Report: UK electric car market braced for fierce price war

The news from the Government comes in tandem with confirmation the UK has achieved the million EV milestone.

According to Auto Trader’s latest Road to 2035 report, the surge in demand for electric vehicles (EVs) is expected to intensify competition, with Chinese brands poised to capture a sixth of the UK market by 2030.

The pressure is further heightened by the Zero Emissions Vehicle (ZEV) mandate, which has now entered into force, requiring manufacturers to ensure 22% of their sales are electric or face fines of £15,000 for each sale falling short of the target.

While the ZEV regime aims for 80% of cars sold in the UK to be electric by 2030, the market currently lags with an average electric sales share of around 16%, according to the report.

Auto Trader’s commercial director Ian Plummer said: “The introduction of the ZEV mandate means that manufacturers are still under pressure to sell more electric cars and to do that, they’ll need to compete on price.

“The rise of China in electric cars will only add to that pricing pressure as they have the firepower to grab UK market share.”

China, now the world’s largest exporter of cars, is making a considerable impact on the UK EV landscape, according to the report.

GWM and BYD, among other Chinese brands, represent 3% of new electric car advert views on Auto Trader. However, the report suggests that the brands are encountering difficulties in translating this interest into sales, primarily due to limited consumer recognition.

Tesla holds a 3% share of new car sales, while MG’s focus on affordable EVs has propelled them to a 4% market share.

Shifting Trends

Nevertheless, the dynamics are shifting, with BYD surpassing Tesla as the world’s leading EV manufacturer in the last quarter of 2023, selling a record-breaking 526,000 vehicles globally.

The searches for BYD cars have tripled on the Auto Trader marketplace, accounting for more than 6% of all new electric car advert views.

Moreover, Chinese brands are also positioned to gain an edge in pricing, as revealed by Auto Trader data.

The BYD Dolphin, priced at £25,000 in the UK, has a lower starting price of £13,000 in China. Similarly, the GWM ORA 03, available for £31,000 in the UK, is priced at £12,000 in its home market.

The report highlights that this price advantage allows Chinese entrants to compete against established Western brands in the UK, where there is no dominant player.

Volkswagen, Ford and Audi collectively command less than a quarter of the UK EV market, according to the Auto Trader’s data.

Sustaining market presence

The report underscores that nearly half of potential buyers are willing to change brands when making the switch to EVs.

Manufacturers are incentivising buyers using discounts, with EVs offering a 10.6% reduction compared to 7.7% for non-electric cars. They are also enticing customers with reduced or zero finance offers to sustain their market presence.

Furthermore, the report suggests that geopolitical factors are anticipated to push up oil costs in 2024, potentially impacting petrol prices and further heightening interest in EVs.

The report advises retailers to prepare for the impact of these factors on the electric car market, which is poised for increased competition and a transformative price war in the coming year.