Five areas shaping mobility in 2025

Jonathan Smart, head of our mobility sector, along with members of our automotive team, set out their predictions for 2025.

The automotive industry is being pulled in different directions, marked by both technological breakthroughs and shifting consumer preferences. From the UK's legislative push towards zero-emission vehicles to advancements in AI and V2X technology, and the crossroads of motor finance, we explore how these developments will drive the industry forward in 2025.

1. Tariffs will come but this won’t stop Chinese OEMs growing volumes across Europe

Simon Barnes, head of competition notes “the EU is particularly attuned to potential trade tensions within the sector with suggestions of tariffs on battery-powered electric vehicles (BEV) being introduced on Chinese vehicles. However, Chinese OEMs will make significant inroads into the European market nonetheless”. The big step change for 2025 will be the integration of Chinese OEMs into the European wide supply chain and distribution network.

For example, we expect 2025 to mark the first time Chinese OEMs will begin manufacturing in Europe rather than simply importing, offering new opportunities for tier ones and the supply chain. This presents new and potentially lucrative opportunities for the supply chain. This integration of supply chain is likely to be replicated in the distribution network where we expect more market entrants to follow the example of Leapmotor International, the joint venture with Stellantis that uses Stellantis’ retail network to distribute vehicles across Europe.  

2. Electrification takes the wheel

Chris Pritchett, a commercial energy and mobility lawyer, notes “electrification remains a political hot potato in the UK. Last year saw record EV market share but still saw sales falling significantly behind where the industry feel is necessary to achieve the UK government's commitment to banning the sale of new petrol and diesel cars by 2030.” This policy is designed to accelerate the transition to zero-emission vehicles and support the UK's broader climate goals. However, the Society for Motor Manufacturers contends that action is required to stimulate consumer demand. This might be one of our most speculative predictions, but we expect to see government incentives being announced in 2025 – consumers need the “carrot” rather than the industry simply being given the “stick”. 

3. Autonomous driving goes mainstream (almost).

Autonomous driving and artificial intelligence (AI) are poised to be transformative trends this year. It has been a long running joke that fully autonomous driving has been three years away for the last 10 years. However, 2025 is poised to be an iterative step on this journey even if we won’t see any standalone breakthroughs on UK roads. Key trends include broader roll out of level 3 autonomous systems that utilise autonomy under certain conditions.

The passing of the UK’s Automated Vehicles Act in May last year was a significant legislative milestone in the deployment of AVs . The Act establishes a regulatory framework for the authorisation and operation of self-driving vehicles, ensuring they meet stringent safety standards before being allowed on public roads. The Act also addresses the legal responsibilities of users and manufacturers, providing clarity on liability issues in the event of an accident.

Ben Gardner, a leading partner specialising on the intersection of automotive and technology, predicts that “while we won’t see driverless cars on UK roads in 2025, China could see the first level 4 vehicles on its road in 2025 with 21 cities taking place in a new autonomous vehicle pilot. The comparatively relaxed regulatory framework in this pilot compared to the US testing that has taken place to date is expected to drive progress dramatically in the next 12 months. In the UK and Europe we will likely see an increasing focus on ADAS as OEMs and Tier Ones steer away from level 4 and level 5 vehicles in order to focus on nearer to market technologies due to technical, cost and regulatory pressures."

4. Connected technology

We will continue to see use of Vehicle-to-everything (V2X) technology grow in the sector. V2X refers to the sensors, cameras and wireless connectivity that allow vehicles to share real-time information with their drivers, other vehicles, pedestrians and roadway infrastructure. There are vast numbers of patents applicable to 4G and 5G, as well as Wi-Fi standards to which vehicle manufacturers must adhere in developing vehicles with this ever-increasing connectivity.

Victoria Bentley notes “as we move towards 6G, connected technology plays a key role in safety and driver assistance, as well as infotainment and personalised driver experience. At the same time, it is central to the ability for manufacturers to maximise the potential of data sharing and of AI.” Given the technology is closely tied to the development of autonomous vehicles, as well as connected mobility, we can expect to see further patent cases arising from the use of the technology this year.

5. Future of finance

The future of car finance is poised for significant transformation this year, driven by evolving consumer preferences and stringent regulatory oversight. The Financial Conduct Authority (FCA) has been proactive in addressing issues within the sector, particularly in response to the car commission mis-selling case of last year.

This landmark case highlighted the practices where car dealers received undisclosed commissions from lenders, leading to allegedly inflated finance costs for consumers. In reaction, the FCA has implemented stricter regulations to ensure transparency and fairness in car finance agreements. These regulations mandate that dealers must disclose any commission arrangements to consumers, ensuring informed decision-making. Additionally, the FCA has introduced measures to cap excessive commissions and prevent conflicts of interest, thereby protecting consumers from potential exploitation. 

As the market adapts to these changes, we can expect a shift towards more transparent lending practices and increased consumer trust. The rise of EVs and advancements in digital finance platforms will also play a crucial role in shaping the future landscape. With the FCA's continued vigilance and the industry's commitment to compliance, the UK car finance market is set to become more transparent, competitive and consumer friendly. 

Wayne Gibbard, Co-Head of our financial services sector, notes ”the last few months have demonstrated that there is an urgent need for a reset.  Delivering for customers and driving growth requires the focus and drive from parliament and our law makers, regulators, lenders, brokers, customers and also those who live in and live off the eco-system, being CMCs and commentators; maybe even lawyers and professional advisors.”