ZEV Mandate drives down price of new EVs
• Price cuts and finance offers helping to increase consumer interest in electric cars but affordability still biggest barrier for most drivers.
• Auto Trader’s latest Road to 2035 Report reveals only one in 10 used electric vehicles (EVs) were sold for less than £15,000 in 2023 vs. seven in 10 across the whole used market.[1]
23rd May 2024, London: Auto Trader’s latest Road to 2035 Report, which tracks the UKs progress of the adoption of EVs, reveals the impact of the Government’s Zero Emission Vehicle (ZEV) mandate, which came into force this year despite the headline sales ban moving back to 2035.
Fresh analysis from the UK’s largest automotive marketplace reveals three-quarters of new electric vehicles (EVs) are currently being advertised with a discount, and average prices are falling for seven in 10 new electric models[2] as the industry strives to generate enough demand to meet the ZEV mandate - regulation that requires manufacturers to ensure 22% of their UK vehicle registrations are electric or they face heavy financial penalties.
Top 10 year-on-year price falls: new electric cars[3]
The data comes as sales of new electric cars have increased overall but progress is being driven by the fleet and business sector, with interest from private car buyers stalling as EVs account for fewer than 1 in 10 new cars sold to private buyers.[4] Since June 2022’s peak, where the electric share of advert views on Auto Trader reached 36% in the face of record petrol prices, demand for EVs has hovered around 14% of Auto Trader’s new car advert views.[5]
The Report shows the extent to which the car industry is trying to improve affordability and get the UK’s transition back on track. There are healthy signs that the UK consumer is responding as latest consumer research conducted by Auto Trader in April shows that over a third (34%) of car buyers are considering electric cars for their next car this is up from a quarter (26%) from consumer research conducted in August 2023.[6]
The used electric market is where the majority of this uptick in electric consideration will be felt as two thirds of UK drivers buy used cars. Encouragingly, the share of advert views and enquiries of 0–5-year-old EVs hit record highs of 9.2% and 8.5% respectively in April.[7]
Top 10 most viewed models: used electric cars[8]
Marking a bright spot in the transition, interest in electric vehicles has also transcended the wealthier AB social groups who have so far led electric adoption, as the proportion of consumers from the combined C1 and C2 groups – accounting for half the population – considering electric cars has risen from 47% in 2022 to 61%.[9] Nearly two thirds (63%) of younger drivers aged 17-24, would also consider making the switch.[10]
Despite this expansion of electric interest, affordability remains the biggest barrier to mass adoption – even in the used electric market which has seen 20 consecutive months of price drops. Auto Trader’s latest analysis shows one in 10 used electric cars sold in 2023 were under £15,000 compared to seven in 10 of all used car transactions in the same year.[11] The average price of a 0–5-year-old EV in April 2024 was £28,562 versus £21,038 for petrol cars in the same age bracket.[12]
Auto Trader’s marketplace moreover underlines the dearth of affordable electric used options with just 10,000 EVs available for less than £15,000, (the most searched price point for used cars on Auto Trader) compared with 350,000 petrol and diesel cars in the same price bracket. Similarly, there are only nine new electric cars with starting prices under £30,000, compared to 76 petrol and diesel models.[13]
The Road to 2035 report also reveals the impact of negative stories surrounding electric cars. With 72% of consumers having heard the “electric cars catch fire” narrative, 44% believe it’s true and that this has made them less likely to go electric. Similarly, 70% had heard that “EVs are not cheaper to run” with 33% believing this to be true and saying that this has made them less likely to buy an electric car.[14]
A growing trend towards electric consideration is fantastic news but for this to be a fair and equitable transition – and, crucially, for expanding interest to convert into sales - we need to be sure that when those considerers are ready to buy, there are electric cars available in a variety of budgets.
Plummer continued:
“New data on the misinformation surrounding EVs and the salience these have with consumers is worrying and it’s vital retailers educate themselves around these key myths so they can reassure consumers.
“We need to make more progress on affordability to encourage retail demand especially as exemptions from vehicle excise duty and the expensive car supplement for EVs end next year. Financial help from the government in the used electric market is vitally needed to ensure a fair and equitable transition.”
-ends-
Sources
1 Auto Trader internal data. April 2024
2 Auto Trader internal data. April 2024
3 Auto Trader internal data. April 2024
4 SMMT registration data. April 2024. https://media.smmt.co.uk/april-2024-new-car-registrations/
5 Auto Trader internal data. June 2022 and April 2024
6 Auto Trader Car Buyers tracker research conducted by QuMind, April-2024. N=861. August-2023. N=845
7 Auto Trader internal data. April 2024
8 Auto Trader internal data. April 2024
9 Auto Trader internal data May 2024 vs November 2022
10 Consumer research conducted by QuMind on behalf of Auto Trader. April 2024, N=2,000.
11 Auto Trader internal data. April 2024
12 April 2024, petrol cars under 5 years old avg price £20,928. Auto Trader internal data.
13 Auto Trader internal data. April 2024
14 Auto Trader Car Buyers Tracker, April 2024, 2,000 respondents
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