Electric vehicles represent an essential solution in safeguarding the environment and combating climate change through their reliance on renewable energy sources for battery power and electricity. On a global scale, governments are dedicated to advancing the proliferation of electric vehicles to curtail carbon emissions and both China and the UK are leading this initiative.
This article discusses the status of the EV markets in China and the UK, outlining the importance of the cooperation between Chinese and British, while exploring the business potential between the two countries.
- The Chinese EV market
To protect the environment, reduce air pollution, and diminish reliance on fossil fuels, the Chinese government and enterprises have been actively advocating for the rapid development and adoption of electric vehicles. China presently holds the title of being the world’s largest producer, consumer, and battery manufacturer of electric vehicles, playing a pivotal role in driving the global transition to electric vehicles, particularly regarding supply chain integration, technological innovation, and cost efficiency.
- Policies and Incentives
The Chinese government has taken a series of proactive measures to promote the development of electric vehicles, providing ample support for independent brands that have led to significant competitive advantages.
China’s “New Energy Vehicle Industry Development Plan (2021-2035)” has set ambitious goals for the development of new energy vehicles (EVs). By 2025, the plan aims to make pure electric vehicles account for more than 30% of the market share, with a minimum energy density of 160 Wh/kg and a cruising range of more than 300 kilometres. BEVs are also expected to account for more than 50% of total EV sales.
Subsidy policies for consumers, manufacturers, and infrastructure have also played a significant role. A consumer subsidy policy was introduced in 2009 to promote the development of electric vehicles, address environmental concerns, and combat air pollution. Over the years these subsidy policies have undergone adjustments with thresholds gradually raised and subsidy intensity gradually reduced. While the withdrawal of state subsidies may have some impact, local governments have implemented stimulus measures to bolster EV demand. These measures include cash subsidies, free parking, and the issuance of car consumption vouchers to incentivize purchases and stimulate the growth of electric vehicle demand.
Manufacturer subsidies have led to the emergence of over 500 electric vehicle manufacturers, driving rapid industry expansion and affordable prices. In terms of infrastructure building, government support for charging stations has facilitated the widespread adoption of standardised plugs, thereby reducing costs for vehicle owners.
Recently, the Ministry of Industry and Information Technology, the Ministry of Finance, and the State Administration of Taxation announced the adjustment of technical requirements for new energy vehicle products eligible for vehicle purchase tax exemption and extension. This extension extends the purchase tax exemption policy to December 31, 2027, aiming to foster the sustainable development of the new energy vehicle industry and provide ongoing support and guidance.
- Main advantages
Battery is one of China’s main advantages in the electric vehicles industry. As the most expensive component in electric vehicles, battery manufacturing is crucial to the competitiveness of the entire industry.
Currently, more than half of electric vehicle battery cells are manufactured in China, demonstrating China’s dominant position in battery production. Chinese manufacturers not only have technological and scale advantages in battery production but also dominate key minerals in the upper reaches of the battery value chain.
Companies such as CATL and BYD have become major suppliers in the global electric vehicle battery market, with a combined market share of more than 50%, as well as an advantage of the entire supply chain from raw materials to battery packs.
In addition, China dominates the refining of key materials for batteries and is expected to have the majority of the refining share of materials such as manganese, cobalt, lithium and nickel by 2025. This data shows that China has a clear competitive advantage in electric vehicle battery production and will continue to play a vital role globally.
As an important EV market in the world, China has a strong information and communication sector that provides not only pivotal intelligent technology but also crucial financial and human resources to support the electric vehicle industry.
China’s electric vehicle market boasts a plethora of brands, among which stand as prominent names like Beijing Hyundai, BYD, and JAC.
Beijing Hyundai stands out as one of China’s largest new energy vehicle enterprises, boasting the most comprehensive industrial chain. Its expansive industrial footprint, coupled with collaborations with globally renowned firms fortifies its technical prowess, research and development capabilities.
BYD, renowned for its commitment to independent research, development, production, and branding, prioritises crafting high-quality, affordable civilian vehicles. BYD has surged to the forefront of the industry, propelled by its rapid product line expansion and technological advancements.
JAC Group is a comprehensive automotive manufacturer that distinguishes itself with a formidable R&D team and advanced production capabilities, sustaining rapid growth over numerous years.
These brands excel in independent research and development, production and sales, and offer high-quality service, significantly contributing to the advancement of China’s new energy vehicle sector. In the coming years, these brands are poised to uphold their dedication to technological innovation, delivering more high-quality products and services to consumers, steering China’s new energy vehicle industry towards an even brighter future.
- 2023 China electric market data
In recent years, China’s electric vehicle market has experienced remarkable growth, driven by a combination of supportive policies, incentive programs, ongoing technological advancements, and robust market demand. A notable highlight occurred in the fourth quarter of 2023 when BYD’s electric vehicle sales surged, with a quarter-on-quarter increase of 22%, surpassing Tesla by 41,000 electric vehicle deliveries to claim the title of the world’s largest electric vehicle manufacturer.
The latest statistics from the China Association of Automobile Manufacturers further show China’s dominant position in the global market, as the country maintained its rank as the world’s top producer and seller of new energy vehicles for nine consecutive years. In 2023 alone, China’s production and sales of new energy vehicles reached 9.587 million and 9.495 million units respectively, marking year-on-year increases of 35.8% and 37.9%, securing a remarkable market share of 31.6%.
Figure 1 Monthly sales of new energy vehicles
Source： Sina Finance
During a press conference, the Vice Minister of the Ministry of Industry and Information Technology offered insights into the new energy vehicle sales, projecting a robust increase to 11.5 million units in 2024, a significant uptick of approximately 20%. While expressing full acknowledgement of the industry’s progress, he also outlined the prevailing challenges of insufficient consumer demand and issues with industrial coordination.
Looking ahead, the strategic focus of new energy vehicles suggests a sustained implementation of preferential policies to bolster consumption, foster corporate technological innovation, advance the development of intelligent connected vehicles, refine industrial planning, and mitigate risks of excess. Furthermore, he emphasised the imperative of promoting international collaboration, fostering innovation, and dismantling trade protection policies to cultivate a favourable environment both domestically and globally, thereby perpetuating the momentum of growth within the new energy automobile industry.
- The UK EV Market
In recent years, the British government has implemented a series of supportive policies and incentives aimed at accelerating the widespread adoption of electric vehicles. These initiatives include the Ten Point Plan for a Green Industrial Revolution, the UK Hydrogen Strategy, the Electric Vehicle Infrastructure Strategy, as well as subsidies and tax exemptions for electric vehicle purchases. Furthermore, there is a steadfast commitment to phasing out internal combustion locomotives by 2030.
In November 2023 the British government unveiled the Autumn Statement 2023, allocating a total of £4.5 billion in funding for the manufacturing industry. Of this sum, over £2 billion (equivalent to approximately US$2.49 billion) has been earmarked specifically for the automotive sector. This substantial investment is intended to bolster the manufacturing capabilities, supply chain resilience, and advancement of zero-emission vehicles within the automotive industry.
Subsequently, the British government unveiled the Advanced Manufacturing Plan (AMP) alongside the “UK Battery Strategy”. This strategic blueprint aims to position the UK as the premier global manufacturing hub, with a targeted objective of establishing a competitively robust battery supply chain by 2030. Central to this vision is the emphasis on fostering the growth of the British battery industry through a spectrum of policy measures including investment facilitation, expansion of collaborations, financial mechanisms, investment evaluations, and adherence to international standards.
Simultaneously, there is a notable surge in British consumer interest in electric vehicles. With a heightened consciousness of environmental sustainability permeating both individual and corporate spheres, an increasing number of people are gravitating towards sustainable, low-carbon transportation options. In response, the demand for new energy vehicles is experiencing a surge, with electric vehicles emerging as a favoured choice due to their clean efficiency. Consequently, electric vehicles are on the precipice of a burgeoning developmental trend within the British market.
Zapmap data shows that as of the end of December 2023, the UK has officially registered over 975,000 pure electric vehicles and more than 590,000 plug-in hybrid vehicles. Notably, nearly 315,000 pure electric vehicles were registered in 2023 alone, marking an 18% increase from the previous year. Since 2019, the sales share of pure electric vehicles (BEVs) has been steadily outpacing that of plug-in hybrid electric vehicles (PHEVs), indicating a growing preference among drivers for pure electric models. This trend is expected to gain momentum in 2024 with a rising number of drivers expressing interest in pure electric vehicles.
Looking ahead, the UK’s electric vehicle market is on track for sustained robust growth, propelled by advancements in technology, expansion of charging infrastructure, government support, and increasing consumer acceptance and demand. Statista’s data suggest that the revenue of the UK electric vehicle market will surge to US$20.6 billion in 2024, with a predicted compound annual growth rate of 8.62% from 2024 to 2028. By 2028, the market volume is anticipated to reach US$28.8 billion, with electric vehicle sales expected to soar to 573,100 units.
- China-UK cooperation: trends and business opportunities in EV sector
In May 2023, a forecast by the World Economic Forum highlighted the imperative for a substantial surge in global electric vehicle sales to achieve emission reduction targets, requiring an 18-fold increase in annual sales before 2030. Addressing this challenge calls for collaborative efforts and supply chain openness within the global automotive industry. China and the UK are harnessing their unique strengths and resources to vigorously pursue the establishment of a mutually advantageous partnership in the electric vehicle market. This collaboration particularly focuses on critical domains such as battery technology, autonomous driving, charging infrastructure, smart grids, and supply chains.
HORIBA MIRA is a renowned British company specialising in vehicle testing grounds and state-of-the-art R&D equipment. With a comprehensive suite of services ranging from trials to approval, it boasts over 30 years of extensive business experience in China.
Geely, a prominent player in the automotive industry, has made significant investments in the British market. These investments include acquiring stakes in London’s electric vehicle company LEVC and the prestigious British sports car brand Lotus. Additionally in May 2023, Geely further solidified its presence by increasing its ownership stake in Aston Martin.
During the 5th World New Energy Vehicle Conference (WNEVC), Jaguar Land Rover affirmed its commitment to facilitating the integration of Chinese parts and components into the global supply chain, highlighting the deepening collaboration between China and the UK’s automotive sector.
After BYD entered the British electric bus market in 2013, BYD ATTO 3 was officially launched in the UK in March 2023 and was named the best electric car in the UK.
In 2024, the British market will witness the introduction of several new Chinese electric vehicle brands, including Seres 3 – a cutting-edge electric SUV, and Skywell’s ET5 – a medium-sized SUV. Neil Addley, the General Manager of JudgeService, emphasised that this will bring new agency opportunities for dealers considering agency. It is important to consider how to integrate new brands into their product portfolios and choose the best direction for capital investment.
According to a JudgeService survey, British consumers are generally price-sensitive. Three-quarters of the 1,000 consumers who participated in the survey said they were attracted by low prices. In addition, 48% of respondents said they would consider buying a new car brand entering the UK market if the price was £3,000 cheaper. While 27% said they would consider changing their vehicle if the price was reduced by more than £3,000. China-made electric vehicles have huge advantages in lowering production costs due to their supply chain accessibility and battery technology, and can therefore gain a competitive advantage in the British market.
Dominic Johnson, the British Secretary of State for Business and Trade at the Global Investment Summit 2023, stated that Chinese investment is crucial to achieving the net-zero emissions goal, and he hopes that Chinese car manufacturers will invest and operate in the UK to jointly promote the goal of reaching zero emissions.
Furthermore, Chinese companies like CATL are actively establishing power battery factories in Europe. Currently, European car manufacturers are increasing their investments in battery projects within China. Notably, the commencement of BMW Brilliance’s sixth-generation power battery project and Volkswagen’s preparations for the launch of their electric vehicle factory in Hefei, Anhui Province, demonstrate the allure of the Chinese market for international automotive giants.
China’s booming automobile industry has attracted more overseas companies and more investment. Throughout the market research and production stages, China’s EV industry has become a strategic choice for many foreign-funded car manufacturers. This investment and cooperation not only strengthens the cooperative relationship between overseas and Chinese enterprises but also promotes innovation and sharing of technology in the automotive industry.