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

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

In the heart of Somerset, a site adjacent to the Hinckley Point nuclear power station and overlooking the windswept landscapes of Glastonbury Tor marks the future of the British car sector. This location, currently a sprawling grid of steel frameworks and heavy machinery, is set to transform into the Agratas electric vehicle battery facility. Scheduled for operation next year, it will become the UK’s largest gigafactory, producing battery cells to support Jaguar Land Rover’s electric vehicle lineup. The project, backed by India’s Tata Group, represents a £5bn investment that successive governments have hailed as a success in industrial strategy.

Yet this facility also underscores a broader challenge: the UK’s car manufacturing base is shrinking. Recent data revealed a significant shift in the market, with the Jaecoo 7—China’s first SUV to top UK sales—sparking debate. The vehicle, a medium-sized petrol or hybrid model, highlights how Chinese imports, predominantly electric, now account for roughly 15% of new cars sold in 2026, up from 1.3% five years prior. The government’s response to this trend is measured, emphasizing that British consumers should embrace the variety.

“Britain should not fear the rise of Chinese imports,” said Business Secretary Peter Kyle, who recently visited the Agratas site to endorse a £380m grant. “I want to ensure UK consumers can choose the vehicles they prefer.” While monitoring potential trade disruptions, Kyle also spotlighted opportunities for employment and investment. “If conditions are favorable, I’d welcome Chinese carmakers setting up in the UK,” he added, drawing a parallel to Japan’s 1990s automotive boom.

However, critics argue the UK’s openness to Chinese vehicles is a double-edged sword. Shadow business secretary Andrew Griffith accused government policies of stifling domestic growth, citing a ban on internal combustion engines as a key factor. “British carmakers have been weakened by a misguided restriction on petrol and diesel,” he stated. Reform UK’s Robert Jenrick echoed similar concerns, warning of “unfair Chinese competition” and pledging tariffs and quotas to shield local jobs if needed.

The UK’s stance contrasts with measures taken by other G7 nations. The EU and US have imposed tariffs on Chinese imports, while Canada reduced duties on certain electric vehicles. Spain, too, has welcomed Chinese EV manufacturers, resulting in substantial factory investments. “The UK’s market has always been accessible,” noted Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT). “Chinese firms are capitalizing on this, offering compelling products at competitive prices, with strong technology and quality.”

Despite the influx, the Agratas gigafactory is positioned as a critical countermeasure. By leveraging UK-based innovation, it aims to keep pace with Chinese advancements in battery technology, such as ultra-fast charging. This facility ensures Jaguar Land Rover can continue exporting to the US, with its vehicles powered by homegrown batteries. The race to modernize the industry, it seems, hinges on whether the UK can match the momentum of its Asian counterparts.