The Society of Motor Manufacturers & Traders (SMMT) has called on government to do more for the electric vehicle (EV) market, warning that Britain could lose unit allocations without strong consumer demand.
David Wong, senior technology and innovation manager at the SMMT, briefed council directors' group ADEPT on the current state of the market, suggesting that while EV cars are being manufactured for the mass market, the UK is not guaranteed to see them.
'The vehicles are coming; whether they get allocated to the UK market is another question,' Mr Wong said.
'Unit allocation to national markets is a competitive process and is heavily dependent on local market attractiveness – which is a function of local consumer demand, exchange rates and the potential imposition of tariffs.
'We need the lion's share of allocation if we are to bump up uptake figures.'
Mr Wong outlined how Norway had achieved enormous growth in electric vehicles by removing sales tax – plug-in vehicles accounted for around 55% of its market last year.
The Government has offered the Plugin Car Grant. Still, the SMMT suggests that if this were combined with a VAT exemption, it could lead to a sixfold (523%) increase in battery electric vehicle (BEV) registrations by 2025.
Mr Wong said: 'We suggest EVs should continue to be supported through the Plug-in Car Grant (PiCG), which should be extended for a longer time horizon and reintroduced for plug-in hybrid electric vehicle (PHEVs) with no Value Added Tax (VAT); no Vehicle Excise Duty (VED); be subject to 0% Company Car Tax (CCT); and be exempt from the Insurance Premium Tax (IPT).
'PiCG (for BEV and fuel cell electric vehicle (FCEV)) trebles (214%) BEV registrations by 2025. PiCG (for BEV + FCEV) and VAT exemption leads to a sixfold (523%) increase in BEV registrations by 2025. VAT exemption even without the PiCG still trebles (293%) BEV registrations by 2025.'
Allocation will be essential in meeting the Government's plans of banning the sale of new petrol, diesel or hybrid cars by 2035, and possibly even 2030.
Of the 35,168,259 cars in the UK as of 31 December 2019, only 251,028 (0.7%) were plug-in vehicles. However, EVs registrations are in track to make up around 10% of the market share in the next year or two; for the first nine months of this year it reached 8.8%.'
One study in summer 2019 showed that by 2025 there will be more than 300 EV models across Europe. In the UK there are currently 83 and counting, Mr Wong said.
According to Deloitte, the global EV market will reach 31.1 million by 2030.
Research from Deloitte Insights, cited by the SMMT, states:
- VW Group plans for 40% of global sales to EVs by 2030 and to have 70 different models by 2028
- Daimler predicts 50% of sales will be EVs by 2030
- Honda expects to have two-thirds of global sales EVs by 2030
- BMW plans for EVs to be 50% of its cars sold in the European market
- Mazda plans for all models to be EVs or hybrids by 2030
- Toyota hopes to achieve a total of 5.5 million EV sales by 2025
- Volvo expects by 2025 EVs will make up 50% of global sales
- GM predicts one million global EV sales by 2025
Mr Wong also advised that the market is very price senstive: 'Only 10% of UK would pay more than £2,500 extra for an EV on a like for like. If you look at the best selling cars - Golf and e-Golf and Corsa and Corsa-e, the difference is more than £2,500.'
However, prices are on their way down due to improvements in battery energy density.
'Bloomberg energy finance would say that around about 2024/2025 we will hit holy grail - $100 per kw hour at the battery pack level and at that point we may see on the road price parity like for like. Let's hope that's true. No one knows because of the volatilty in the market for lithium and cobalt.
'You might say we should talk about total cost ownership (TCO), not just list price, because running costs are lower. That's right but comparing like for like over 10,000 miles in three years, there is still no TCO parity at the moment.
'This is why we think to overcoming afforability barrier requires government support for consumer incentives.'
