Chinese EV Makers Hit 14.6% EU Market Share as Incumbency Bites

China's four leading carmakers now hold 14.6% of Europe's electric vehicle market, up from 9.6%, despite EU duties of up to 35% stacked on the standard 10% import tariff. The figures come from the European Automobile Manufacturers' Association, and they anchor a blunt warning from Greg Jackson, founder and CEO of Octopus Energy, the UK's largest energy provider: Europe's problem isn't technology. It's incumbency.

"I think the single biggest factor affecting Europe—and an issue the U.S. is not immune to—is incumbency," Jackson told Fortune. "China and the Gulf are not held back by incumbent industries. Instead they are, at huge pace, delivering the new world."

How fast are Chinese EVs gaining in Europe?

Fast, and unevenly. Chery has tripled its European sales in the past year. BYD has doubled. Geely is up a third. SAIC has gained 23%. Brussels responded to claims of state-subsidized dumping with the extra duties — yet Chinese cars remain more than 20% cheaper to buy.

Jackson's diagnosis draws on the numbers, not sentiment. "If I look at electric vehicles as an example, there's not an incumbent car industry in China that's struggling to manage the transition to an entirely new technology," he said. "But if I look at Europe, European governments and consumers want electric vehicles, but the European car companies have not yet been able to be competitive at building them."

What is 'incumbency cost'?

Jackson frames it as the penalty for doing tomorrow what you did yesterday — missing what an outsider sees instantly. He learned the lesson early, at one of his first jobs, at a mirror manufacturer that barely broke even. "We started making mirrors that had really wide frames," he said. "And on a picture [on the internet], suddenly we had a mirror that looked different from everybody else's. And they sold like hotcakes – and that transformed the business."

The pattern repeats across industries, he argues. "Incumbents crowd out the innovators in many sectors and markets," Jackson said. "It wasn't the Post Office that invented email. The music industry held back streaming and digital music for 10 to 20 years." Big European industries, he adds, hold "a stranglehold on policy," blocking routes to market for new technologies.

His prescription is unvarnished: "Economists have said that nearly all productivity growth comes from new companies. If we want more growth, we need to allow creative destruction so new companies can deliver the productivity we need."

Can Europe do it? Fintech says yes.

Europe isn't uniformly stuck. Jackson points to the continent's fintech sector as proof it can out-innovate — noting that in America "they take my card around the back of the bar because their terminals and processes are so dated." Few people in Europe have seen a check in more than a decade.

Octopus itself is the case study. Jackson first tried to sell legacy energy companies on a fully overhauled technology platform. He didn't get far. So in 2015 he built his own team. "Through technology, we would be able to provide lower costs because we'd be more operationally efficient," he said. "We'd be more agile, so we can incorporate technologies like electric vehicles and solar panels and batteries directly into the energy system very efficiently." Nine years later, Octopus overtook every incumbent to become the UK's biggest energy company.

Outsider status was the advantage. "We came from outside energy, we came from tech, and just like the people that built Uber didn't come from personal transportation, and the people that built Airbnb didn't come from hospitality, and the people that built Amazon didn't own bookshops," Jackson said. Octopus built an energy company "not based around the assumptions of the industry, but using technology to meet the needs of customers."

How fast is the underlying technology moving?

Market dynamics are doing the arguing. Wind and solar produced more electricity than fossil fuels in the EU for the first time last year, according to the energy think tank Ember.

"The technologies of electricity are improving exponentially, and the technologies of hydrocarbons are not," Jackson said. "A car engine costs roughly the same now as it did 20 years ago. They're not particularly more efficient." The contrast on the other side: an EV battery today costs 10 times less than 15 years ago, solar panels cost 200 times less than 40 years ago, and wind turbines have fallen two-thirds in price over two decades.

Visiting China earlier this year, Jackson saw battery-swap stations cut driver wait times to three to five minutes. "It's only when you see 49-ton trucks in China running on batteries that you realize how serious electrification is," he said. "The drivers don't care about the price of diesel." That reality, he suggests, might give Donald Trump pause as he watches fuel costs climb in the US ahead of the mid-term elections.