In January, the Society of Motor Manufacturers and Traders (SMMT) revealed that Britain’s millionth battery electric car (BEV) had officially hit the roads, with new BEV registrations rising 21% year-on-year and new plug-in hybrid (PHEV) registrations up by 31.1%. Just a few weeks later, the new car market recorded its best February for more than 20 years, with fleets and businesses firmly leading the charge.
Until the UK pushed back the 2030 gasoline and diesel ban, it had the strictest EV transition legislation in the world. Despite the five-year delay, the UK’s per capita EV uptake and public charge point rollout far outpaces most other markets. The UK is also home to some of the globe’s leading charge point manufacturers and OEMs, making the country a world leader in EV technology exploration, trial and development.
BEVs and PHEVs now make up nearly a quarter of new vehicle registrations in the UK (23.7%)—almost double the share of diesel vehicles, with pure electric cars having a 16.5% market share in 2023. In 2016, just 0.4% all new vehicles registered were pure electric. This growth is, in part, testament to continued investment and development from vehicle manufacturers. Indeed, back in 2016, early EV adopters were restricted to just a handful of models, most of which were limited on range and didn’t really stack up with their ICE-powered equivalents. Today, however, virtually every OEM has an EV range in its arsenal—all of which boast next-generation design, headline-grabbing range stats and pioneering in-car technology.
Is the UK’s transition to electrification really slowing, or is misinformation simply painting an inaccurate picture of the current landscape?
In 2035, the sale of all new gasoline and diesel vehicles will be stopped in the UK. By 2030, due to the government’s zero emissions vehicle (ZEV) mandate, the UK will see 80% of new cars and 70% of new vans powered by an electric powertrain. By 2040, all new cars and vans sold in the UK will have to be entirely zero emissions ‘at the tailpipe’. The country is, and has been for a while, on a good trajectory towards meeting its EV goals, spurred along by dropping prices, higher availability, the easing of automotive supply chains and OEMs now able to take full advantage of economies of scale.
So, what’s the problem?
EV sales by private buyers fell by a quarter in January from the previous month and by a further 2.6% in February. At the same time, the House of Lords Committee released a statement suggesting that the UK was ‘lagging behind’ in its EV strategy, citing price and charging availability as the leading barriers to entry for many would-be consumers. But this assessment, alongside the recent deluge of headline-grabbing statistics surrounding plummeting EV sales, doesn’t tell the full story. Is the UK’s transition to electrification really slowing, or is misinformation simply painting an inaccurate picture of the current landscape?
As far as doomsaying goes, the EV sector presents an easy target. It’s a booming market that’s really shaken up the automotive industry in recent years, attracting widespread support but also a crowd of hardcore sceptics who continue to challenge the sector’s progress. This, alongside the most famous face in electrification—Elon Musk—never being too far away from a headline-grabbing story, means that it’s a sector with just too much low hanging fruit for the media to ignore.
But it’s also important to look at the UK economy as a whole. The private buyer EV market is certainly not the only sector that’s struggling. The UK is in the midst of a drawn out period of stagnating economic growth, a cost of living crisis, and now an official recession. It’s simply not pragmatic to single out one industry while the entire economy struggles. Indeed, private buyers have been a diminishing influence in the new car market over recent years, with recent SMMT data showing that they account for only around one in three new registrations, down from around half of all new registrations within the last five years or so, with private new car registrations in 2023 recorded at their lowest level for 12 years.
Taking a further step back to the wider automotive industry, the global market for ICE vehicles peaked in 2017, according to BNEF, with 85.9 million sold globally and sales steadily declining since (including an expected major drop in 2020), to 69.1 million in 2022. These forecasts show that sales of ICE vehicle are expected never to return to pre-pandemic levels. Yet, in the same period, the sale of both BEVs and PHEVs shot up from just over a million to upwards of ten million.
This is where the crux of the problem in reporting on EV markets lies: EV sales and market share are up—the 2024 forecast from the SMMT is a 27% increase in EV (BEV and PHEV) registrations compared with 2023—and ICE sales and market share are down, but because fewer private buyers bought EVs in January and February (notoriously tight months for middle-income earners), many media outlets have spelled this the end of EVs.
While the UK is behind initially estimated trajectories for the private buyers’ market, businesses and leasing companies are buying up EVs in their droves, and many of these are ending up as essentially private cars by salary sacrifice schemes, which allow employees to lease an EV via salary deduction at very attractive rates. As has been the case for previous new technologies in the automotive space, from diesel engines to live traffic information systems, it’s these groups who lead the charge by driving new sales. But where will these EVs all end up within the next handful of years? The answer, of course, is in the used car market.
The second hand EV market is where it’s at
In 2023 there was a significant surge in used BEV sales, reaching a record high of 118,973 units and a 90.9% increase compared to 2022, and with PHEV’s also increasing by 25.1%. At the time of writing, Auto Trader has 19,300 used EV listings, with options available as low as £1,800 (US$2,290) for a Nissan Leaf, £10.900 for a Vauxhall Corsa-e, and £15.500 for a Tesla Model 3.
The influx and sheer availability of used EVs means UK drivers now have access to a much greater volume of quality, reliable, higher range EVs than ever before. That’s why private buyers are turning to the second hand market when making the switch to electric, and exactly what the industry needs to expand the EV ecosystem in the lead up to 2035.
The future’s bright
EVs are certainly not dead, and while there has been a drop in private buyer adoption at the start of 2024, the growing popularity of new fleet and business EVs, as well as the growing used private buyers’ market, has been more than enough to strengthen the industry. Considering the slowdown seen across a variety of sectors in the UK, like property (Savills predicts that UK property prices will fall by 3% in 2024) and hospitality (with an average of ten closures of licensed premises per day in much of 2023 according to AlixPartners), EVs are actually doing rather well all things considered. When the economy is down, buyers are simply less likely to buy expensive things.
With continued government support, and more collaborations between companies across EV supply chains, the EV markets can weather the economic storm and get back on track towards its very bright long-term projections. As a country leading the charge in EV ecosystem technology development, the UK is well positioned to both maintain and strengthen its position as a pioneer of the transition to electric vehicles.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Jordan Brompton is Co-founder and CMO of myenergi
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