Despite surge in sales driven by greater choice, model launches, and advertising, the EV market is off required pace to meet Government’s 2030 targets
According to Auto Trader, despite the significant growth in consumer demand for electric vehicles (EV), the market remains behind the required pace to reach the Government’s ambitious, albeit admirable, 2030 ban on new petrol and diesel cars.
To reach its target, Auto Trader forecasts EVs will need to account for approximately 11% of all new car registrations in 2021 and 54% in 2026; however, despite strong growth from below 5% of sales at this point of 2020, current year-to-date market share lags behind the required pace of growth at just 8.4%. The scale of the future challenge becomes even starker given that we will need to record a near seven-fold increase in the next five years to get back on track.
On the Auto Trader marketplace, which in August saw over 70 million cross platform visits, interest in EVs is growing fast with one in seven (14.3%) new car advert views currently for an electric vehicle, which is up significantly from just 3.8% in August 2020. What’s more, nearly one in five (17.7%) are considering an EV as part of their new car research, which is up from 11.8% in May and 8.8% in January of this year.
However, highlighting the challenge in meeting the 2030 target, despite record levels of interest, behavioural analysis of these buyers suggests that three in four currently look at EVs with low intent. In fact, the conversion rate for an electric search on Auto Trader to proactively engaging with a retailer is half that of an internal combustion engine (ICE) vehicle. Curiosity and interest are yet to consistently translate into sales.
Choice, price and infrastructure slowing adoption
The speed of adoption is being hampered by a number of key factors, not least the level of available choice. Whilst there has been a notable increase in the number of new EV models available on the UK market as well as advertised on Auto Trader, up from circa 20 in August 2019 to 58 today, there remains a considerable mismatch between the cars that are available, and the budget consumers wish to spend. For new ICE vehicles, 25% of the recorded demand is for cars priced below £20,000; however, there are currently just four new EV models available on Auto Trader that fit within this category.
This mismatch is even more acute when looking at specific examples, particularly at the lower priced car types where the inclusion of a costly battery pack adds very significantly to the cost of what is usually a budget focused car choice. The average retail price of a new volume brand electric hatchback is circa 75% more expensive than an ICE equivalent, whilst a volume brand SUV is 25% more. It’s not limited to just new cars either: on average, the current cost of a second-hand volume brand electric hatchback is around 27% more expensive than a used ICE equivalent, and 39% for a premium model.
Accordingly, electric vehicles are still largely beyond the reach of all but the most well-off car buyer. Indeed, on Auto Trader, the most serious EV considers are far more likely to live in an affluent postcode, be older (55% are over 45 versus a new car average of 52%), have a higher household income (29% earning over £75,000, versus a new car average of 23%), and have an overall wealthier economic profile (41% have an A/B social grade, versus a new car average of 34%).
Further research shows that these early considerers are more likely to have off street parking options and to have more than one car in their household. Democratising EVs beyond these car buyer profiles will require all the various car types to be available across all price brackets, along with appropriate public charging solutions.
Focus on the three I’s: incentives, investment and information
For the market to be on track to meet the Government’s 2030 target, and to support genuine electric vehicle uptake, Auto Trader believes the industry needs to focus on three core areas:
- More incentives: Greater incentives are required to deal with the prohibitive up-front cost for many consumers, which according to Auto Trader’s recent consumer sentiment survey, was a major reservation to purchasing an EV for 44% of people. There also needs to be more support in making second-hand EVs more financially accessible. What’s more, consumers need the confidence of a committed and long-term Government policy around issues such as road tax and fuel tax.
- More investment: There needs to be considerably more investment to overcome the lack of charging infrastructure, which according to Auto Trader’s study was the number one (48%) concern for the circa 2,000 consumers surveyed. Today there are approximately 25,000 charging stations in the UK. Estimates by various industry bodies vary as to what is required to remove range anxiety fears but they range from an ambitious ten-fold increase up to as many as 2.3 million charging stations across the country
- More information: The industry also needs to make this entirely new segment easier for consumers to navigate and understandable for all. As well as removing complicated jargon, car buyers need to be shown how to look at a more complex cost equation, in particular understanding the total cost of ownership (TCO).
Separate Auto Trader research conducted last month showed that for 45% of those surveyed, TCO was what they focused on most when considering a purchase, ahead of the upfront cost (29%). What’s more, 27% would consider an EV if the TCO was the same or better than a petrol or diesel car. Thus, explaining what TCO is, and that an EV owner saves around £100 per 1,000 miles over a three-year period on fuel, servicing and VED could make a huge difference in encouraging a car buyer to make the switch.
Ian Plummer, Auto Trader’s Commercial Director, commented: “There’s no question that the market for electric cars is in the best shape it’s ever been in. We’re seeing more choice, and significantly more advertising and marketing spend from manufacturers promoting electric models, and as a result, we’re seeing more sales too. However, in the context of 2030, the market isn’t where it needs to be, and we’re going to need a greater commitment from the Government and all of us within the industry to inject much needed pace into its Road to Zero race. Key to this will be focus on the three I’s: more incentives, more investment, and more information, all of which we believe will be critical to make both new and used electric vehicles a genuinely viable option for mainstream buyers.”
 Society of Motor Manufacturers and Traders, new car registrations August 2021
 Auto Trader consumer survey of 2,004 consumers, conducted in March 2021