Consumer support key to faster and fairer EV transition as market enters new phase – SMMT

Posted on 19 Sep 2023 by The Manufacturer

UK automotive leaders yesterday celebrated the battery electric car market’s emergence from the ‘early adopter’ phase and discuss the measures needed to shift the technology to mass market following a 21-fold growth in EV uptake since 2018.

According to the latest data from the Society of Motor Manufacturers and Traders (SMMT), with one electric vehicle registered every 60 seconds, they now account for more than 16% of overall sales, making Britain Europe’s second largest zero emission car market by volume. Delivering a faster and fairer mass transition, however, is threatened by the absence of support for private buyers, many of whom plan to go electric but are delaying due to concerns over affordability and uncertainty regarding the availability of a nationwide charging network.

Uptake of battery electric cars has soared over the past five years. In 2018, they comprised just 0.7% of the new car market, yet are anticipated to account for 17.8% by the end of the year – good progress, but the market must move even faster to meet net zero ambitions. While the shift was originally driven by private consumers, they have since been overtaken by fleets and business buyers. Following 2022’s removal of the Plug-in Car Grant – leaving Britain as the only major European market with no consumer EV incentives yet the most ambitious transition timeline – sales to private buyers have fallen from more than one in three, to less than one in four.

Driving up demand is made more urgent by the proposed Zero Emission Vehicle Mandate which will compel the sale of these cars and vans, but has still to be finalised with barely 100 days to go until implementation.

Business demand has been boosted by fiscal incentives, proving that purchasing support powers up markets. Private drivers also want to make the switch from petrol to electric cars, as a new survey commissioned from Savanta shows. Two thirds (68%) of non-EV drivers surveyed said they want to make the switch, but just 2% plan to invest this year and 17% in 2024 – with more than half saying they will not be ready until 2026 or later.

Manufacturers are committed to delivery, having invested heavily to ensure there is wide-ranging choice in the market, with performance to meet drivers’ needs. Getting consumers to buy sooner, however, depends on financial incentives (said 68% of respondents) and ready access to affordable, reliable public charging (said 67% of respondents).

The success of the business and fleet markets in switching must now be replicated in the private retail market. While manufacturers already provide attractive purchase incentives, these need to be complemented by government-backed incentives.

For example, reducing VAT on EV purchases would mirror existing discounts on other environmental products such as solar panels and heat pumps and improve Exchequer receipts. Raising the threshold for the Vehicle Excise Duty ‘expensive car supplement’ from its 2017 level to reflect today’s costs – or exempting EVs altogether – would also help. Taxation would also be fairer if VAT on public charging matched home charging at 5%, not 20%.

Furthermore, mandating targets for chargepoint rollout would help overcome the other issue holding back consumers – insufficient infrastructure. Such measures would improve the attractiveness of EVs to British consumers and flow through to the second hand market, increasing demand and helping address concerns about the residual value of these new technologies.

Once consumers make the change to an EV, they seldom go back. Nine in 10 electric car drivers say they wouldn’t go back to a conventionally fuelled vehicle, with most (57%) loving that they spend less on fuelling – although, overwhelmingly, those drivers have access to home charging (84%) – while half (49%) are delighted to have reduced their environmental impact.

Mike Hawes, SMMT Chief Executive, said: “We are entering a new phase in the UK’s EV transition, in which Britain can, and should, be a leader. We have the industry, the love of new technology and the scale to succeed. Government has recently demonstrated its commitment to EV manufacturing in the UK and that commitment must be extended to the consumer. With a new – and still to be finalised – Zero Emission Vehicle Mandate due to revolutionise the market in just over 100 days, supply must be matched by demand. A comprehensive package of measures would encourage households across the UK to go electric now, boosting an industry slowly recovering from the pandemic and delivering benefits for the Exchequer, society and the global environment.”

SMMT Electrified, the UK’s pre-eminent summit on the zero emission vehicle transition, will today bring together more than 600 automotive industry leaders, plus stakeholders and representatives from government, the energy sector, chargepoint providers and fleets, to discuss and debate the key challenges and opportunities as Britain decarbonises its transport.

Read more of our Leadership articles here