Eco, the 'Electric Car Organisation', welcomed the depth of analysis contained within Autotraders latest report on the EV sector , but dismissed its conclusions as “Misleading, headline grabbing rubbish”.
Autotraders' headline conclusion is that the demand for EVs is in decline, because of a 35% price premium on EVs, a lack of EV choice and UK charging infrastructure. However, these conclusions are directly contradicted within its own report, and it just shows how people can reach radically different conclusions whilst looking at the same data.
Autotraders report shows a massive 100% increase in search’s, year on year, between Feb 21 at 10% share and Feb 22 at 20.7%, but then draws its headline of “declining EV demand” based on a drop from a peak in search demand of 25.7% during Nov 21.
However, I think it’s natural that EV demand declined once the petrol pump crisis abated and we entered an 'Electricity crisis' with a threat of 30% price increases caused by the soaring price of Gas-powered Electricity generation. However, EVs remain 66% cheaper to run than I.C.E (Internal Combustion Engine) cars and this gap is likely to increase.
Most households are currently on flat-rate electricity tariffs paying 20p per KWH for electricity but will shortly be able to sign up for 'dual tariffs' where night-time rates are only 5p per KWH, reducing the cost of EV millage dramatically. EVs are also the biggest battery you have ever attached to your house and models like the Nissan Leaf allow electricity to be stored in the car during off-peak and then used to power the house during peak hours, potentially saving thousands of pounds in electricity chargers.
Where to charge?
Industry research shows that 85% of users only ever charge at home because their daily commutes are less than 200 miles, allowing them to fully recharge overnight. Therefore, most EV owners could cut their charging cost by 75% by only charging at night using the dual tariffs that are only just coming out. Hence, charging costs are likely to reduce whilst petrol cost continues to rise sharply.
Eco agree with Autotraders' opinion that the current 35% EV price premium, compared to the equivalent I.C.E (internal Combustion Engine) car prices, is rapidly disappearing, with price parity being achieved mid-2024 when 50% of all new car production will be EV’s. Eco however believes that in the meantime that the UK Government's attractive tax breaks will encourage Employers to make leasing a new EV, the must-have company perk.
For example, my own Tesla X10 would have cost £1,200 via a personal lease but leasing it by Salary Sacrifice via my business saved me 42% income tax (£420) whilst the business also saved 25% (£250) by not paying the employer NI and claiming 50% of the VAT back, giving a combined saving of £670. This left me with a net equivalent cost of £530, which is much cheaper than an equivalent petrol lease for a top of the range I.C.E car.
Eco believes that over 50% of new EVs will be leased via company Salary Sacrifice Schemes and that these will be the key short-term drivers of EV adoption.
Eco does agree that the lack of robust charging infrastructure is slowing EV adoption, because of range anxiety, but believes the Rapid Fast chargers on motorways is only part of the solution with employers also needing to help adoption. Eco provides consultancy services for implementing business charging solutions and will shortly launch 'Bookable Software' for companies that allow them to prioritise daytime office charging for the 30-40% of staff who do not have off-road parking at home.
Eco believes that employers can inexpensively kit their car parks out with cheap 7kw 'slow' chargers and charge employees for the electricity they use via the eco app. The Bookability software we are about to launch will also allow them to prioritise access for staff who cannot charge at home, to charge during the day at the office. Most EVs have a range of 200 miles, and it’s estimated that 92% of journeys can be handled by home or office charging, reducing the need for an extensive 'Fast charge' network.
How much choice?
Autotrader also contradicts itself when claiming that there is a lack of EV choice with only 69 options compared to 222 I.C.E cars, as it then recognises that a new EV model is being launched every 10 days.
In Eco’s opinion, we are right at the start of the EV revolution and of course, there is currently a smaller range of cars aimed more at the affluent customers earning £50k plus. This will change over time, and we are already seeing strong demand at the cheaper end of the market for the Nissan Leaf and Electric Mini.
However, it is true that insurance costs and lower incomes are major blockers to young people moving to EVs, which is a pity as these are often the greenest minded. The Government needs to look at this issue when reforming its tax incentives as currently the more you earn, the more you save, which is clearly wrong. It may be better to offer increased tax allowances for people with EVs as this will benefit the lowest earners the most.
The EV revolution is just commencing and headlines based on two months of data saying demand has peaked is just headline-grabbing rubbish.