Faisal Islam: Why the government is relaxed about Chinese car imports

Faisal Islam: Why the government is relaxed about Chinese car imports

Nestled in a Somerset landscape, the site adjacent to Hinckley Point nuclear power station and overlooking Glastonbury Tor holds significant potential for the British automotive sector. It is currently a sprawling expanse of steel frameworks, comparable in size to 30 football pitches, with cranes and machinery scattered across the terrain. By 2027, this location will host the Agratas electric vehicle battery facility, the UK’s largest gigafactory, set to produce battery cells for Jaguar Land Rover’s electric vehicle range. This investment by India’s Tata Group represents a £5bn achievement in industrial strategy, yet it is framed as a baseline necessity to sustain domestic car manufacturing.

The sector has recently faced a notable challenge as data revealed the Jaecoo 7, a mid-sized petrol or hybrid SUV from China, became the most popular car in the UK for the first time. Chinese automakers have broadened their presence, accounting for roughly 15% of new car sales in 2026—a sharp contrast to the 1.3% recorded five years prior. This surge coincided with Business Secretary Peter Kyle’s visit to Agratas, where he confirmed a £380m grant. When asked about the implications of Chinese imports, Kyle emphasized the government’s confidence in the trend, stating,

“Britain should not fear the rise of Chinese imports.”

He acknowledged the need to monitor trade impacts but highlighted the opportunities for employment and investment, drawing a parallel to Japan’s automotive industry in the 1990s.

However, the UK’s car production has dropped by half in the last ten years, raising questions about competitiveness and potential security risks. Shadow business secretary Andrew Griffith criticized regulations that phased out petrol and diesel vehicles, arguing they “removed natural customer choice” and “sucked in imported EVs.” Meanwhile, Reform UK’s Robert Jenrick warned of “unfair Chinese competition,” vowing to implement tariffs and quotas if Beijing continues to dominate the market. The EU and US have already introduced such measures, but the UK’s reluctance to follow has allowed Chinese firms to expand their dealer networks and marketing efforts, accelerating sales growth.

Other G7 nations have mirrored this approach. Canada’s Prime Minister Mark Carney reduced tariffs on certain Chinese electric vehicles, while Spain actively embraced Chinese EV leadership, securing substantial factory investments. Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT), noted that the UK’s traditionally open market has enabled Chinese companies to gain traction swiftly. “At the end of the day, the consumer is right,” he said, adding that these firms “offer attractive products at competitive prices, with strong technology and quality craftsmanship.”

The Agratas facility is central to the UK’s ability to remain competitive. As Chinese brands prepare to demonstrate faster charging times than traditional fueling, Agratas asserts its UK-based research will enable it to match advancements in battery technology. This, along with the production of batteries for Jaguar Land Rover, underscores its role in preserving the nation’s export capabilities to the US and maintaining industrial relevance in a rapidly evolving global market.