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Will Chinese electric car manufacturers transform the UK BEV market?



There have been many challenges for the battery electric vehicle (BEV) market in the UK auto industry, including supply and demand, residual values, price parity, lack of long-term government incentives, charging infrastructure, and battery manufacturing factories.

The Chinese auto industry, the biggest in the world, with its dominance in car manufacturing and battery technology, is beginning to move its Chinese electric vehicle (EV) brands to Europe and the UK, offering cheaper, high-quality, technologically enhanced models which are seen as a threat to European automakers.

Toby Marshall, Managing Director of GWM ORA UK discussed the entrance of disruptors from the Chinese market to the UK, including GWM ORA’s Funky Cat, with David Betteley at the Asset Finance Connect Summer 2023 conference, and the implications for European car manufacturers.

Headwinds of battery electric cars

Changes in the EV market, including Tesla, NIO and others discounting prices has created added complexity to the EV market, as used EV values falter and stock becomes ever more extended.

As Toby Marshall noted, 2022 saw huge demand for EVs but low supply, while 2023 has seen a dramatic shift with supply picking up with established brands as well as new EV brands coming into the marketplace. Residual values of EVs are also normalizing in 2023 (at a significantly lower level than a year ago) as the EV market becomes more established and stable, with price parity between EVs and their ICE counterparts getting closer all the time.

At the beginning of 2023 there was a lot of negative media coverage surrounding electric vehicles, from range anxiety to charging infrastructure and the cost of public charging, but hopefully this negative blip is starting to subside.

In a recent Lloyds Insight article, Nick Williams, Managing Director for Transport at Lloyds Banking Group commented that, “2022 was a record year for electric vehicle (EV) registrations, with a 40% year-on-year increase despite ongoing supply chain issues – and 2023 is set to see this acceleration get a major boost.

We’ll see more new vehicles, with more choice for drivers than ever before. As well as traditional brands set to increase their electric vehicle ranges and offers, this year we can also expect to see more new manufacturers, including some disruptive new names. Many of these disruptors are coming from the Chinese market.”

Chinese auto market

The UK and European car markets are very different to the Chinese market which is by far the biggest car market in the world, with indications that it will grow to 30 million cars a year compared with 2 million in the UK. China is also the biggest electric car market in the world with a huge offering of electric car manufacturers.

In addition to Chinese car manufacturers, Chinese battery makers dominate the European motor industry, with more factories than any other nation.

Moving Chinese brands to Europe and the UK

Chinese car makers have been working to establish a foothold in the European and UK markets for many years, with an influx of new Chinese brands starting to access the market, including BYD, NIO, Ng, Polestar and GWM ORA.

There are many opportunities for Chinese BEVs in Europe and the UK markets, where they are outperforming western brands with their high-quality infotainment systems, better cameras and sensors, and are likely to lead the way in semi-autonomy and in-car services in the future.

The arrival of Chinese electric brands brings a range of opportunities and challenges for UK and European dealers and finance houses in addition to challenges for western OEMs. A recent survey by Startline Motor Finance highlighted that 51% of dealers expect the arrival of Chinese OEMs will result in some European manufacturers folding and 29% believe it is the European manufacturers that will fare worse in the transition to green.

With many European brands moving away from manufacturing smaller cars to focus on SUVs, for example, Ford has ceased production of the Focus and Fiesta, the European auto industry seems to be opening the door for Chinese brands to enter the European market with their smaller cheaper EV models.

The newest Chinese EV on the block is the ORA Funky Cat manufactured by GWM ORA, owned by the Great Wall Motors group. With the help of UK distributor International Motors, GWM ORA has recently brought the Funky Cat to the UK market.

EU investigation

During her annual address to the bloc’s parliament, European Commission President Ursula von der Leyen said the global market has been ‘flooded’ with cheap Chinese cars, with China’s share of EVs sold in Europe rising to 8% and possibly reaching 15% in 2025, noting prices are typically 20% below EU-made models.

On September 12th, the European Commission launched an investigation into whether to impose punitive tariffs to protect EU auto manufacturers against cheaper Chinese EV imports it says are benefiting from state subsidies.

The Commission will have up to 13 months to assess whether to impose tariffs above the standard 10% EU rate for cars, possibly rising to the stiff 27.5% level already imposed by the US on Chinese EVs.

Toby Marshall sees such tariffs as simply limiting the consumer who deserves the choice of EVs and should be able to buy whatever car fits their wallet and lifestyle the best.

EV purchasing incentives

A major boost for the sale of BEVs is the various incentives that can be offered to prospective customers including home chargers and cash grants for EVs and chargers. However, such incentives have disappeared in the UK, while other countries including China, Sweden and Norway have generous EV incentives which support the sale of electric cars.

In the UK, regulation is pushing consumers along the path to EVs. But Toby Marshall believes that “incentives are needed to pull demand along the route”.

The government’s drive to net zero through EVs and ultra-low emission zones (ULEZ) is creating a socio-economic impact on the country, causing a divide between those who can afford an electric vehicle and those who cannot.

During the recent House of Lords inquiry into EVs, Auto Trader’s Marc Palmer expressed concerns to the committee that a large number of motorists are being ‘held back’ as a result of price concerns and changes to their lifestyle.

Auto Trader’s Palmer told peers: “There are three core groups being left behind by the transition to EVs: those over 55, women, and people on lower incomes.

“And the core reasons they’re being left behind are around cost, which is a big barrier, perceptions around public charging infrastructure and around the changes required to lifestyle.”

Quality of Chinese brands

Chinese electric vehicles are renowned for their high quality compared to previous Chinese car models and are thus breaking down the brand snobbery that exists in the car industry. Consumers are moving to newer car brands for the enhanced quality and technology they offer, with Tesla breaking the mould.

Toby Marshall noted that, “Electric cars have enabled a shift away from legacy brands in all segments of the market which has and will dramatically change things.”

“People see an electric car as a gadget,” according to Toby Marshall, and the Chinese expertise in EV technology is far advanced of European car brands.

Equipment as standard and the level of outstanding in-car tech plus long warranties (including battery warranty) provides a growing confidence in Chinese EVs and gives them a genuine opportunity to grow in the UK and EU markets.

Sales model for Chinese brands

Most Chinese brands entering the European and UK markets are not looking at the direct agency route and are, instead, focusing on going down a traditional route to market with a dealer model or a hybrid route, incorporating online and dealer presence.

GWM ORA has chosen this omni-channel approach of dealer, online or both for the Funky Cat, which most customers are adopting. Toby Marshall highlights that a significant proportion of EV customers do those stressful car-buying elements online, such as configuring finance, but then go to the retailers to view and drive the car, especially with EVs which are new to most consumers.

The franchise models are essential for EVs, according to Toby Marshall, as they add value and confidence as they are experts in EVs and can amplify the marketing message of the car brand.

The service infrastructure for Chinese EV brands in the UK is still developing, but Marshall notes that International Motors owns a large parts warehouse in the UK for a number of EV brands, and around 30 aftersales points (which is constantly increasing) around the country where Chinese EVs can be repaired, although EVs are known to require less maintenance and repair.


An influx of Chinese EV brands is set to enter the European and UK auto markets in 2023, seducing European car buyers with their low-cost, high-quality EVs and superior in-car technology.

With recent changes in the EV market creating headwinds for electric cars in an increasingly stable market, there is a need for more affordable European models to rival these emerging Chinese EV brands, which are seen as a threat to European automakers.

Analysis from David Betteley

Asset Finance Connect's head of content

There are always a lot of moving parts at play in the auto industry. We have seen many changes over the past few years, generally speaking driven by a combination of consumer preference and changing legislation. Take for instance the rush into diesel started by Gordon Brown but now totally discredited due to concerns over air quality.

BEVs are seen as the saviour in this respect as they are zero tailpipe emitters, and whilst there are no national incentives in the UK for the purchase or financing of BEVs at the moment, there are a growing number of examples of penalising ICE and, in particular, diesel vehicles. These include ULEZ in many towns and cities and also a new trend of councils charging more to park a diesel (or in some cases an SUV) when compared to a BEV.

All these developments are promoted as “green” by their respective local authorities, but there is growing evidence to suggest that whilst almost everyone supports green initiatives, this support dries up as soon as the initiative begins to hurt the pocket.

Therefore, it is safe to say that the transition from ICE to BEV is a dilemma for the national government. Low to middle income households are receiving no (national) support to make the transition to more expensive BEVs and, to add insult to injury, these households are having to pay more to use their (in most cased pre 2016) existing diesel vehicles.

There is some evidence that this message is beginning to land. A topical example is the London Mayor submitting to pressure from his local and national party and hastily introducing a means tested scrappage scheme, in an attempt to make the London ULEZ expansion more palatable for voters.

Additionally, Kemi Badenoch (Secretary of State for Business and Trade) is lobbying hard against the 22% rule (22% of production to be emission free) that is due to take effect from January 2024 on the basis that it will destroy investment in the industry and that the targets should either be reduced or extended.

Following the announcement to defer the ban on ICE vehicles to 2035, there will be a further announcement on the ZEV mandate on the 22nd September. It wouldn’t come as a great surprise to see some further watering down of this (also cast in stone) initiative!

However, the issue raised by the deferment of the ban on ICE vehicles is what will happen now to demand for new and used BEVs? With the phasing out date for ICE pushed back, there will be less customer urgency to make the change which may well result in weaker demand from the private sector with the fleet sector hopefully taking up the slack, driven by continuing attractive BiK taxation treatment. The other knock-on effect will likely be a further weakening of RVs on used BEVs which in turn will make them more affordable as a second-hand purchase….so perhaps a silver lining here for customers at the expense of the industry.

So, lots of challenges ahead for the sale of BEVs. One thing is for certain however; at the end of the day, it will be the customers voting with their feet and/or their financial firepower that will decide the winners and losers. The Chinese brands with their combination of wide choice, high quality, class leading tech and competitive pricing would seem to currently hold most of the aces in the pack.

It will be up to Toby Marshall and his colleagues to make sure that they play the strong hand they have been dealt skillfully. And I have no doubt that he will do just that!