Financial Times, July 23 — The UK government’s newly announced electric vehicle subsidy policy has drawn criticism from automakers for “creating chaos” and effectively excluding Chinese-made EVs from incentives, according to industry sources.
Policy Details
- Total funding: £650 million
- Eligibility: Based on carbon emissions from electricity used in vehicle production.
- Subsidies:
- Up to £3,750 for EVs priced under £37,000 with lowest emissions.
- Up to £1,500 for slightly higher-emission models.
Industry Backlash
One auto executive told the FT: “It’s a complete mess.”
- Confused automakers have set up “war rooms” to interpret vague policy clauses.
- Critics warn the rules may:
- Short-term: Suppress new EV sales.
- Long-term: Crash used EV prices.
Financing Domino Effect
In the UK, 80%+ car purchases use finance schemes where monthly payments hinge on 3-year residual values. If used prices fall:
“New buyers face higher monthly costs,” warns Toby Poston of the British Vehicle Rental & Leasing Association (BVRLA).
He adds:
“Boosting new demand without supporting the used market accelerates depreciation. Losses erode confidence and raise finance costs—undermining the subsidy’s purpose.”
Leasing firms (accounting for 75% of UK EV sales) had already urged government stabilization measures before this policy, citing used EV price volatility.
China’s Response
The Chinese Embassy in London called for “an open, fair, just and non-discriminatory environment” for all companies, stressing:
“Exclusionary policies and protectionism harm EV industry growth.”
It vowed to safeguard Chinese firms’ rights.
BYD’s blunt critique:
- Stella Li (BYD EVP, Head of Overseas): The policy is “pointless” and a “backdoor tariff” against Chinese brands.
“It’s like a drug—it will damage the UK market long-term.”
- Despite this, BYD plans 280 UK showrooms (creating 5,000+ jobs) and remains unfazed on sales.
Alfredo Altavilla (BYD Europe Advisor, ex-ITA Airways CEO):
“Can any European government fight Chinese cars forever? No. So what’s the point?”
Bigger Picture
BYD aims European localization via plants in Hungary and Turkey, plus 2,000 retail stores continent-wide. Chinese brands already hold ~5% share in UK/EU EV markets (Schmidt Automotive Research).
The subsidy clash underscores rising tensions as China’s automakers expand globally.