As the UK celebrates a record month for electric car sales, the very government policy fueling the boom is also shaping the competitive landscape, creating significant hurdles for burgeoning Chinese auto brands. A taxpayer-funded grant has successfully stimulated demand, but its specific rules on manufacturing emissions and price effectively sideline many new market entrants.
The September sales figures were remarkable, with battery EV registrations climbing by nearly a third and plug-in hybrids soaring by 56%. This growth was a direct result of a grant of up to £3,750, which was reintroduced in July. This incentive has been crucial for legacy carmakers, who have been struggling with intense competition and the pressure to meet government-mandated sales targets for zero-emission vehicles.
The grant’s design, however, is not a level playing field. It is restricted to vehicles priced under £37,000 and includes clauses related to manufacturing processes that many Chinese brands currently cannot meet. Consequently, the subsidy benefits a select group of about a quarter of the models on sale, including those from established European and Japanese firms like Citroën, Nissan, and Vauxhall, insulating them from the full force of Chinese competition.
This comes as legacy automakers are increasingly shifting their focus towards more profitable hybrid models to counter the market disruption caused by newer, often more technologically advanced and affordable, Chinese EVs. The surge in hybrid sales—up 56%—highlights this strategic pivot, as they navigate the transition while protecting their bottom line.
While the subsidy helps the UK move closer to its environmental goals—with electrified cars making up over half the market in September—it simultaneously raises questions about market openness and consumer choice. By favouring incumbent players, the policy may be slowing the price reductions and innovation that robust competition, particularly from Chinese rivals, could bring to the UK’s electric vehicle market.