LONDON, 20th April 2023: The Government must step in with a detailed programme of tax incentives to shore up its ambitions for mass adoption of electric vehicles (EVs) and improve affordability, according to Auto Trader’s latest Road to 2030 Report.
The largest automotive marketplace’s latest insight into the electric vehicle market warns that buyer interest in new EVs has dropped by almost two thirds – or 65% – since the beginning of 2022 due to factors such as cost of living increases, higher cost of borrowing and the well-documented hike in energy prices. The market for new EVs is still hampered by a lack of affordable choices, with the number of new electric models between £20,000 – £30,000 – the most popular price bracket on Auto Trader – actually decreasing, less than seven years before the Government’s ban on new petrol and diesel sales comes into force.[iii]
The Road to 2030 Report reveals that, on average, new EVs are still 37% more expensive than petrol and diesel cars – a figure that hasn’t changed since June 2022. Among the more affordable cars costing less than £30,000, the lack of choice is even more acute, with the number of petrol and diesel models for sale nine times bigger than the number of EVs.[iv] A new electric SUV will set you back on average £22,290 more than a petrol one, and when comparing hatchback models, going electric will cost on average £10,285 more.[v]
Auto Trader’s Report shows the impact of lower fuel prices and higher energy bills – where the high upfront cost of buying a new EV erodes the now shrinking advantage of lower running costs. While EV owners with a home charger can save up to £130 for every 1,000 miles by charging at off peak overnight rates, savings reduce to just £40 for those drivers using slow/fast public chargers, according to Auto Trader’s analysis. For drivers using ultra rapid chargers, EVs currently cost £16 more to run per 1,000 miles than conventionally fuelled vehicles.[vi]
Well-documented price drops in the used electric market partnered with improved choice caused by a year-on-year surge in the number of used EVs for sale – from 5,000 to almost 20,000 a week[vii] – have sparked growing interest from consumers with electric share of used car ad views now 6.5%.[viii] Unhelpfully, the average one-year old used EV is still 28% more expensive than its petrol or diesel equivalent.[ix] The Mercedes GLC Class (£44,000) and EQC (£58,000) have one of the widest gaps at £14,000 while the Renault Clio (£16,000) and the Zoe (£20,000) have one of the smallest price gaps at £4,000.[x]
With the introduction of Vehicle Excise Duty on EVs looming in 2025 – further reducing the incentives for ownership – Auto Trader is calling for a series of tax breaks to give a fresh spur to the mass adoption of electric vehicles – something that has worked well in other European countries to stimulate demand and grow the market.
To make the transition to electric fairer, Auto Trader is calling for:
- Fairer charging costs: by equalizing VAT on public and private charging
- More incentives to make EVs affordable for all: such as reducing VAT on used EVs and lower or interest free rates on EV financing deals
- Initiatives to build both buyer and seller confidence in used EVs with a focus on battery health: Research shows that for car buyers, the top concerns about used EVs are related to battery health[xi] and so adopting common standards on battery health and charging terminology should be a top priority for government and industry.
There’s also inspiration to be taken from other countries, like Norway and France, who have balanced financial and alternative incentives, such as free parking and free charging in certain locations, to reduce cost and convenience barriers, providing enough incentive for consumers to go electric.
Ian Plummer, commercial director of Auto Trader, the UK’s largest automotive marketplace, said:
“These are difficult times for the UK’s Road to 2030 ambitions and we are in danger of veering off-track. If the Government is serious about achieving its ambitions, it needs to do more. For example, it cannot be right that those who don’t have option of charging at home are forced to pay substantially more to charge their vehicles. “While the extra £380 million announced in March to improve charging infrastructure will help, the goal of mass adoption is at risk unless we use the tax system inventively to spur on EV purchases and accelerate demand.
“Without action, specifically on affordable options and battery health confidence, the used electric market – which is both key to the success of the new electric market and to ensuring a fair transition to electric – will continue to falter.”
