Author: Carl Gurney
A new report predicts that the UK electric car market will witness fierce price competition this year as manufacturers strive to gain market share amidst new government mandates and the entry of Chinese competitors. The report also highlights the achievement of the UK in surpassing the milestone of one million electric vehicles (EVs) on the road.
Increasing Competition and Chinese Market Share
Auto Trader's Road to 2035 report anticipates intensified competition in response to the growing demand for EVs, with Chinese brands projected to capture a significant portion of the UK market by 2030. The report attributes this pressure to the Zero Emissions Vehicle (ZEV) mandate, which has come into effect, requiring manufacturers to ensure that 22% of their sales are electric or face fines. However, the current market share of electric sales in the UK stands at around 16%, falling short of the target.
Price Pressure and Chinese Influence
The introduction of the ZEV mandate means manufacturers must sell more electric cars, leading to increased price competition. The rise of Chinese brands in the UK EV market adds to this pricing pressure, as they have the resources to gain market share. Chinese brands such as GWM and BYD represent a significant portion of new electric car advert views on Auto Trader. However, they face challenges in converting interest into sales due to limited consumer recognition.
Shifting Dynamics and Chinese Pricing Advantage
BYD surpassed Tesla as the world's leading EV manufacturer in the last quarter of 2023, selling a record-breaking 526,000 vehicles globally. Searches for BYD cars on Auto Trader have tripled, accounting for over 6% of all new electric car advert views. Chinese brands also have a pricing advantage, as highlighted by Auto Trader data. Lower starting prices in China allow Chinese entrants to compete against established Western brands in the UK market, where no dominant player exists.
Buyer Behavior and Manufacturer Incentives
Nearly half of potential buyers are open to changing brands when transitioning to EVs. Manufacturers are offering incentives such as discounts, with EVs providing a 10.6% reduction compared to 7.7% for non-electric cars. Reduced or zero finance offers are also being used to attract customers and maintain market presence.
Geopolitical Factors and Future Outlook
Geopolitical factors are expected to drive up oil costs in 2024, potentially impacting petrol prices and further increasing interest in EVs. The report advises retailers to prepare for these factors, as the electric car market is poised for heightened competition and a transformative price war in the coming year.
The UK electric car market is set to experience intense price competition as manufacturers vie for market share. The entry of Chinese brands, along with government mandates and changing buyer behavior, will shape the market dynamics. Manufacturers must adapt their strategies and offer competitive pricing to succeed in this evolving landscape. Retailers should also be prepared for geopolitical factors that may impact the market and contribute to the ongoing transformation in the electric car industry.
