UK government leaves carmakers vulnerable as Chinese competition intensifies

The UK automotive sector is being left exposed by a glaring gap at the heart of government policy: the failure of the Department for Business and Trade to set out a credible industrial strategy and protect the sector from heavily subsidised competition out of China

Since 2022, nearly one in three BEVs sold in the UK each year were made in China, marking a significant shift in the structure of the market. What was once dominated by exports from established brands such as Tesla and BMW has rapidly evolved, with Chinese-owned marques including BYD, MG and Volvo now taking a leading role.

This growing reliance on Chinese manufacturing is not confined to just BEVs. In the plug-in hybrid market (PHEV), the UK’s top-selling brands, BYD and Jaecoo, are both China-made, despite having had zero presence in 2024, overtaking established brands including Land Rover and VW.

In the face of this competition, rather than delivering the bold, home-grown reindustrialisation it has promised, the UK Government is considering proposals to further weaken the Zero Emission Vehicle (ZEV) mandate, a distraction from the deeper industrial challenges facing the automotive sector.

‘’Weakening the ZEV Mandate would do nothing to ease pressure on UK producers. Instead, the absence of a coherent industrial strategy -alongside targeted trade measures seen in the EU- risks decimating the UK automotive sector during a period of global market realignment,” said Tim Dexter, UK Vehicles Policy Manager.

The progress on EV in China has been underpinned by more than $ 230bn in state aid. The UK has now become a key export market, receiving 8% of all Chinese battery electric vehicle (BEVs) exports, highlighting the vulnerability of the UK market and the urgency of a credible industrial strategy rather than further policy retreat.

The EU has already responded. Following the introduction of tariffs, the market share of EVs imported from China has started to decline, with made-in-China models now accounting for 17% of BEV sales down from a peak of 22% in 2024. At the same time, Chinese manufacturers are increasingly investing in European production, with output projected to reach 600,000 units by 2035 and at least ten new facilities announced since the EU’s anti-subsidy investigation began.

"The message for the UK is clear: rolling back climate policy will not stop competition from China. Chinese manufacturers are gaining ground across every part of the market, not just electric vehicles. The answer is not to weaken the ZEV Mandate, but to strengthen Britain's industrial strategy. That means backing domestic manufacturing, investing in resilient supply chains, and ensuring the UK remains a competitive place to build the cars of the future. The choice is simple: lead the transition or lose UK manufacturing all together." Dexter added.

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