Changing Landscapes: How the move to EVs will pave the way for Chinese car brands in the UK

We’ve reached a fork in the road. In the first article of our Changing Landscapes series we discussed the potential that Chinese brands have to capitalise on shifting attitudes within the car market. In our second article, we considered their current standing as contenders, and the routes that they can take (and are taking) to overcome the barriers they face. In our final article, we’re left with the most important question of all: are customers ready to make the switch?

Here we evaluate the risks and opportunities for both emerging and legacy brands, discuss the perceived impending dominance of Chinese brands in the EV market, and determine which, if any, of the drivers on the road today are poised to buy their first Chinese car.

Our study has already shown that the concept of a ‘Chinese car’ is still a collage of preconceptions in the minds of most UK drivers. When pushed, awareness of actual Chinese brands remains low. Even BYD, which is arguably at the forefront of Chinese brands expanding into the UK market, could only be named by 16% of our respondents. However, lack of specific awareness doesn’t mean that Chinese brands don’t have appeal, and preconceptions of Chinese brands and products are shifting. Among younger respondents in particular, there is a clear shift towards the separation of associations between Chinese car brands and political concerns.

China is championing electric

There is perhaps no more prominent association for Chinese car brands these days than with electric vehicles. Drivers in the UK, and indeed the rest of Western Europe, will struggle to find a Chinese car on the market that isn’t an EV.

What’s more, while Europe is still fixated on Tesla as the figurehead of EV-makers, China is carefully positioning itself to dominate the EV sector going forward. Electric vehicles are the focus of China’s automotive industry and are receiving heavy government investment, much to the benefit of emerging Chinese EV brands. From 2009 to 2022, the Chinese government poured over 200 billion RMB ($29 billion) into relevant subsidies and tax breaks.

Meanwhile, telecoms equipment giant Huawei has paired with state-owned Chery Automobile with the launch of the upscale?EV marque Luxeed. Richard Yu Chengdong, head of Huawei’s car unit promised “It will be superior to Tesla’s Model S”, and customers will soon be able to judge for themselves, with mass delivery having begun in the past month.

"It will be superior to Tesla’s Model S"

So can it be said, therefore, that the continued adoption of electric vehicles signals the imminent arrival of Chinese brands?

The same, but different

At first glance, our data certainly shows that those who would consider buying from a Chinese brand share a very similar profile to those who would consider buying an EV. Both are tech-centric, and both are more likely to be in the 26 – 45 age bracket with children in the household. Both are more likely to be employed full time and live in more urban environments. And, at a very basic level, EV considerers are far more likely to consider a Chinese brand, and vice versa.?

There are, however, some key differences between these two groups that help shed light on the real story: that Chinese brand considerers are really just a ‘late majority’ subset of EV considerers. In general, EV considerers are actually more highly educated, more likely to be high earners, and more willing to pay extra for a car made in their own country. Up until now, the premium entry point for most available EVs has been preventative for many who would have liked to make the switch.

Now, however, the EV market as a whole is beginning to grow out of the ‘early adoption’ stage, albeit not without hitting the occasional speedbump. Some brands overcommitted early, as evidenced by the 24% slide in Hertz’s stock value, attributed to the continued struggles it’s facing in the EV rental business. And, while buying intent for EVs continues to increase, actual market share plateaued in 2023.

Changing priorities in the EV era

Early adopters of EVs were willing to pay a premium for the cutting-edge tech, environmental consideration, and lower subsequent running costs that come with them. But the rest of the market want a more functional relationship with their car, starting with good initial value for money, a good product offering, and convenience. Almost two thirds of our respondents stated that they are reluctant to move to an EV because they are just too expensive, and over half believe that the charging network infrastructure just isn’t good enough yet.

And these respondents speak for themselves in identifying the strengths of Chinese brands: 88% believe that Chinese cars offer the same or better value for money in up-front/lease costs, and 87% believe that their in-car technology is the same or better.

Furthermore, many of our respondents are positive about the entry of Chinese brands into the market, and even those who say they would never buy a Chinese car themselves are generally neutral. In fact, over half state that they think the entrance of Chinese brands will force the more established car brands to adapt to remain competitive.

The key takeaway here is that there is evidently little to no inherent bias against Chinese brands that will defend established OEMs against new entrants.

The battlegrounds

So, as EV adoption continues to grow in the UK and Chinese brands increase their visibility, where will the inevitable battles play out? Firstly, while the majority are open-minded about Chinese entrants, there remain some product concerns. Nearly half of all respondents, Chinese brand considerers included, are still worried about smart home devices listening to their conversations, with 35% of rejectors directly citing data security concerns as a reason why they are deterred from Chinese brands. The trustworthiness that UK customers associate with many established manufacturers will play a crucial role in how these brands adapt to new competitors.

And, despite the progress China has made in escaping the “low quality knockoff” trope that we discussed in our first article, some product and brand quality concerns persist. For 56% of rejectors, these product quality concerns are a key factor. The lack of established dealership networks for Chinese brands is also important for 37%, and is a reminder that some of the traditional avenues for building relationships with customers remain vital even as the market shifts.

Electrification is the foothold that Chinese brands need

But it’s clear that established manufacturers will need this head start in the long run. The Chinese offering aligns well with the needs of the late majority; the late majority just don’t know it yet. The true indicator of uptake of Chinese brands in markets like the UK lies in the rate at which drivers make the move to EV. And the fact is, the established brands will do much of the heavy lifting in encouraging their customers to make this switch. In markets where Chinese brands are already fighting directly with the likes of Tesla, they’re landing some heavy punches.

As we’ve already discussed, traditional market dynamics like brand loyalty and provenance are declining in a challenging socio-economic climate. Our data shows that drivers are open to the idea of buying from a Chinese brand, with many feeling positive about the implications of these new entrants. And their fundamental disadvantage in these markets – lack of awareness and familiarity – will begin to erode as customers become more familiar with the EV landscape in general.

To go one step further, the fact that these brands almost exclusively offer EVs in European markets may even serve to position them as experts in the sector, as drivers become more familiar with their high-quality offerings.

Where do we go from here?

Let’s not forget that it’s not up to the manufacturers to determine the rate at which they electrify their offerings and convert their customers to EV drivers. As manufacturers are well aware, the UK’s move towards its 2035 ZEV targets demands that 80% of all cars sold in 2030 are EVs. Furthermore, with constantly shifting legislation, levees and taxes on EVs, no manufacturers are totally safe from a sudden change in circumstances.

So, as established brands race against time to make this transition, is enough attention being paid to the way in which this is achieved, and the importance of messaging that ensures these customers stick around in a brave new electrified world? And how will emerging brands meet the needs of a new wave of EV customers without simply ending up as the ‘cheap wheels’?

As we’ve seen, the automotive industry in the UK is in the midst of a period of radical change, and it's clear that car manufacturers must keep their eye on the ball to stay competitive. From evolving consumer preferences and technological advancements to regulatory changes and environmental considerations, the landscape is transforming at an unprecedented pace. If you’ve enjoyed our Changing Landscapes series, keep an eye out for our webinar, taking place later this month.

Simpson Carpenter specialises in navigating these complex shifts. Our expert Automotive team provide strategic insights and tailored analysis to ensure that brands not only keep up but thrive in a dynamic market. For more engaging content like Changing Landscapes, follow or connect with us on LinkedIn, and if you want to know more about what we can do for your brand then get in touch with us via email at [email protected] or visit our website. We’d love to hear from you!