Consumer fears over affordability keeps up pressure on ministers to support electric vehicle market
London, 19 September 2024
The Government needs to go further to support sales of electric vehicles amid lingering consumer fears over affordability, according to new Auto Trader research.
87% of buyers aren’t willing to pay more for an electric car4, the UK’s largest online automotive platform has found, with petrol cars the most popular choice among car buyers for their next vehicle, according to independent research of over 2,000 drivers conducted in September by Find Out Now on behalf of Auto Trader.
Nearly two thirds of buyers (65%) are intending to spend a maximum of £20,000 on their next vehicle, a budget which puts a new electric car far out of reach5. Among these buyers, 47% are considering a petrol car and, 38% are considering some form of hybrid – but just 8% an electric vehicle (EV).
According to Auto Trader’s latest Road to 2035 Report, the median RRP of a new electric vehicle is £51,000 – 31% higher than new petrol and diesel cars. The Report underlines the lack of affordable options of new EVs on the market, with just 16 for sale under £30,000. Among the minority willing to spend more on an electric car, 70% are unwilling to spend over £3,000 extra. Over 65s are the most reluctant to pay more with 6% of drivers willing to spend extra, although almost one in four 25–34-year-olds would pay extra to make the switch.
Used EV sales are relatively healthy after a 62% sales rise in sales since January, as buyers were tempted by lower prices, according to the Road to 2035 Report. The sales are strongest among 3-5 year-old EVs, which experienced the steepest price declines and reached price parity with petrol/ diesel counterparts of a similar age. The average price of a petrol 3-year-old BMW 3 Series was £24, 110 in August, compared to the £23, 137 average price of a 3-year-old Tesla Model 3, which has fallen more than £22k compared to August 20226.
But new EV sales remain low and are growing at a far slower rate, up 11% since January7. The online platform shows EVs accounting for 16.2% of new car leads in July, up 3.5ppts YoY but still well below the 32% market share achieved when petrol prices rose to nearly £2 per litre in June 20228. New EV prices remain prohibitively high despite five in six offering some sort of finance offer.
Despite increased numbers of public chargers being installed, the affordability issues mean new EV sales are lagging well below the Government’s Zero Emissions Vehicle mandate, which demands EVs account for 22% of new cars sold in 2024, rising to 100% by 2035. Manufacturers worldwide are also reassessing their own timetables on electric vehicles following lower growth.
Consumers are showing increased interest in hybrids with interest a third (33%) higher than 2023 in August, as consumers explore all options available for lower emission vehicles amid uncertainty over the Government’s position on new hybrid sales9. But the affordability issues remain even more acute for hybrids as there are no plug-in hybrid electric vehicles (PHEV) on the market for under £30,000. Similarly, the median RRP for a PHEV is approximately £8,000 higher than for an EV10.
The Report calls on the Government to support new EV production to maintain a healthy and affordable used EVs market to aid mass adoption. The company has called on Labour to make electric vehicles more affordable to more people by:
The Company’s call comes as its survey reveals 70% of drivers opposed the ban on new petrol and diesel cars by 2035, which the new Government has pledged to return to its original deadline of 2030. Over 65s are the biggest opponents of the ban, the research shows, although 25-34 year-olds are the most evenly balanced with 45% in support of it.
The used EV market has shown real strength in the past 12 months – helped by signs of price parity with conventional diesel and petrol cars. But a healthy used market is unsustainable unless we do more to encourage drivers to buy new EVs, which are still too expensive."
Most consumers say they are unwilling to pay more to go electric, which is a real concern for the transition. The rising interest in hybrids is encouraging as drivers look for reassurance, but they’re not going to solve the affordability challenge.
Labour has talked a lot about tough choices ahead of next month’s Budget. But if it is serious about the mass adoption of EVs, the Chancellor must not just protect the current tax incentives on offer but expand them to accelerate new and used EV demand to ensure it remains on track with government targets.”
Most viewed EVs on Auto Trader 1st- 8th September
Notes to editors
Auto Trader’s research was based on a nationally representative survey of 3,035 drivers by Find Out Now, conducted between September 6-9.
About Auto Trader
Auto Trader Group plc is the UK’s largest automotive marketplace. It listed on the London Stock Exchange in March 2015 and is a member of the FTSE 100 Index.
Auto Trader’s purpose is Driving Change Together. Responsibly. Auto Trader is committed to creating a diverse and inclusive culture, it aims to build stronger partnerships with its customers and use its voice and influence to drive more environmentally friendly vehicle choices.
With the largest number of car buyers and the largest choice of trusted stock, Auto Trader’s marketplace sits at the heart of the UK car buying process. That marketplace is built on an industry-leading technology and data platform, which is increasingly used across the automotive industry. Auto Trader is continuing to bring more of the car buying journey online, creating an improved buying experience, whilst enabling all its retailer partners to sell vehicles online.
Auto Trader publishes a monthly used car Retail Price Index which is based on pricing analysis of circa 800,000 unique vehicles. This data is used by the Bank of England to feed the broader UK economic indicators.
For more information, please visit: plc.autotrader.co.uk
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