Britain’s unusual stance on Chinese electric vehicles

A short walk down the road from Berkeley Square in Mayfair, a swish part of London, sits a BYD showroom. The Chinese electric-vehicle (EV) manufacturer set up shop there last year. Rolls-Royce displays its luxury cars just across the street, having first taken up in the neighbourhood in 1932. BYD probably doesn’t mind the association.

BYD clearly hopes to pitch its vehicles as aspirational. But their real allure is that they are affordable. One model on display, the Dolphin, sells for around £25,000 ($33,000); British car reviewers have called the pricing “attractive” and “impressively low”. What really worries BYD’s Western rivals is that there is plenty of room for prices to fall. In China the Dolphin sells for 99,800 yuan, or just over £10,000. An analysis by Rhodium Group, a consultancy, found that BYD could cut its prices in Europe by 30% and still make the same profit per car that it does in China.

Consumers are gradually cottoning on to the appeal of Chinese EVs. Seeing an Ora, Maxus, MG or BYD marque on the road in Britain still feels noteworthy. On current trends, that won’t be the case for long. Chinese brands now make up around 10% of new EV sales in Britain, up from around 3-4% five years ago (see chart). Those figures, if anything, understate China’s increasing role in the car market because Western brands are also shifting carmaking to China. According to data from Jato Dynamics, an automotive-research firm, 22% of EVs registered in Britain (and 7.5% of all cars) are now made in China.

More affordable cars are welcome news for households: EVs are more expensive than their petrol equivalents for now, but the gap is narrowing fast. Making it cheaper to get around ought to be a welcome spur to growth. Speedy EV penetration is also critical for the government’s decarbonisation goals. But these arguments also apply in America and the European Union, and they are both instituting hefty tariffs on Chinese cars to discourage imports and shield domestic carmakers. On August 26th Canada said that it was following suit.

Thankfully, Britain’s new Labour government has so far largely leant away from such protectionism. Jonathan Reynolds, the business secretary, said in July that he was not planning to ask the independent Trade Remedies Authority (TRA) to investigate Chinese EVs, a necessary first step towards tariffs. Britain’s own car industry, which can also demand an investigation, has held off, too.

Why the different approach? After all, Labour ran for election on a “securonomics” platform that takes explicit inspiration from President Joe Biden’s economic policies. The main motivation is likely to be fear of retaliatory tariffs. China is a big export market for high-end producers like Rolls-Royce, Jaguar and Bentley, which make up a big chunk of Britain’s car industry. Losing the market for Chinese tycoons would hurt. And China would be unlikely to limit its retaliation to the car industry. Scottish salmon and whisky might be juicy targets; China buys lots of both products and Labour is loth to risk alienating voters north of the border.

Advocates for trade barriers on Chinese EVs also raise security concerns. Modern cars gather vast amounts of data. Sensors scan road conditions; on-board computers connect to passengers’ smartphones; voice-control systems record conversations. The Chinese military has banned Tesla vehicles from its facilities since 2021, citing security issues with their on-board cameras. A Chinese carmaker should not be supplying ministerial cars in Britain—no matter how cheap. And there may come a point when Chinese EVs exert too much control over the market for comfort.

But what distinguishes Chinese EVs is less their usefulness for surveillance and more that they are increasingly competitive. For domestic appliances, cameras, smart toasters and more, Western governments expect Chinese manufacturers to behave well not out of a sense of benevolence but because any whiff of association with spying would be commercially harmful. The logic isn’t any different behind the steering wheel. ■