Chery could build new UK car factory by 2030

Chinese car maker Chery is in early discussions with UK authorities over plans to build a new car factory here. The company, which will launch its Omoda and Jaecoo sub-brands in the UK in the coming months, is optimistic about its performance potential in the market, to the extent that bosses say local production could quickly become viable. Speaking to Autocar in the wake of a Financial Times story that broke the news, Chery's UK manager, Victor Zhang, confirmed that "we have started some discussions" with the government "but it's still at a very initial stage". He added: "We need a closer discussion to see how to develop this kind of potential cooperation." Zhang said Chery's decision rests on a number of key considerations, including transportation and the timing of various market developments, but most crucially it will depend on the government's willingness to engage. This, he said, could take the form of "incentives for the land costs or electricity" but said no firm requirements have been outlined. The UK government, Zhang believes, is "very welcoming of overseas investors" but "we need good communication to establish favourable policies". Notably, Indian company Tata's gigafactory in Somerset – one of the biggest investments in UK automotive in decades – is said to have been supported by £800 million worth of cash grants and energy subsidies from the government. Any UK-based car factory would also need to be supported by substantial local sales volumes to ensure its viability and Chery is confident of quickly achieving the figures necessary to build cars here. "The UK is one of the most important strategic markets for the Chery group and also the Omoda and Jaecoo brands," he said, citing the near-two million cars sold here in 2023 as a sign of the market's potential. He said Chery is targeting 15,000 sales – across the Omoda and Jaecoo brands – in its first year in the UK market, with the first cars from each brand due to touch down in the coming weeks. Ultimately, he pointed to a Kia-rivalling 100,000 cars per year as the goal and suggested this could be achieved in "possibly three to five years". At that point, Zhang suggested, producing cars in the UK would make commercial sense. "If we're looking at setting up a factory, 100,000 is a reasonable figure from a more general perspective," he said. He added that Chery would consider building cars in the UK for export to other right-hand-drive markets, including Australia and South Africa, to maximise productivity and return on investment. Zhang acknowledged that manufacturing costs in the UK are significantly higher than in China, because of higher wages and inflated energy prices, but said there are a number of other factors that could make the UK a viable production location, including transportation and workforce talent. "The lead time from China to the UK can be possibly two or three months," he said, "and I think the UK has its own strength in terms of automotive talent. "You have good universities and every year you have many engineers coming off the university courses." He said the UK operations of brands such as JLR and Toyota provide "the basis" for further industrial investment and are an indication of the UK's continued viability as a production location. There is potential for Chery to partner with another vehicle manufacturer to share the investment too. "We are open-minded and, of course, open to any kind of co-operation. Many OEMs in China do joint ventures. It's a very common practice to work with someone." The UK is not the only location outside China that Chery could build cars, with a factory in mainland Europe also under consideration. Zhang did not name any specific countries, nor give an indication of timeframe. Rival firm BYD – which sold more electric cars globally than Tesla in the final three months of 2023 – has already confirmed it will build a new EV factory in Hungary and other Chinese companies are expected to make similar announcements in the coming years as they increase their local market share.