In 2025, the automotive industry will continue to face pressure from global trends, policy shifts, and evolving consumer preferences.
- Global EV Growth: EV sales remain robust, with China surpassing a 50% market share for battery-electric and plug-in hybrids in 2024. UK EV adoption continues to grow but lags due to affordability and charging infrastructure gaps.
- BYD’s Global Impact: Chinese automaker BYD is leading the charge, with over 4 million global EV sales in 2024. This highlights the urgency for UK and European manufacturers to accelerate local battery production and streamline supply chains.
- Incentives on the Rise: Increased inventory levels are leading to aggressive pricing strategies globally, with average incentives rising over 25% in key markets like the US. UK dealers face similar pressures as they navigate shifting consumer demand and rising operational costs.
- Dealer Consolidation: The ongoing shift to EVs and direct-to-consumer sales models will further consolidate the UK dealership market. Valuations for high-performing dealerships remain strong, but weaker players face mounting challenges.
- Battery Prices Drop: Lithium-ion battery prices fell 20% in 2024, reaching $115/kWh, marking progress toward cost parity with internal combustion vehicles. This trend supports broader EV adoption but underscores the need for secure raw material supplies.
- Hydrogen’s Decline: Hydrogen-powered vehicles have all but disappeared from the passenger car market as automakers and policymakers focus on EVs as the primary path to decarbonisation.
- OEM Consolidation and Struggles: Legacy automakers like Nissan and Stellantis face mounting pressure from restructuring and Chinese competition. The proposed Honda-Nissan merger is emblematic of the survival strategies needed to remain competitive.
- UK EV Policies: The UK’s regulatory push toward a 2030 ban on new ICE vehicles adds urgency to local EV production and charging infrastructure development.
- EV Dominance: China’s EV market is expected to surpass 12 million sales in 2025, setting the benchmark for global electrification. UK manufacturers must accelerate innovation to compete with Chinese automakers’ scale and pricing advantage.
- Battery Innovation: China’s dominance in lithium-ion production underscores the UK’s need to invest in alternative battery technologies and domestic production capabilities.
Mike Allen is a long time analyst of UK dealer groups and managing director, Cambria Private Capital
This story continues at BLOG 2025: A Year of Transition
Or just read more coverage at Motor Trader
