Listen on * Spotify * Apple Music * Amazon Music Friedrich Merz steht zu Beginn des Jahres 2026 unter Zugzwang. Bei der CSU-Klausur in Seeon muss er beweisen, ob er den Spagat zwischen „Klingbeil-Versteher“ und Reformkanzler schafft. Rasmus Buchsteiner berichtet aus dem Kloster, warum die Union jetzt Ergebnisse bei der Unternehmenssteuer will und wie Merz seine Doppelbotschaft aus Sicherheit und Wirtschaft vermitteln muss. Im 200-Sekunden-Interview bezieht EU-Kommissar Magnus Brunner (ÖVP) Stellung zur CSU-Forderung nach einer Abschiebeoffensive Richtung Syrien. Er erklärt, warum Regeln eingehalten werden müssen, wie Brüssel künftig mit „Return Hubs“ plant und warum Grenzkontrollen noch eine Weile bleiben dürften. Ringen um die außenpolitischen Linien in der AfD: Weil Alice Weidel die USA-Strategie besetzt, sucht Tino Chrupalla sein Profil in China. Pauline von Pezold analysiert, wie die Reise ohne Fachexperten, aber mit PR stattfindet und was das über den Riss in der Parteispitze verrät. Außerdem: Ein Blackout in Berlin-Zehlendorf und ein Regierender Bürgermeister auf dem Tennisplatz. Kai Wegners Freizeitgestaltung während der Krise sorgt für Kopfschütteln. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski. POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 information@axelspringer.de Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna

Anchal Vohra is a Brussels-based international affairs commentator. On a smog-filled day in New Delhi, I watched as a few German cars struggled to navigate a massive traffic jam. A British SUV was also in the mix, trailing not so far behind. Last year, these foreign cars accounted for only 0.1 percent of India’s imports, with Germans in the lead and the British coming in a near second. However, British businesses have gained an edge ever since the U.K. and India inked a free trade agreement earlier this year, with India finally lowering its protectionist guard. Once this deal fully comes into effect, overall bilateral business is expected to grow by more than 50 percent in about a decade-and-a-half, as New Delhi slashes its car tariffs from 100 percent to 10 percent, and its tariffs on scotch from 150 percent to 40 percent over a period of 10 years — all despite the cost to its domestic industries. It also gains particular advantage for its textile sector, which was hard hit by U.S. President Donald Trump’s 50-percent tariff, removing tariffs on Indian textiles exported to the U.K. The EU, meanwhile, remains the single largest market in the world, with a much higher chance of growing its exports to a country packed with over 1.46 billion consumers. Yet, negotiations between New Delhi and Brussels are forever hitting roadblocks, even as negotiators shuttle between the two capitals to get a deal across the finish line — a deadline that’s now been postponed to Jan. 26. And as these talks continue, the bloc could stand to learn from the flexibility of its former member. According to an Indian official in New Delhi, granted anonymity in order to speak freely, the biggest barriers to an agreement are currently the EU’s insistence on greater market access in the politically sensitive agriculture sector, and its insistence on a carbon tax under the Carbon Border Adjustment Mechanism (CBAM). On top of all this, the bloc’s protectionist tendencies — displayed by its higher tariffs on steel and its recent decision to curb rice imports from India — are also unexpected hurdles. In contrast to this rigidity, India’s concessions in its deal with the U.K. emerged from the flexibility it was granted in the agriculture sector, which was largely insulated from British products, the official said. “For all its faults, [the U.K.] understands India and Indians better.” Nearly half of Indians depend on agriculture for their livelihood, and farmers make up a strong voting bloc that holds strong political clout. Back in 2021, farmer protests even forced Prime Minister Narendra Modi to withdraw agricultural reforms and apologize. In fact, I have been told by former Indian officials and experts that the U.S. tariffs on India weren’t punishment for the country’s purchase of Russian oil, as Trump has claimed, but rather for its refusal to let U.S. food products flood the country. Nearly half of Indians depend on agriculture for their livelihood, and farmers make up a strong voting bloc that holds strong political clout. | Jagadeesh Nv/EPA “The interests of our farmers are top priority. India will never compromise on the interests of its farmers, dairy farmers and fishermen,” Modi had said at the time. But these same differences now threaten the EU-India relationship before it even properly takes off. “The Europeans could learn from the British,” the Indian official noted. “They excluded dairy, chicken and apples from the deal,” he explained, listing products particularly important to India. “In exchange, we let them bring in salmon, cod and lamb.” He also alluded that India could consider dropping tariffs on cars and wine if the bloc kept out of agriculture: “In liquor, luxury cars and wine, there is always room, since that doesn’t affect our most vulnerable people.” Instead of any such changes,, however, India is now growing peeved by what it sees as last-minute pressure tactics by Brussels. Just this month, the EU decided to “limit rice imports from India” and other Asian countries to the benefit of domestic rice growers and millers. And the bloc’s unexpected decision to spike tariffs on steel imports outside its quota to up to 50 percent has rattled Indian negotiators. New Delhi was already opposed to the EU’s incoming carbon tax, believing it would make its steel exports uncompetitive. The Secretary of India’s Ministry of Steel Sandeep Poundrik described the European carbon tax as a bigger threat to Indian exports than Trump’s tariffs. On top of all this, the bloc’s protectionist tendencies — displayed by its higher tariffs on steel and its recent decision to curb rice imports from India — are also unexpected hurdles. | Piyal Adhikary/EPA Moreover, some experts like former trade negotiator for India Sangeeta Godbole argue the EU stands to gain more from an FTA whereas India stands to lose if the carbon tax provision isn’t reconsidered. “Nearly 80 percent of Indian exports to the EU even now face miniscule tariffs below 1 percent,” she noted recently, demanding India shield exports “from excessive environmental rules” the EU is trying to impose. To that end, the country has decried the bloc’s tax on carbon intensive imports via CBAM as a violation of the Common But Differentiated Responsibilities (CBDR) principle, which doesn’t hold developing countries equally responsible for climate change due to differences in historical contributions and the state of their economic development. And here, too, India argues, the understanding with the British could be emulated. Although it failed to gain an exemption on the U.K.’s version of the carbon tax, India has reserved the right to retaliate if the FTA’s benefits are negated by this tax. For its part, the EU claims the carbon tax is intended to encourage the use of clean energy in heavy polluting industries. And as Commissioner for Trade Maroš Šefčovič said back in September: “We also need an understanding from the Indian side that we also have our constituency, we also have our audience” to consider — especially after the farmer protests over the recent deal with Mercosur nations. Meanwhile, the EU is also concerned about whether a deal with India might end up benefiting China. The bloc is desperately trying to reduce its dependence on Beijing in strategically important sectors and hoping India could replace it, but India itself is heavily reliant on China as well — for example, nearly half of the components in Indian semiconductors are imported from there. It also gains particular advantage for its textile sector, which was hard hit by U.S. President Donald Trump’s 50-percent tariff, removing tariffs on Indian textiles exported to the U.K. | Divyakant Solanki/EPA However, speaking with a highly placed EU insider who was granted anonymity, I learned the bloc is now ready to make concessions, offering to jointly manufacture cars to encourage India to lower its tariffs, to leave out access to certain agricultural products, and to possibly even relent on garment duties. And last week, negotiators went through sector by sector once more, trying to get a better deal for their domestic industries, trying to keep the balance sheet even. The truth is, India — home to a large number of people living below the poverty line despite its rapid economic growth — needs an FTA with the single largest market to attract foreign investment. But the EU needs India too.

Iris Ferguson is a global adviser to Loom and a former U.S. deputy assistant secretary of defense for Arctic and global resilience. Ann Mettler is a distinguished visiting fellow at Columbia University’s Center on Global Energy Policy and a former director general of the European Commission. After much pressure, European leaders delayed a decision this week amid division on whether to tighten market access through a “Made in Europe” mandate and redouble efforts to reduce the bloc’s strategic dependencies — particularly on China. This decision may appear technocratic, but the hold-up signals its importance and reflects a larger strategic reality shared across the Atlantic. Security, industry and energy have all fused into a single race to control the systems that power modern economies and militaries. And increasingly, success will hinge on whether the U.S. and Europe can confront this reality together, starting with the one domain that’s shaping every other: energy. While traditional defense spending still grabs headlines, today’s battlefield is being reshaped just as profoundly by energy flows and critical inputs. Advanced batteries for drones, portable power for forward-deployed units and mineral supply chains for next-generation platforms — these all point to the simple truth that technological and operational superiority increasingly depends on who controls the next generation of energy systems. But as Europe and the U.S. look to maintain their edge, they must rethink not just how they produce and move energy, but how to secure the industrial base behind it. Energy sovereignty now sits at the center of our shared security, and in a world where adversaries can weaponize supply chains just as easily as airspace or sea lanes, the future will belong to those who build energy systems that are resilient and interoperable by design. The Pentagon already understands this. It has tested distributed power to shorten vulnerable fuel lines in war games across the Indo-Pacific; it has watched closely how mobile generation units keep the grid alive under Russian attack in Ukraine; and it is exploring ways to deliver energy without relying on exposed logistics via new research on solar power beaming. Each of these cases clearly demonstrates that strategic endurance now depends on energy agility and security. But currently, many of these systems depend on materials and manufacturing chains that are dominated by a strategic rival: From batteries and magnets to rare earth processing, China controls our critical inputs. This isn’t just an economic liability, it’s a national security vulnerability for both Europe and the U.S. We’re essentially building the infrastructure of the future with components that could be withheld, surveilled or compromised. That risk isn’t theoretical. China’s recent export controls on key minerals are already disrupting defense and energy manufacturers — a sharp reminder of how supply chain leverage can be a form of coercion, and of our reliance on a fragile ecosystem for the very technologies meant to make us more independent. So, how do we modernize our energy systems without deepening these unnecessary dependencies and build trusted interdependence among allies instead? The solution starts with a shift in mindset that must then translate into decisive policy action. Simply put, as a matter of urgency, energy and tech resilience must be treated as shared infrastructure, cutting across agencies, sectors and alliances. Defense procurement can be a catalyst here. For example, investing in dual-use technologies like advanced batteries, hardened micro-grids and distributed generation would serve both military needs and broader resilience. These aren’t just “green” tools — they’re strategic assets that improve mission effectiveness, while also insulating us from coercion. And done right, such investment can strengthen defense, accelerate innovation and also help drive down costs. Next, we need to build new coalitions for critical minerals, batteries, trusted manufacturing and cyber-secure infrastructure. Just as NATO was built for collective defense, we now need economic and technological alliances that ensure shared strategic autonomy. Both the upcoming White House initiative to strengthen the supply chain for artificial intelligence technology and the recently announced RESourceEU initiative to secure raw materials illustrate how partners are already beginning to rewire systems for resilience. Germany gave the bloc one such example by moving to reduce its reliance on Chinese-made wind components in favor of European suppliers. | Tan Kexing/Getty Images Finally, we must also address existing dependencies strategically and head-on. This means rethinking how and where we source key materials, including building out domestic and allied capacity in areas long neglected. Germany recently gave the bloc one such example by moving to reduce its reliance on Chinese-made wind components in favor of European suppliers. Moving forward, measures like this need EU-wide adoption. By contrast, in the U.S., strong bipartisan support for reducing reliance on China sits alongside proposals to halt domestic battery and renewable incentives, undercutting the very industries that enhance resilience and competitiveness. This is the crux of the matter. Ultimately, if Europe and the U.S. move in parallel rather than together, none of these efforts will succeed — and both will be strategically weaker as a result. The EU’s High Representative for Foreign Affairs and Security Policy Kaja Kallas recently warned that we must “act united” or risk being affected by Beijing’s actions — and she’s right. With a laser focus on interoperability and cost sharing, we could build systems that operate together in a shared market of close to 800 million people. The real challenge isn’t technological, it’s organizational. Whether it be Bretton Woods, NATO or the Marshall Plan, the West has strategically built together before, anchoring economic resilience with national defense. The difference today is that the lines between economic security, energy access and defense capability are fully blurred. Sustainable, agile energy is now part of deterrence, and long-term security depends on whether the U.S. and Europe can build energy systems that reinforce and secure one another. This is a generational opportunity for transatlantic alignment; a mutually reinforcing way to safeguard economic interests in the face of systemic competition. And to lead in this new era, we must design for it — together and intentionally. Or we risk forfeiting the very advantages our alliance was built to protect.

BRUSSELS — Huawei was rushed back into the EU’s most influential solar panel lobby after threatening legal action in reaction to its earlier expulsion over its alleged involvement in a bribery and corruption scandal.   That’s outraging other solar power companies, worried that creating a special membership category for Huawei could undermine the ability of SolarPower Europe to effectively represent the industry in Brussels.  “The conduct reported … specifically the handling of Huawei’s membership has seriously undermined both my personal confidence and that of our organization in the governance of SPE,” Elisabeth Engelbrechtsmüller-Strauß, CEO of Austrian company Fronius, wrote in a letter to SPE, which was obtained by POLITICO.  Lawyers for Huawei and SolarPower Europe met at the end of May for negotiations, an industry insider told POLITICO, which culminated in SPE sending a final agreement to the Chinese company at the beginning of September.   Huawei argued that the European Commission’s decision to ban its lobbyists from any meetings with the executive or the European Parliament was unlawful and did not warrant a full expulsion from SPE, said the insider, who spoke on condition of being granted anonymity over fears of retaliation for speaking out.  The ban on Huawei lobbyists was put in place in March after Belgian authorities accused the company of conducting a cash-for-influence scheme and bribing MEPs to ensure their support of Huawei’s interests.  At the time, Huawei maintained it has a “zero-tolerance stance against corruption.”  During the Sept. 29 meeting to reinstate Huawei’s membership, SPE told its board of directors that the organization wanted to avoid a lawsuit and a potentially costly trial.  Instead, SPE proposed making Huawei a passive member that would not actively participate in the group’s workstreams — an option the board accepted, POLITICO reported earlier this month.   Huawei did not respond to a request for comment about its legal threat.  SPE acknowledged the threat in a letter to Fronius, one of its board members, on Thursday. “Based on legal advice and with the assistance of external lawyers, SolarPower Europe held discussions with Huawei with a view to avoiding litigation and protracted legal uncertainty regarding Huawei’s membership status, while preserving SolarPower Europe’s uninterrupted and unrestricted access to the EU Institutions and other relevant stakeholders,” reads the letter obtained by POLITICO.  The SPE’s letter was a response to an Oct. 20 letter from the Austrian solar panel manufacturer sent to the lobby after POLITICO’s story was published on Oct. 9. Fronius called for full transparency over the reinstatement of Huawei and action against any appearance of corruption.  The Austrian company’s concern is that SPE will be “unable to effectively represent” the sector given the EU’s ban on direct contact with Huawei or groups that lobby on its behalf, Engelbrechtsmüller-Strauß told POLITICO in an email.   Fronius is also raising questions about whether SPE can designate a company as a passive member — a status that does not exist in the organization’s bylaws.  “To our knowledge, SPE’s status do not include such a membership category,” Fronius’s letter to SPE reads. “We request a clear explanation of what this form of membership is based on.”  SPE did not raise the issue of member status in its response to Fronius.   The lobbying practices of Huawei and other Chinese companies are under a microscope over concerns around the influence they wield over crucial technologies, including renewable energy and 5G mobile data networks.  While it is better known as a telecom giant, Huawei is also a leader in manufacturing inverters, which turn solar panels’ electricity into current that flows into the energy grid.  Cybersecurity experts warn inverters offer a back door for bad actors to hack into the grid and tamper with or shut it down through remote access.  Two members of the European Parliament sent a letter to the European Commission earlier this month warning of such risks and urging the executive to restrict high-risk vendors like Huawei from investing in Europe’s critical infrastructure.  “Inverters are the brain of a [solar panel] system, connected to the internet and must be remotely controllable for updates. This applies regardless of who the manufacturer is,” Engelbrechtsmüller-Strauß said. “If European legislation does not address the ‘manufacturer risk,’ then energy security in Europe will be jeopardized, which I consider critical.” 

Listen on * Spotify * Apple Music * Amazon Music Außenminister Wadephul sagt seine China-Reise kurzfristig ab. Ein Vorgang, der zeigt, wie sehr sich die Machtverhältnisse verschoben haben. Hans von der Burchard analysiert, wie China Deutschland die Grenzen aufzeigt, warum die EU zum Vermittler wird  und welche Folgen die Eskalation hat. Im 200-Sekunden-Interview spricht Markus Frohnmaier, außenpolitischer Sprecher der AfD, über Pekings Rolle in der Welt, deutsche Interessen und warum er die Regierung für „hypermoralisch“ hält. Danach: Innenminister Alexander Dobrindt will Deutschland besser gegen Cyberangriffe wappnen und erlaubt künftig auch digitale Gegenschläge. Rixa Fürsen erklärt, wie schwierig das Konzept der Abwehr ist und warum Zuständigkeiten zwischen Bund, Ländern und Bundeswehr so unklar sind. Zum Schluss: Ein Blick auf die SPD, die in Bielefeld gegen den Kanzler und damit die eigene Regierung demonstriert. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski.

German Foreign Minister Johann Wadephul on Friday postponed an imminent diplomatic trip to China, over a dearth of meetings on his schedule. “The trip cannot take place at this time and will be postponed to a later date,” said a spokesperson for Germany’s Federal Foreign Office. With the exception of a sitdown with Chinese Foreign Minister Wang Yi, there were not enough meetings with the Beijing side on his agenda, the spokesperson added. Wadephul’s bombshell will likely roil relations between Berlin and Beijing. It comes amid an increasing deterioration of Germany-China relations in recent months over Beijing’s export curbs on rare earths and microchips, as well as German criticism over China’s posture toward Taiwan and behavior in the South China Sea. A few hours earlier, German Economy Minister Katherina Reiche announced that Berlin was lodging a diplomatic protest against China for blocking semiconductor shipments. “We have been hit hard by the chip shortage because the German economy depends on these chips,” she said in Kyiv. In August, Wadephul also noted that China was providing “crucial” support to Russia that enabled President Vladimir Putin’s ongoing war against Ukraine. The foreign minister was originally scheduled to depart for China on Sunday. Wadephul had planned to press Beijing to ease export restrictions on rare earths and semiconductors, he told Reuters on Thursday — and discuss pushing Russia toward negotiations to end its war in Ukraine. Brussels, for its part, is pressing ahead in talks with Beijing. The European Commission on Friday told reporters that it “can confirm that both in-person and virtual high-level technical meetings will take place next week” after the bloc’s Commissioner for Trade Maroš Šefčovič spoke to his Chinese counterpart Wang Wentao on Tuesday.

Listen on * Spotify * Apple Music It’s been a week where the politics of the Middle East and Britain’s relations with China have loomed large over Westminster. For all the backslapping and goodwill of Sharm el-Sheikh, will the ceasefire and exchange of hostages and prisoners in Gaza pave the way for a political solution? What part could Britain play? And how will the row over the collapsed Chinese spy case play out at home as the blame game between the government, opposition and prosecutors continues to rumble on? What impact will it have on Keir Starmer’s attempts to boost economic relations with China? Anne McElvoy talks to one of Westminster’s most prominent figures on foreign affairs, Emily Thornberry, who chairs the influential Foreign Affairs Select Committee of MPs. As one of Labour’s most senior backbenchers and a former shadow attorney general, she’s been unafraid to be a critical friend of Starmer. She’s also joined by Tim Ross, POLITICO’s chief political correspondent for Europe and the U.K., who’s been reporting on the reaction to President Trump’s Gaza peace plan and gauging the mood in Westminster over the row about Chinese espionage.

U.S. President Donald Trump said he is ready to impose “major sanctions” on Moscow if NATO members stop purchasing Russian oil.  In a letter to alliance members, which he published on his social network Truth Social, Trump wrote: “I am ready to do major Sanctions on Russia when all NATO Nations have agreed, and started, to do the same thing, and when all NATO Nations stop buying oil from Russia.”  He added that oil purchases by NATO states have been “shocking,” arguing that it “greatly weakens your negotiating position, and bargaining power, over Russia.” Trump said he believes ending Russian oil purchases, combined with the imposition of tariffs on China of 50 percent to 100 percent — by NATO members and the U.S. — would help bring an end to what he called a “ridiculous war.” Trump, promised in his election campaign that he would end the war within a day, concluded his statement Saturday by saying that if NATO followed his plan, the war would “end quickly.” Just this week, several European leaders were confident that they had convinced Trump that Russian President Vladimir Putin is not interested in ending the war and has to be forced to the negotiating table, officials and diplomats told POLITICO. In a flurry of diplomatic visits, the leaders discussed new financial restrictions and plans to cut off the flow of Russian oil and gas.

MUNICH, Germany — Europe’s automakers are walking a tightrope at this year’s Munich auto show: introducing cutting-edge EVs while pleading for leniency in transitioning from combustion engines.   Mercedes-Benz unveiled the all-electric version of its best-selling GLC SUV, which is slated to go on sale next year. BMW is touting its new electric iX3 SUV. Both have ranges of more than 720 kilometers and fast recharging times. They’re aimed at cutting off the Chinese EV-makers recording rapid gains in the European market. “I’m convinced we’re on a journey towards zero emission, hence why we’re investing massively into state-of-the-art electric technology in cars,” Mercedes CEO Ola Källenius told reporters at the show.  At the same time, car executives are begging the EU to have mercy on them over its rule banning the sale of new CO2-emitting cars from 2035. Industry wants Brussels to show greater leniency by allowing hybrid vehicles and alternative fuels to ensure at least a limited future for the combustion engine. It’s getting strong backing on that from conservative politicians, including the European People’s Party in the European Parliament. Executives will be making that argument on Friday when Commission President Ursula von der Leyen meets with the auto industry in yet another summit to figure out how to save the troubled sector. The Commission needs to take a “more market-oriented approach” in the 2035 regulation, Källenius said. The argument is not without merit. Car sales in Europe are lower than they were before the pandemic. Chinese automakers have the best tech and batteries, and European brands continue to lose market share in China, which was once a cash cow for them. On top of that, U.S. President Donald Trump has unleashed a global trade war that is costing the sector billions even after Brussels struck a trade deal with Washington.  Sales of electric vehicles are lower than expected, Källenius and his peers complain, and sticking to the emissions targets will make them less competitive. POLITICAL MANEUVERING  But those carmaker grumbles are far from sure to elicit any movement from the Commission, especially after von der Leyen broke her silence on the matter during her State of the European Union speech on Wednesday. “No matter what, we all know the future will be electric, and Europe will be a part of it,” she said while announcing the launch of the EU’s Small Affordable Cars Initiative.   The words were barely past her lips when MEPs erupted in a chorus of boos, particularly those in the EPP.  Although carmakers and their political backers were aghast, climate campaigners saw hope. “Von der Leyen’s clearest message today was that Europe’s future is electric,” Chris Heron, the secretary-general of E-Mobility Europe, said after the speech. “That’s a welcome sign the Commission wants to lock in investment certainty around the 2035 target.” In a media briefing Thursday, the Commission refused to give further details on the EV effort, saying there would be more information after the Friday summit. The industry was given a reprieve from this year’s tougher emissions targets following the last dialogue with von der Leyen, but the fate of the 2035 ban is a political discussion that will largely be determined by EU capitals. “Instead of looking at what [carmakers] say, we have to look at what countries say much more than we did before,” said Jean-Philippe Hermine, a director with the IDDRI French think tank. CHINA IN THE WINGS While EU carmakers lobby Brussels, their Chinese rivals are making headway in Europe despite the levy the bloc imposed on EV-makers as punishment for getting subsidies from Beijing. China’s electric car market is the world’s largest, and BYD has overtaken Tesla as the world’s leading EV producer. Chinese electric car producers were strutting their stuff in Munich, with brands including BYD, Changan, Xpeng and Leapmotor, which has a partnership with Italian-French-American automaker Stellantis, all displaying models. They were also clear that the EU’s duties are not dissuading them from entering Europe, though the taxes are shifting the types of models they’re importing.  Hybrids are not included in the duties, making them an attractive alternative to all-electric versions.   In each of their media pitches, the Chinese brands said they were dedicated to being “in Europe, for Europe.”   But for the most part, that means taking a model sold in China and tweaking the tech and components to abide by European regulations, rather than building models from the ground up with European audiences in mind, said Pedro Pacheco, an auto expert at consulting firm Gartner.  The real test of whether Chinese carmakers see Europe as a viable long-term market is if they create products designed for Europeans. That’s already starting to happen. BYD has announced that the first model to roll off production lines at its Hungarian factory next year will be the Dolphin Surf, an electric station wagon — a nod to European consumer preferences, given that station wagons are not popular in other markets.  “BYD is in Europe to stay,” said Stella Li, BYD’s executive vice president. 

BRUSSELS — Two of Europe’s tech powerhouses tied the knot on Tuesday in a landmark deal that bolsters a push by politicians to reduce reliance on the United States for critical technology. Dutch microchips champion ASML confirmed it was investing €1.3 billion in French AI frontrunner Mistral, one of the few European companies that is able to go head-to-head with U.S. leaders like OpenAI and Anthropic on artificial intelligence technology.  It’s a business deal soaked in politics. Officials from Brussels to Paris, Berlin and beyond have called for Europe to reduce its heavy reliance on U.S. technology — from the cloud to social media and, most recently, artificial intelligence — under the banner of “tech sovereignty.”  “European tech sovereignty is being built thanks to you,” was how France’s Junior Minister for Digital Affairs and AI Clara Chappaz cheered the deal on X. Europe has struggled to stand out in the global race to build generative AI ever since U.S.-based OpenAI burst onto the scene in 2022 with its popular ChatGPT chatbot. Legacy tech giants like Google quickly caught up, while China proved its mettle early this January when DeepSeek burst onto the scene. European politicians can showcase the ASML-Mistral deal as proof that European consumers and companies still can rely on homegrown tools. That need has never been more urgent amid strained EU-U.S. ties under Donald Trump’s repeated attacks against EU tech regulation. But the deal also illustrates that while Europe can excel in niche areas, like industrial AI applications, winning the global consumer AI chatbot race is out of reach. EUROPE KEEPS CONTROL Tuesday’s deal brings together two European companies that are most closely watched by those in power. ASML, a 40-year-old Dutch crown jewel, has grown into one of the bloc’s most politically sensitive assets in recent years. The U.S. government has repeatedly tried to block some of the company’s sales of its advanced microchips printing machines to China in an effort to slow down Chinese firms.  Mistral is only two years old but has been politically plugged in from the start, with former French Digital Minister Cédric O among its co-founders.      When the company faced the need to raise new funding this summer, several non-European players were floated as potential backers, including the Abu Dhabi-based MGX state fund. There were even rumors Mistral could be acquired by Apple. Apple’s acquisition of Mistral would have been “quite negative” for Europe’s tech sovereignty aspirations, said Leevi Saari, EU policy fellow at the U.S.-based AI Now Institute, which studies the social implications of AI. “The French state has no appetite [for] letting this happen,” he added.  Getting financing from an Abu Dhabi-based fund, conversely, would have reinforced the perception that Europe can provide the millions in venture capital funding needed to start a company, but not the billions needed to scale it.  With this week’s €1.7 billion funding round led by ASML, Europe’s tech sovereignty proponents can breath a sigh of relief. “European champions creating more European champions is the way to go forward and it needs further backing from the EU,” said Dutch liberal European Parliament lawmaker Bart Groothuis in a statement. The deal is also what officials, experts and the industry want to see more of: one where startups are backed by an established European corporation rather than a venture capitalist. “A European corporation finally investing massively in a European scale-up from its industry, even [if] it [is] not directly tied to its core business,” said Agata Hidalgo, public affairs lead at French startup group France Digitale, on Linkedin. A French government adviser, granted anonymity to speak freely on private deals, said they felt “hyped” by the news after months of uncertainty due to Mistral’s refusal to publicly deny talks with Apple. The deal is also expected to avoid any close scrutiny from Europe’s powerful antitrust regulators, which in the past have intervened in mergers and deals to keep the market competitive. Tuesday’s deal is not a full takeover and does not need merger clearance. Nicolas Petit, a competition law professor at the European University Institute, said there was “nothing to see here unless the EU wants to shoot itself in the foot with a bazooka.” “It’s a non-controlling investment, and neither ASML [nor] Mistral AI compete in any product or service market,” he added. REALITY CHECK While the incoming Dutch investment goes a long way toward keeping Mistral in European hands, it also determines the path forward for the French artificial intelligence challenger.  Mistral had already been struggling “to keep up with the race for market share” with other large language models, Saari claimed in a blogpost published last week, in which he cited numbers suggesting that Mistral’s market share is “around 2 percent.”  “Mistral was known to face challenges both technically and in finding a business model,” said Italian economist Cristina Caffarra, who has been leading the charge for European tech sovereignty through the Eurostack movement. “It’s great they found a European champion anchor investor” that will, in part, “protect them from the [venture capital] model.” Tuesday’s deal could mean that Mistral will get more support to work on industrial applications instead of a consumer-facing chatbot that venture capitalists like to propagate.  “With Mistral AI we have found a strategic partner who can not only deliver the scientific AI models that will help us develop even better tools and solutions for our customers, but also help us to improve our own operations over time,” ASML CEO Christophe Fouquet wrote in a post on Linkedin.  ASML’s main customers are the world’s biggest microchips manufacturers, including Taiwan’s TSMC and America’s Intel. The company also has a wide network of industrial suppliers, which could be leveraged as well. For Mistral, catering to European industrial applications could strengthen its business. But it could also be seen as a tacit admission that in the global AI race, Europe has to pick its battles.  Francesca Micheletti and Océane Herrerro contributed reporting.