BRICS+ Series: UK Car Market Contracts While Chinese EVs Surge

The UK new car market slipped by 2% in August, registering 82,908 vehicles, in what is typically the quietest month of the year before September’s plate change. Fleet buyers continued to dominate, accounting for nearly 60% of registrations despite a fall in volumes, while private sales edged slightly higher and business purchases rose by more than 40%, though from a low base.

EVs Hit Record Share Despite Market Weakness

The standout trend was the rapid acceleration of zero-emission vehicles. Battery electric vehicle (BEV) registrations grew by nearly 15%, reaching a record 26.5% market share for the year and marking the fourth-highest on record. Plug-in hybrids expanded even faster, soaring almost 70% to take nearly 12% of sales, while hybrids lost ground, slipping by around 14%. This surge mirrors patterns in previous years when lower overall volumes boosted the relative weight of EVs.

Across the first eight months of 2025, UK car sales rose just over 2% to 1.265 million units – the best performance in five years, though still well below pre-pandemic levels. BEVs accounted for nearly 22% of registrations, short of the 28% required under the government’s zero-emission vehicle mandate for next year. With around a quarter of BEV models now eligible for the newly reintroduced Electric Car Grant, worth up to £3,750, industry leaders expect September to be pivotal for further growth.

Chinese Carmakers Defy Trends, Tesla Falters

While overall UK sales slipped, Chinese carmakers strengthened their foothold. BYD led the charge, quadrupling July sales year-on-year to 3,200 vehicles and reaching 22,600 units in the first seven months – six times more than in 2024. Rival Chery also made an aggressive debut, delivering 19,000 vehicles under its Omoda and Jaecoo brands since January. These gains came despite Chinese manufacturers being excluded from the UK’s EV grant scheme due to restrictions tied to carbon-intensive energy grids.

In stark contrast, Tesla saw its UK sales collapse. The US company’s deliveries plunged almost 60% in July to below 1,000 units, with year-to-date volumes down 7% despite the launch of an updated Model Y. Analysts point to weak consumer sentiment, uncertainty around subsidies, and political backlash following Elon Musk’s brief alliance with Donald Trump as factors undermining performance.

Market Outlook and Industry Concerns

The Society of Motor Manufacturers and Traders (SMMT) has underlined the significance of September, which typically accounts for one in seven annual registrations. Chief Executive Mike Hawes noted that with new incentives in place and an expanding range of electric models, the conditions are favourable for accelerating the transition to EVs.

However, risks remain. GlobalData forecasts total UK sales of around 1.99 million units in 2025, but warns that fiscal tightening and the knock-on effects of recent US tariffs could dent demand, though these pressures are partially offset by the US-UK trade deal. Analysts also highlight that Chinese brands’ competitive pricing and rapid rollout may reshape the UK market, especially as traditional players rely heavily on government support and discounts to drive EV adoption.

A Market at a Crossroads

The UK car industry is entering a defining phase: demand for EVs is at record levels, grants are back on the table, and Chinese manufacturers are rapidly scaling up. Yet challenges remain in meeting zero-emission targets and sustaining growth in an uncertain economic environment. The coming months, particularly the September plate change, will be critical in determining whether the UK consolidates its EV momentum or struggles under the weight of broader market headwinds.

Written By: 

*Dr Iqbal Survé

Past chairman of the BRICS Business Council and co-chairman of the BRICS Media Forum and the BRNN

*Cole Jackson 

Lead Associate at BRICS+ Consulting Group 

Chinese & South American Specialist

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