The ongoing price war in China’s electric vehicle market could have serious implications for the UK and European car sectors, according to new analysis from Indicata, part of the Autorola Group.
With Chinese EV brands slashing prices by up to 34% and average discounts hitting a record 17%, analysts warn that oversupply may drive down vehicle values in overseas markets.
Andy Shields, global business unit director at Indicata, said: “Chinese OEMs are facing massive oversupply and intense competition in their domestic market. They need to find markets outside of China to sell their vehicles, and Europe represents their most viable and profitable export destination.”
The UK is seen as particularly vulnerable to a sales push, as there are currently no additional tariffs on battery electric vehicles (BEVs) from China. While the EU has introduced some import tariffs, Shields said: “Whilst there are tariffs in place for BEVs in the EU, it’s still possible for Chinese manufacturers to sell BEVs in Europe more profitably than in their home market.”
With the US largely closed off due to high import duties and other markets lacking sufficient EV charging infrastructure, Chinese carmakers are expected to shift more focus to Europe. The analysis also highlights a pivot from BEV to hybrid and internal combustion engine production in response to slower-than-expected consumer uptake and tariff challenges.
Shields added: “We’re looking at a potential shift in market dynamics. The excess supply of new Chinese products has the potential to continue increasing pressure on used vehicles in Europe because of lowering new car list prices and excessive supply.”
Indicata’s report suggests that the impact may not be limited to BEVs. Plug-in hybrids could also be pushed into global markets such as the EU, UK, Brazil, Mexico and Australia as Chinese manufacturers search for new buyers.
The study also points to a likely consolidation of China’s EV sector, with only a few brands such as BYD, Li Auto and Seres managing to remain profitable. Others, including Nio, are struggling to meet volume targets and are facing rising financial pressure. Exports now account for 33% of China’s EV production, with government support focused on expanding that figure to 50%.
Legacy brands like Volkswagen and Honda are already under strain, facing difficulty in competing with more technologically advanced and cheaper Chinese EVs. Analysts warn that traditional European manufacturers may respond by shifting attention back to their home markets, increasing competition and potentially triggering a wider price war that could affect both new and used car sales throughout 2025.
