The EU needs to lean into the strengths: they have high priced labor, that labor should be building automation which is cheaper in the long run. The EU can never compete with China on the cost of somebody putting bolts in. Even China knows they can no longer compete with (insert poor country of choice here) and has a lot of automation - in fact I’m not even sure the labor is cheaper in China anymore (I don’t know how to look this up)

The EU is just under half the population of China - population is not a reason the EU can’t or shouldn’t make cars. Cars are too common to leave to someone else when you are the scale of the EU, and the things you need to make good cheap cars are also things you need to make lots of other things you want to make.