Speaking at a panel event on EV policy in Glasgow today (10th November), Plummer will call for targeted incentives to drive mass adoption of EVs. Without a smart and targeted approach to incentives, the UK’s transition to green vehicles could hit the buffers, Plummer will say.
Setting out a three point EV manifesto, Plummer will warn that the UK is in danger of being left behind as manufacturers may choose to focus on markets such as France and Germany where the incentives on offer to consumers and the automotive industry are more attractive.
He will also call on manufacturers to shift the emphasis in electric vehicle marketing from environmental benefits to features such as superior performance, enjoyment and total cost of ownership.
Auto Trader’s Manifesto for the Mass Adoption of EVs has three principal clarion calls:
Give people the means to be green - The UK government’s £620 million investment in grants for electric vehicles and street charging points, announced last month and referenced again in the Budget, is welcome, but Ministers should consider how that investment is targeted. Even if all those funds were used to boost sales it would likely only subsidise about 120,000 vehicles, and even then it will not bring EVs within the price range of those in middle and lower incomes given the current price disparities.
The average EV is currently 38 percent more expensive to buy than its nearest petrol or diesel equivalent while a nearly new volume brand EV hatchback is on average £10,000 more expensive than the equivalent ICE vehicle. At present, used EVs only start to make financial sense when they are four years old.
Auto Trader data shows that interest in electric vehicles is coming almost exclusively from wealthier postcodes. Six of the Top 10 EV hotspots are to be found 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 with the highest interest in making the switch are twice as likely to have a household income of £75k or more.
“The Government and industry has to grasp this nettle if it is to supercharge mass adoption” said Ian Plummer. “That might mean introducing some kind of means testing. 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. 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.
Car buyers do have an appetite to go green. We operate the UK’s largest online automotive marketplace and our data shows that EV consideration is changing - and that’s across all socio economic households. People have more of desire to go green, in research we ran in August – it’s now the second key consideration factor after upfront costs.
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. At the moment we have neither. The recent fuel shortages certainly reduced the convenience gap in consumers’ minds but the slow roll out of EV charging points continues to act as a break on consideration.
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.
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 include hefty grants, 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 percent of the maximum. EV drivers can even use bus lanes.
In the absence of clear advantages in terms of convenience and up-front cost, the best rational argument that can be made for EVs is the total cost of ownership, but this is a concept that is difficult to convey to consumers.
Cheaper running costs mean that – very roughly – for every 1000 miles driven, £100 is saved in fuel costs. So a motorist driving an EV 10,000 miles a year will save several thousand pounds over the course of a typical ownership period.
This ‘jam tomorrow’ inducement doesn’t help if you can’t afford the up-front cost. Nevertheless, it’s important information that can certainly help some car buyers and Auto Trader is introducing a new function to give an indication of the total cost of ownership for all vehicles listed on its marketplace.
Of course, the total cost argument only stacks up if EVs continue to offer a fuel price saving. This could be undermined if road pricing, which has been suggested as the fairest way to offset the inevitable decline in fuel duty, was to be introduced.
“Taxes on motoring generate about 5 percent of government revenue” added Mr Plummer, “and the majority of that comes from fuel duty. Plainly the transition to EVs will create a big hole in public finances.
Road pricing may be part of a long term solution, but if it’s introduced too early or without exemptions for EVs it will be a giant own goal. We can’t afford another flip flop fiasco like the one we had with diesel incentives.
While opinions about the required number of charging points vary from 10 times more than we have today to nearly 100 times, it’s clear that more investment and government support will be required to ensure that charging your car is as easy as refuelling. People need to have confidence that those solutions exist – or are definitely on the way – before they purchase, which means that investment needs to be supply led.”
Sell the EV experience not just the green credentials - Manufacturers and retailers should shift the emphasis in EV marketing from sustainability to more personally relevant benefits 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” Mr Plummer continued. “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.”
Research conducted by Auto Trader last year suggests that motorists do not think the performance of EVs is as good as ICE vehicles. For years, advertising has tried to give people an emotional reason to buy cars, but that hasn’t been the case with EVs.
“People are amazed when they get behind the wheel of an electric vehicle for the first time” Plummer added. “We asked people what they love most about their car, and EV drivers were twice as likely to say that ‘performance’ was the attribute they enjoyed most.”
Ramp up the volume - One of the big impediments to EV adoption has been the relative lack of choice. While the choice of electric cars is now starting to accelerate with a threefold rise since the start of last year, there’s clearly a long way to go. In fact, buyers considering ICE cars still have six times the choice compared with EVs.
More and more electric cars are being introduced, but most are in the more expensive segments – anyone looking for a supermini or city car has very limited options.
“For manufacturers, the economics of EVs stack up less well in the more affordable and high volume segments, but this is precisely the part of the car market that EVs need to crack if we are to drive mass adoption” Plummer said. “The government has a role to play in ensuring that the UK is an attractive place for manufacturers to introduce new EV options into high volume segments of the car market. There are just four electric models priced below £20,000, but this is where we see 20 per cent of views of new cars. Buyers looking for an affordable electric car still don’t have enough options.”
Conclusion:
Greater incentives to make EVs more accessible to all income level households are needed, both on new and used cars. It’s important that further incentives benefit mass market buyers. This could mean creating a means tested grant to ensure EVs don’t remain the preserve of the rich.
Other incentives for EV owners, similar to those already offered in other countries like Norway and France, such as reduced road tax, free parking or reduced toll charges will also greatly benefit adoption levels. Ultimately car buyers need to be incentivised to make the switch.
More investment is needed to overcome consumer anxieties surrounding the charging of EVs. The current charging infrastructure needs widespread investment so it can offer drivers flexible solutions to their charging needs. As geographies and lifestyles differ across the UK, so too must charging solutions.
More information is needed to make buying and owning an EV accessible and relevant to all. Consumers need to understand the financial benefits of owning an EV, especially the government grants that are available and the total cost of ownership (TCO) savings that EVs present.
An industry already littered with jargon also needs to help consumers understand EVs, crucially how the battery will wear, where they can charge and what they are like to drive. Owners talk about how EVs are fun to drive, have great acceleration and performance; elements crucial for car owners, which paired with the clear environmental benefits make EVs an exciting prospect. We now need the marketing to communicate these emotional characteristics.
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