Europe's automakers and their already-stretched suppliers face a tough year as they race to cut costs for electric models to counter leaner Chinese rivals which are bringing cheaper vehicles to challenge them on their home turf.

A big question is how much more Europe's automakers can squeeze out of suppliers that have already started laying off workers, with many smaller companies hard hit by supply chain issues during the pandemic.

The difference between Europe's legacy automakers and more EV-focused Chinese manufacturers will be on stark display this week at the Geneva car show, which is returning after a four-year hiatus due to the pandemic.

The only major companies holding media events are France's Renault and China's SAIC and BYD – two of a number of the country's automakers that have set their sights on Europe.

Renault is launching its electric R5 and SAIC's MG brand will unveil its M3 hybrid. Meanwhile, BYD's Seal sedan is shortlisted for the Car of the Year award. If it wins, it would be the first Chinese model to get the prestigious award.

"They really are like chalk and cheese," Nick Parker, a partner and managing director at consulting firm AlixPartners, said of the legacy European automakers and their Chinese rivals.

Unlike European automakers that are reliant on external suppliers with separate supply chains for fossil-fuel and electric, their Chinese rivals are highly vertically integrated, producing almost everything in-house and keeping costs down.

That helps them undercut their European rivals. In Britain, BYD's electric Dolphin hatchback starts at 25,490 pounds ($32,300), about 27 percent less than Volkswagen's equivalent ID.3 model. Tesla works in the same way.

Chasing those rivals means European automakers' profit margins could be "heavily challenged" moving forward because there is only so much they can squeeze out of external suppliers, AlixPartners' Parker said.

The challenge has been made more difficult by a slower-than-expected shift to EVs, leaving legacy automakers stuck with their dual supply chains. Data this week showed EU fully-electric car sales in January fell 42.3 percent from December.

Both Renault and Stellantis have stressed their EV cost-cutting efforts this month while Mercedes toned down expectations for EV demand and said it will update its traditional lineup well into the next decade.

Stellantis CEO Carlos Tavares has gone further, telling suppliers that with 85 percent of EV costs related to purchased materials, they need to bear a proportionate burden in reducing costs.

"I am translating that reality to my partners: If you don't do your part of the job, then you exclude yourself," he said.

BYD opened a new chapter in its development in the Central and Eastern European market as it has delivered its first batch of new BYD ATTO 3 energy passenger cars in Hungary on Sunday. Since entering Hungary in October 2023, BYD's passenger car business has achieved rapid layout and development in the Hungarian market. Together with major local dealers, the company provides consumers with integrated services from car purchase consultation to after-sales maintenance.

Currently, BYD has three stores in Budapest and is planning to continue expanding its sales and service network in the country. The number of BYD stores in Hungary is expected to increase to six by the end of 2024.

BYD data showed that the company's exports grew by about 334 percent to over 240,000 units in 2023, with its reach spanning more than 70 countries and regions on six continents.

(With input from agencies)