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

In a Somerset field, with a distant view on one side of Hinkley Point nuclear power station (under construction) and on the other side** **the windswept grassy folds of Glastonbury Tor, lies the future of the British car industry. It is possibly also the foundation of our future economic resilience, at what is a troubled moment in the global economy.

Right now the site is a lattice of hulking steel frames covering an area the size of 30 football pitches, interspersed with cranes, earth movers and drainage channels.

From next year, it will be the Agratas electric vehicles battery facility, the UK's largest gigafactory, manufacturing cells for electric vehicle batteries, that will go on to power Jaguar Land Rover's electric vehicle fleet.

For successive governments this investment from India's Tata Group has been a £5bn triumph of industrial policy, but it is also a minimum requirement to secure the future of British car manufacturing.

That's a sector that came in for a bit of a shock this week with the release of data that showed that a Chinese car - the Jaecoo 7 - was the number one car in the UK for the first time ever.

The Jaecoo 7 is a medium-sized petrol or hybrid SUV. But Chinese imports have more generally been of electric vehicles, and the numbers are as remarkable. Chinese-owned brands have made up one in seven new UK cars, about 15% so far in 2026. Five years ago this was 1.3%.

The news about the Jaecoo came in the same week Business Secretary Peter Kyle was visiting the Agratas site to confirm a £380m grant to the company.

I wanted to hear his thoughts on this wave of Chinese imports: was it good for consumers or bad? What about for governments? They are questions I've been grappling with for three years.

The government's message is that "Britain should not fear" the rise of Chinese imports.

"I don't want to prevent UK consumers having access to cars of their choice," Kyle told me.

He was watching out for any trade distortions, he said, but was also focusing on encouraging the "huge opportunites" for jobs and investment from Chinese car makers who have expressed interest in setting up factories in the UK.

"If the conditions are right, I would absolutely welcome [Chinese investment]" he told me. He compared it to Japan's car industry in the 1990s.

But the UK's car production has halved over the past decade. And there have been some concerns about whether domestic production can compete, as well as over possible data and national security implications.

Shadow business secretary, Andrew Griffith MP, blamed government regulation designed to shift consumers away from petrol and diesel for the sector's decline.

"British car makers have been undermined by a foolish ban on internal combustion engines, which has removed natural customer choice and sucked in imported EVs," he said.

Reform's Robert Jenrick said British car makers didn't stand a chance against "unfair Chinese competition".

"If Beijing continues to cheat, Reform UK will introduce tariffs and quotas to protect jobs across the country," he said.

The EU and the US have imposed tariffs on Chinese imports. The rapid rise in Chinese imports to the UK has been partly down to the UK's decision not to follow suit. In response, Chinese companies have invested in dealer networks and marketing across the UK, accelerating the rise in sales.

Other G7 allies such as Canada have done something similar. There, prime minister Mark Carney rowed back the extra tariff on some Chinese electric vehicles. Spain embraced Chinese leadership in EV manufacturing, and has attracted major factory investments.

"The British car market has always been very open," says Mike Hawes, boss of the Society of Motor Manufacturers and Traders (SMMT) and Chinese firms are moving quickly, he points out. But China's success is also because they are offering drivers something they want, he says.

"At the end of the day, the consumer is right. They are offering attractive products at very competitive prices, good tech and good build quality."

It is, says everybody, then up to the UK to compete. That is why the Agratas facility is so vital.

As Chinese companies gear up to show off their ability to charge a car in less time than it takes to fill a petrol tank, Agratas says its own cutting-edge UK-based research will mean it can also keep pace with the new frontiers of battery tech.

Another advantage it offers is that Jaguar Landrover will be able to keep exporting to the US, with a made-in-the-UK battery solution, at a time when China is selling very little there.

But economic resilience is as much about navigating a wildly changing geopolitical landscape as it is about keeping ahead on technology.

It is salutary to think that in 2020 Elon Musk was being shown around this very same Somerset site, pitched as a possible location for his European Tesla gigafactory, before he opted for Berlin, citing Brexit.

Instead the UK will have a significant new component in its own domestic supply chain. Yes, we will be dependent on foreign expertise and investment. But we will also be miles ahead of other G7 countries when it comes to being open to the extraordinary rise of the world's biggest car exporter, China. And that rise has only just begun.