Electric vehicle (EV) giant BYD has started a price war in China, reducing prices across its range by up to 34%, in a bid to gain market share.

Rivals have responded by cutting prices in turn, bringing EV values down across the board.

Experts warned that if manufacturers bring these price cuts to the UK, the ensuing market uncertainty could cause widespread disruption in the EV market, causing residual values to fall sharply.

Peter Golding, CEO of FleetCheck, said: “On the one hand, everyone wants to see cheaper EVs in the market in order to accelerate adoption but there has been so much disruption in this sector during the last couple of years, especially over residual values, that any disorderly marketing is likely to bring a great deal of fear and uncertainty for vehicle operators.

“The question it raises is, if they and other manufacturers are willing to do this in China, what would be stopping them adopting similar measures in the UK and other markets?

“BYD are already outselling Tesla in Europe, so they could soon have sufficient market mass that price cuts could cause genuine disruption.”

So far, Chinese manufacturers have resisted heavy price cuts in the UK market, instead opting to grow dealer networks, while slowly reducing prices, in order to build trust.

Golding added: “The EU and US have raised tariffs on Chinese electric vehicles but the UK has resisted following suit.

“Presumably, such measures could be rapidly adopted in the event of any price war arising here but the temptation to discount by manufacturers with huge capacity and deep pockets must be considerable.”