Chinese new energy vehicle (NEV) brands are expanding aggressively overseas, facing tariff barriers in several European and North American markets. The UK, however, has taken a different approach by welcoming these brands into its passenger vehicle market and iconic public transportation system, the double-decker bus.
The question remains: Is this a threat to the British automotive industry, or could it spark further development?
Securonomics: UK bucks the trend of barriers
In July, the UK's Labour Party took over from the long-reigning Conservatives. The newly appointed Trade Secretary Jonathan Reynolds indicated that the country has no intention of requesting the independent Trade Remedies Authority (TRA) to investigate Chinese electric vehicles.
According to The Economist, Labour's "securonomics" approach is driven by concerns over potential Chinese retaliation to high tariffs, given China's importance as an export market for luxury car brands such as Rolls-Royce, Jaguar, and Bentley. If China retaliates, other UK products, like salmon and whisky, could also be caught in the crossfire.
The automotive landscape across the UK varies by region. In London, areas are divided into "Zones."
Zone 1, home to landmarks like the London Eye, Big Ben, Covent Garden, St. Paul's Cathedral, and the British Museum, sees frequent use of electric vehicle brands such as Volkswagen, Audi, BMW, Mercedes Benz, and Peugeot, alongside domestic brands like Jaguar. South Korean brands such as Hyundai and Kia are also popular in the central area. Outside of electric vehicles, luxury models from Bentley and Rolls-Royce are a frequent sight as well.
However, the picture changes as one travels outside central London to areas like Milton Keynes, about an hour's drive or 30-40 minutes by train from the capital. Due to London's skyrocketing property prices, many businesses have chosen to establish offices there.
The area's younger population, driven by immigration, is more open to innovation. Consequently, Chinese brands such as MG and Polestar have gained significant visibility, alongside European brands like Volkswagen, Vauxhall, and Renault. The main factor driving this shift is price competitiveness.
Greening the public transportation
When one thinks of London, the iconic red double-decker bus inevitably comes to mind. As a leading manufacturing and automotive nation, the UK now faces the challenge of giving this cultural icon a green makeover.
This also presents a lucrative business opportunity, one that Chinese company BYD has seized. In addition to its existing single-decker electric buses, BYD is set to launch its BD 11 double-decker electric bus in May 2024, boasting a range of over 400 miles and a total battery capacity of 500 kWh, outperforming most commercial vehicles in the UK.
Overall, the UK government and the passenger vehicle market remain highly open to Chinese brands. However, the real key to these brands' success is their competitive pricing.
While the price of electric buses procured by UK public sectors remains undisclosed, a comparison of MG's pricing gives an idea of its affordability. For instance, the MG5 SE Long Range version is priced at around GBP30,000 (approx. US$36,600), while the Trophy Long Range is close to GBP34,000.
The MG ZS EV's four versions range from GBP30,000 to GBP35,000. In comparison, the Vauxhall Astra Sports Tourer Electric ranges from GBP39,000 to GBP45,000, and Peugeot's e-308 SW is priced between GBP39,000 and GBP41,000.
MG not only offers competitive prices but also more choices.
The UK government views the current situation optimistically, even considering it a potential boost to the domestic automotive industry. Despite brands like Lotus and MG becoming joint ventures, the outlook remains positive.
Price wars
Discussions with suppliers in the British automotive supply chain reveal that fierce competition on price has put significant pressure on local companies. Some industry insiders even noted that Chinese EVs could drop their prices by another 20-30% and remain profitable.
To expand their presence and increase market penetration, Chinese manufacturers will go as far as selling at a loss, meaning for every two vehicles sold, they may lose one in its place.
As many European and American countries fortify their defenses to prevent Chinese electric vehicles from eroding their markets, it remains to be seen whether this approach reflects "securonomics" or appeasement. The line between the two seems thinly veiled.
