The inconvenient truth about electric vehicles

We are in danger of allowing the recent increases in sales of EVs to mask an inconvenient truth which is that only rich people are buying electric vehicles…

If we think that the current and planned range of incentives are going to address that, then we’re very much mistaken.

It is true that the price disparity between EVs and ICE vehicles has narrowed and now stands at about 38% and that we have forecast price parity by 2024/25. But with the market still not setup to enable mass EV adoption, this forecast is looking set to be missed.

We have seen some eye-catching figures from the UK government recently, including £620m for grants and street charging points announced last month and repeated in the latest Budget.

But even if all those funds were used to boost sales it would likely only subsidise about 120,000 vehicles, that’s assuming £5k per vehicle, which wouldn’t be nearly enough to offset the current price disparity and drive adoption among middle- and lower-income consumers.

Right now, our data shows that interest in electric vehicles is coming almost exclusively from wealthier postcodes. This is the nut we need to crack; it’s not about getting high earning professionals in Fulham and Cheshire to switch from a petrol luxury saloon to a Jaguar I-PACE.

We need middle income households to have a wide choice of mid-range and budget electric vehicles available to them and for the costs of those vehicles to be at parity with their petrol equivalents.

Incentives for adoption

In our view, if we are going to drive mass adoption, we need smart and targeted incentives to bridge the gap for those who simply cannot afford the ‘green premium’. Without the right type of incentives, it’s doubtful we will see the volumes we need to drive economies of scale and that means manufacturers will lose interest in the UK and move EV volumes to other markets

A prime example of successfully implemented incentives is Norway which has hefty grants for EVs, zero road tax, no VAT, reduced company car tax and savings on toll roads and ferries. Parking charges are capped at 50% of the maximum. EV drivers can even use bus lanes!

Norway is a small market, but we see much bigger incentives in bigger markets too.

So lets see how the UK compared to the two largest car markets in Europe - France and Germany.

The current UK incentive is capped at £2,500.

In Germany it’s three times greater at £7,652.

In France it’s twice as high at £5,951.

This translates directly into sales.

In Germany, BEVs had a 17% market share in September (up 59% YoY; 12% of the market YTD).

In France it was 13% in September (up 70% YoY).

In the UK it was 15% in Sept (up 73% and 10% YTD).

The hazard for the UK then is that the automotive industry will follow the money over the Chanel at the expense of the mass market here.

Charging into the future

The charging infrastructure needs to meet the varying geographies and lifestyles of people across the UK 

Investment in infrastructure needs to be targeted to give the mass market reassurance that they will be able to charge their vehicles, not just on route but closer to home too

The on-route charging network is actually pretty robust. Most major roads are well-served, albeit with some questions over reliability. But 40% of UK homes will need a proper public charging infrastructure solution. Clearly private investment is the route the government prefers, looking to local authorities to take the lead. There is a lot of money available for a public charging network, the problem is that nobody seems sure what that should look like.

Whether it’s on-street, shared community hubs or destination charging (gyms, supermarkets etc.) we believe that data is critical to knowing where to invest. Investors need to know that the charge points they pay for will see sufficient traffic, and data must be used to determine where to put that money so we meet the demands of the hottest regions first.

More cars using more charge points provides the social proof that the interested majority needs to see – they’re the ones that can’t charge at home so aren’t buying. The more charging options there are near them the more likely they are to switch, but data must be used to identify where to invest first.

People need to feel reassured in their decision making and confident that infrastructure and policy will support those decisions. We flip flopped on diesel; we can’t afford to do the same on EVs or even give consumers the feeling that we may do the same since that’ll lead to confusion, fear and inaction where instead we need consumer confidence in EVs.

Find out more about what is needed to drive EV adoption in our all new and fully interactive The Road to 2030 report.