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Chinese automaker Chery Auto is exploring the possibility of building a second manufacturing facility in Europe, with the UK emerging as a strong contender. As international trade tensions, particularly with the United States, complicate export routes, Chery and other Chinese car manufacturers are shifting focus toward the British and European markets. With growing interest from British consumers and ongoing tariff negotiations between the UK and US, the opportunity for localized manufacturing in the UK is gaining serious traction.
I. Chery Auto’s UK Ambitions
1. Expansion Plans and Market Presence
Chery Auto has been steadily gaining ground in the UK since launching its brands Omoda and Jaecoo in September. According to the company’s UK director, Victor Zhang, their presence in 75 dealerships has already secured them around 2% of the UK’s electric vehicle (EV) market. Speaking at the Society of Motor Manufacturers and Traders (SMMT) annual conference, Zhang emphasized that the company is “actively considering” establishing a manufacturing site in Britain, as part of a wider localization strategy.
2. Consumer Interest in Chinese EVs Grows
Zhang noted that British consumer curiosity toward Chinese auto brands is translating into real sales. He highlighted one of Chery’s key offerings—a high-performance hybrid vehicle capable of driving up to 90 miles on energy generated by the car itself. He also cited research indicating that 40% of UK car buyers are open to considering Chinese vehicles, pointing to a rapidly growing market segment for Chery and other Chinese manufacturers.
II. The Global Trade Context
1. US Tariffs Driving Chinese Investments to UK and EU
The aggressive tariffs imposed by Donald Trump’s administration on Chinese goods have accelerated Chinese carmakers’ shift toward Europe. In addition to Chery’s UK ambitions, Geely Auto has invested over £3 billion in British sports car brand Lotus, while EV battery company EVE Energy is reportedly planning to invest £1 billion in a new facility near Coventry. These moves are strategically aimed at bypassing US and EU trade barriers by producing within those markets.
2. EU and UK as Strategic Manufacturing Bases
Other Chinese automakers have also established a foothold in the EU to avoid the 2023 tariffs imposed by Brussels on EV imports. For example, BYD is constructing its first European assembly plant in Hungary, and Chery’s Omoda brand recently entered a joint venture with Spanish carmaker Ebro to launch a production facility near Barcelona. The UK, offering competitive advantages under its evolving trade agreement with the US, is being seriously evaluated as a complementary hub.
3. UK-US Trade Deal Offers Competitive Edge
As the UK’s new trade agreement with the United States is set to take effect, tariff reductions offer fresh incentives for foreign carmakers to invest. The agreement reduces tariffs on vehicles from 27.5% to 10% for UK exporters, a rate still higher than pre-2024 levels but significantly lower than what EU-based automakers currently face. However, a general 10% import tariff and a 25% levy on UK steel remain in place, and officials continue to negotiate their removal.
III. British Government’s Trade Efforts and Industry Support
1. Business Secretary Advocates for Full Tariff Elimination
Jonathan Reynolds, the UK’s Business Secretary, acknowledged during the SMMT event that substantial progress still needs to be made in trade discussions with Washington. He underscored that while the suspension of the 50% steel tariff is a win, efforts must now focus on reducing the remaining tariffs on steel and automotive products to zero. Reynolds affirmed that reciprocal tariff negotiations are ongoing and expressed optimism about reaching favorable outcomes.
2. British Diplomacy Engaging China Amid Global Shifts
Sherard Cowper-Coles, chair of the China-Britain Business Council, shared that the UK is intensifying diplomatic and commercial engagement with China. With US-China tensions reshaping global trade routes, Chinese investors are reportedly more interested in British opportunities. Cowper-Coles revealed that National Security Adviser Jonathan Powell will visit China soon to prepare for a potential visit by the Prime Minister, signaling high-level commitment to strengthening bilateral relations.
3. Strategic Events and Trade Dialogues Ahead
Reynolds is also scheduled to attend the Joint Economic and Trade Commission in September, further underlining the UK’s intent to deepen economic ties with China. These discussions are crucial, as they could pave the way for greater Chinese investment in UK infrastructure and manufacturing, including new auto plants that would create jobs and stimulate local economies.
IV. Industry Leaders Call for Certainty and Speed
1. Ongoing Uncertainty Impacts Confidence
Despite encouraging signals, industry leaders continue to stress the importance of timely action. As Zhang stated, a clear and immediate decision on Chery’s factory plans hinges on how quickly the UK government can provide a stable and welcoming trade environment. Manufacturing domestically, he argued, is a natural next step for any brand serious about long-term presence in the UK.
2. Competitive Opportunity for the UK Market
The openness of the British automotive market is playing to the advantage of Chinese brands. With local consumers increasingly open to new players, and with US-bound exports facing fewer barriers from the UK than from the EU, Britain stands to become a vital launchpad for global Chinese auto ambitions.
3. Growing Pressure to Finalize Agreements
Chery’s interest in setting up a UK plant also serves as a reminder of what’s at stake. Trade experts and auto executives alike are urging the UK government to finalize and enact its trade deal with the US quickly to eliminate residual tariffs, particularly on steel and car exports. Failure to do so may delay or discourage further investment at a critical moment for the country’s post-Brexit industrial strategy.
Conclusion
The prospect of Chery Auto establishing a second European factory in the UK is emblematic of a larger global trend where geopolitical shifts are reshaping trade routes and investment strategies. With the UK poised to benefit from reduced tariffs under its new agreement with the US, and as Chinese companies seek alternatives to the US and EU markets, Britain has a unique opportunity to become a key manufacturing hub. However, the full realization of that potential depends on swift government action to finalize trade agreements, eliminate lingering tariffs, and create a stable, investor-friendly environment. For now, Chery and other Chinese firms are watching closely, ready to commit—if the conditions are right.
