HomeFinanceElectric cars will 'remain the preserve of the wealthy' without more incentives

Electric cars will ‘remain the preserve of the wealthy’ without more incentives



Experts have warned the Government that more incentives need to be in place if they want more drivers to consider switching to electric cars before the end of the decade.

Ian Plummer, commercial director at Auto Trader, warned that electric vehicles will ‘remain the preserve of the wealthy’ if more grants aren’t made available to lower prices, and failure to implement them risks creating a buffer for the UK to meet its green targets.

Speaking at the COP26 climate summit on Wednesday – a day dedicated to transport and vehicles – Plummer says failure to take action will put the UK in danger of being left behind other European nations as manufacturers may choose to focus on markets such as France and Germany where incentives for consumers and industry are more attractive. 

UK green targets could be buffered by lack of electric vehicle incentives: Auto Trader has today urged MPs to ramp up subsidies to help make EVs more affordable

UK green targets could be buffered by lack of electric vehicle incentives: Auto Trader has today urged MPs to ramp up subsidies to help make EVs more affordable

Calls for a boot to EV incentives comes just weeks after Chancellor Rishi Sunak announced in the Budget a fresh £620million investment in ‘targeted grants’ to help motorists buy plug-in cars and to boost the nation’s network of on-street charging points.

Yet, Auto Trader says that even if this entire investment was used to boost EV sales alone, available funds would likely only subsidise about 120,000 purchases.

And even with subsidised prices, this would still not bring EVs within the budgets of middle and lower income families.

Auto Trader calculates that the average new EV is 38 per cent more expensive to buy than its nearest petrol or diesel equivalent.

But it’s the same case for second-hand examples, where most drivers with tighter budgets buy their motors.

A year-old used electric family hatchback, for example, is on average £10,000 more expensive than a similar-size model with a combustion engine under the bonnet.

Such is the higher cost of EVs that demand is coming almost exclusively from wealthier postcodes, the online marketplace claims. 

It says six of the top 10 hotspots for EV ownership are in affluent areas of London, including Putney and Kensington. 

Across the UK the pattern is the same, with higher interest in towns and cities such as Harrogate, Bath and the wealthy areas south of Manchester.

In fact, compared with the car buying average, those registered the biggest interest in making the switch are twice as likely to have a household income of £75,000 or more. 

Auto Trader's own research has found that, when looking at income alone, it's the biggest earners who are most interested in buying an electric car currently

Auto Trader’s own research has found that, when looking at income alone, it’s the biggest earners who are most interested in buying an electric car currently

The only subsidy in place in the UK that makes electric car more affordable is the £2,500 Plug-in Car Grant, though that is only in place for new models and is due to be terminated in 2023

The only subsidy in place in the UK that makes electric car more affordable is the £2,500 Plug-in Car Grant, though that is only in place for new models and is due to be terminated in 2023

‘The Government and industry has to grasp this nettle if it is to supercharge mass adoption,’ says Plummer. 

‘Incentives are needed to bridge the gap for those who simply cannot afford the ‘green premium’ of today’s higher priced EVs.

‘We have gone on record previously to say that we expect to see price parity by the middle of the decade, but this is not a given.

‘A number of factors need to be in place, and that includes serious Government support to bridge the current price differential. This needs to be for used as well as new vehicles.’

He adds: ‘Without these incentives it’s doubtful we will see the volumes necessary to drive the type of economies of scale required to achieve ICE-EV price parity.

‘As things stand the Plug-in Car Grant is due to be withdrawn in 2023 and the benefit-in-kind tax break in 2025. 

‘With incentives playing such a key role in stimulating demand, manufacturers will lose interest in the UK if it is not aligned with the levels of support seen in the other key European markets.’

UK’s EV drive at risk of falling behind other European nations, including France and Germany 

Plummer says there is clear evidence of car buyers wanting to go green, however, for there to be mass adoption, electric vehicles need to offer consumers an advantage in terms of convenience or up-front cost, or both.

However, they are currently providing neither and more needs to be done to increase their appeal – and the easy way to do so is to make them more alluring with lower prices and a stack of incentives. 

‘The majority of European countries have set less ambitious targets than the UK for the end of petrol and diesel sales, yet the measures they have put in place to drive EV adoption are more substantial,’ Plummer explains. 

‘If you look at France and Germany, for example, let alone Norway, the continent’s leader, it really puts the UK to shame.

‘EV drivers there have for many years benefitted from a wide variety of incentives aimed at both reducing costs and making ownership more convenient.’

Financial incentives in Norway are by far the most appealing.

Not only do they include hefty grants but also zero road tax, no VAT, reduced company car tax and savings on toll roads and ferries. 

Parking was free until recently and charges are still capped at 50 per cent of the maximum and EV drivers in Norway can even use bus lanes.  

With more benefits likes these, sales volumes are much higher – in Norway’s case, EVs accounting for more than 70 per cent of registrations in 2020. 

Auto Trader has warned UK politicians that this could see manufacturers favour other nations like Norway when it comes to delivering the latest plug-in models with longest ranges, best performance and lowest price, knowing full well their market has far greater demand for zero-emission vehicles. 

With other European nations providing far more lucrative incentives for EV ownership, Auto Trader says the UK risks falling behind in its bid to hit green targets

With other European nations providing far more lucrative incentives for EV ownership, Auto Trader says the UK risks falling behind in its bid to hit green targets

EV emphasis should be on performance, not just eco-credentials to boost sales

Auto Trader also says manufacturers and retailers need to adjust how they market EVs to consumer, moving from eco and sustainability benefits to more personal advantages, such as superior performance, enjoyment and total cost of ownership.

‘When we ask owners to list the features they value most about their cars, electric vehicles consistently outperform their petrol counterparts when it comes to performance,’ said Plummer. 

‘But when it comes to how these cars are often marketed, the sheer joy of driving gets obscured by environmental messages and vague concepts about the future of driving.’

It also called on car makers to provider a wider selection of vehicles, especially towards the more affordable end of the market. 

Around 20 per cent of all views of new cars on its site are for models under £20,000, yet there are just four electric models within that price bracket.

It’s a similar story for the current Plug-in Car Grant eligibility requirements. 

Only zero-emission models priced at £35,000 qualify for the £2,500 subsidy, which prices most of the market out of the scheme, including every Tesla on sale and the latest releases from Ford and premium rivals including Audi, BMW and Mercedes-Benz. 

> You can find out which electric cars are currently eligible for the PiCG in our report here

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