between Huawei and Seres Group, will make its global debut of its extended-range electric vehicle, the AITO 5. First unveiled as a prototype last year, the AITO 5 will enter official sales in Europe following its debut in Munich.

BYD is set to unveil its new plug-in hybrid station wagon, the Seal 6 DM-i Touring, marking a notable entry in the hybrid segment for European consumers.

Changan Automobile will also debut a new model at the show, signaling its intention to expand into 10 European markets.

Among the European legacy brands, Mercedes-Benz will make debuts of the all-new GLC with EQ Technology, the electric iteration of its best-selling SUV. Volkswagen will present the world premiere of the ID.2 concept car, a fully electric compact SUV designed to appeal to younger urban drivers seeking an affordable entry into the EV market. Polestar is also slated to reveal its latest model, the Polestar 5, for the first time in Germany.

Swedish marque Volvo Cars is returning to the IAA after a 12-year absence with a plan to unveil the first look at its upcoming midsize electric SUV, the EX60, which is scheduled for market launch in early 2026.

BY SARAH CHEA [[email protected]]