U.K. should attract Chinese factories

The 80% target is in trouble because there is not yet any underlying demand from private buyers to match this destiny. The current EV market share was 22.6% in March and the target for this year is 33%.

The EV market remains tepid despite the government offering powerful incentives to manufacturers while fining companies that don’t meet the prescribed EV sales level. Unintended consequences abound. In order to boost sales of largely unprofitable EVs, manufacturers have to raise the price of highly profitable ICE vehicles to make sure they don’t sell, forcing buyers to consider the EV option. That’s a recipe for financial disaster and a Chinese victory.

According to the Society of Motor Manufacturers and Traders, Britain’s auto industry lobby, this policy has cost the industry over £10 billion ($13.5 billion) in incentives over the last two years. The Labour government seems content to carry on with it. In the EU, similar regulations designed to eliminate carbon dioxide emissions in new vehicles by 2035 is currently being challenged by the industry and countries with important auto manufacturing.

According to consultants Accenture’s Automotive and Mobility practice, this drive to 2030 favors electrification but at some cost.

“If the current trajectory remains broadly unchanged, the U.K. auto market may be more electrified by 2030, but for many incumbent (manufacturers) and retailers it may also become increasingly more challenging to sustain profitability,” said Johannes Trenka, EMEA Lead for Growth Strategy in an email exchange.

Compressing profitability

“Electrification is already compressing profitability from several directions: it reduces traditional aftersales income and intensifies price competition in new-car sales in many segments, while (manufacturers) continue to absorb transition investment and regulatory compliance requirements,” Trenka said.

Other experts agree. British automotive analyst Dr Charles Tennant recently told Forbes market share targets for EVs in the U.K of 38% in 2027 and 52% in 2028 are getting close to draconian. Tennant said Chinese companies are going to benefit from U.K. and EU targets. Professor Peter Wells of Cardiff Business School said action is required to relieve pressure on Britain’s auto business, but leadership is lacking.

Pedro Pacheco, senior research director at Gartner Group, said so-called “legacy” manufacturers face problems because they failed to invest in EVs to make them attractive to the public.

“It’s important to highlight the main reasons behind the financial problems of certain legacy (manufacturers) are sales/profitability losses in China, due to uncompetitive EV products, and premature cancellation of EV projects – they wrote off billions in EV investment in Q1 (2026) while oil prices skyrocketed in March. For those reasons, any change in policy by the U.K. government wouldn’t do much to revert this course of events as the size of the overall U.K. car market is small compared with that of China, Europe or U.S.,” Pacheco said in an email exchange.

Multi-billion dollar write-offs

Major global automakers have written off about $65 billion, driven by costly pullbacks from over-ambitious EV targets. This included a $26 billion hit from Stellantis, and smaller ones from General Motors, and Ford. In Europe, Volkswagen made a big write-off, while Mercedes and BMW issued EV-related profit warnings.

Some experts say Britain’s ZEV policy is the result of central planning political dogma led by Energy Secretary Ed Miliband.

“It (ZEV) was intended to join the dots between a political desire to phase out petrol and diesel vehicles, and the need for manufacturers to rejig their operations towards making EVs, with a degree of certainty on the expected timing,” said Andy Mayer, Energy Analyst at the Institute of Economic Affairs, a free market think tank.

“It can be accurately characterized as people who have no idea how to make cars, dictating to those that do, what type of cars they can make, to an absurd degree of precision, through crude output targets, entirely blind to the challenges of individual firms, and customer demand. Very clearly it should be scrapped and preferably replaced by nothing at all,” Mayer said in an email exchange.

Mayer said failing that manufacturers should compete to commercialize EVs and the market allowed to decide the level of demand.

Future EVs will be much cheaper

“What will make a difference long-term is the normal cycle of invention, innovation and market testing that drives down costs. Future EVs will be much cheaper than EVs today,” Mayer said.

According to experts, if the EV rules don’t change by 2030, only the strongest legacy players will survive, and the marginal ones will struggle. Volkswagen has already started to expand its EV range down to more affordable niches through its own name brand, Skoda and SEAT/Cupra. Hyundai-Kia, BMW/Mini, Mercedes and Renault have introduced attention-grabbing EVs. Multibrand Stellantis has teamed up with China’s Leapmotor to exploit its technology and keep up with the opposition. Ford has teamed up with Renault to produce cheaper EVs by 2028.

China’s Geely and its Volvo and Polestar subsidiaries will lead the onslaught from the east, including MG, BYD, Chery’s own brand and its Jaecoo and Omoda outlets.

The current overall Western European market is stuck at an annual sales rate of just under 12 million, according to GlobaData. The pre-Covid high of 15.8 million remains a distant dream. Western Europe includes the five biggest markets of Germany, France, Britain, Italy and Spain.

If the market doesn’t regain those lost sales by 2030, the increasing presence of Chinese automakers clearly means some of the locals will struggle to survive.