How are new entrants impacting the market?

The journey to electric has seen a wave of new brands entering the market. From Polestar to Tesla and BYD to Fisker, the transition to electric vehicles has seen the number of new brands on the market rise from 46 in 2018 to 57 as of January 2024, with almost all of these brands having a focus on or being purely focussed on electric vehicles (EVs).

Some of these new entrants have grown considerably in recent years. Tesla, the first pure EV brand to enter the UK market, now accounts for 3% of new car sales in the UK with MG, with its focus on affordable electric cars has, seen rapid growth, gaining a 4% share of the market.

And when we look at Hyundai and Kia, once the much talked about new entrants from South Korea, we can see that they have grown market share in the transition to electric by transforming their product portfolio and shifting their buyer demographic to a more affluent audience.

Many of the emerging brands aiming to challenge though are from China, which have significant experience in manufacturing cars and huge competitive advantages in the transition to electric.

China is now the world’s biggest manufacturer of EVs producing more EVs than the USA and Europe combined, with three in five EVs produced in 2022 being from China.

The scale of production combined with the fact that 77% of the world’s battery production is in China, means that China can produce EVs at a lower cost and command higher margins than many of its overseas competitors, giving it a competitive advantage. The result of this is that China is now the world’s number one car exporter and, as we’re seeing, many of these Chinese brands are now entering the UK market.

But what impact are these new Chinese brands having on the UK automotive market?

A great deal of interest, but slow to convert

New Chinese models, such as those from BYD and GWM, saw a great deal of interest from curious consumers in 2023, accounting for 4.8% of all new EV adverts on our marketplace.

However, this curiosity has yet to transform into sales with these new brands struggling to convert advert views to leads.

This is primarily due to a lack of familiarity with the brands with only 4% of consumers hearing of BYD and 3% of GWM ORA.

However, there are signs that consumers are becoming increasingly aware of new entrants. The recent news about BYD selling more EVs than Tesla has prompted a surge in interest for the brand with advert views for the brand’s models on our platform rising over 200% on the 2nd of January 2024 - the day BYD announced its sales data.

Furthermore, we are seeing that many well-established brands are failing to maintain recognition as they transition their ranges to electric. This combined with the fact that EV considers are far more open to switching brands, considering on average 13 brands before making their purchase, means that there is an opportunity for new entrants to establish a market share in the coming years, with one in six new cars sold in 2030 expected to be a new entrant.

Opportunities for retailers and consumers

Whilst the growth in new entrants is a concern for incumbent brands looking to maintain their market share, for retailers and consumers these new entrants do present opportunities.

They offer a greater choice of brands to consumers looking to make the switch to electric, with many of their models offering more affordable routes into an EV when compared to legacy brand offerings.

Most new entrants rely on a retailer-centric model to build credibility, enable distribution, and manage aftersales in what is a new market to them. We recently discussed this with BYD in our The Road to 2035 webinar where they confirmed their focus on a retailer model for their brand in the UK. These new entrants then could prove to be a lucrative addition to retailers' stock mix, particularly as awareness of these brands increases and more consumers seek a more affordable route to EV ownership.

For our latest EV market insights and an in-depth look at the impact of new entrants on the market, be sure to check out The Road to 2035 report.