Are we to believe that the electric vehicle bubble has burst?

Has the EV vehicle bubble burst (or at least been stalled) by circumstance and choice in the governments direction towards reducing emissions from the tailpipe, and what could be done about it?

For several months I've read that the electric vehicle bubble has burst... so I thought I'd write a post on it... turns out that the level of content deserved an article where I could present some of the data more easily...

The latest monthly SMMT car registration data is out for February 2023, and it paints a picture that has been emerging over the last couple of months.

Have the natural reduction in fuel prices from last year's high, and the stated intent to introduce VED for EV worked together to create a blip in the data, or a longer term challenge to resolve?

The data is showing that there is a year-on-year reduction in diesel car sales, an increase in pure battery electric vehicles, BUT a larger increase both in terms of percentage change and total number, in petrol car sales.

BEV – Battery Electric Vehicle; PHEV – Plug-in Hybrid Electric Vehicle; HEV – Hybrid Electric Vehicle; MHEV – Mild Hybrid Electric Vehicle

The data above in its purest form, shows the fluctuations of monthly sales and the peaks created by the "new plate". Therefore the data, when created on a 6 month rolling average, works to reasonably smooth this effect.

This data shows some impact, but / and - let's be clear, it's not conclusive.

• There is a stagnation of pure BEV vehicles.
• There is growth in forms of milder hybrid that still have an internal combustion engine
• The decline in petrol has slowed (and the first graphics show that as a flip to growth in the last months)

Whatever the subtleties of the data, and the coming months will clarify what appears to be an emerging trend, it is clear that such an continuation of internal combustion engines is not the aspiration of the strategy towards zero from the tailpipe.

And it appears that this is a trend that has been accelerating over the last quarter.

So why might this be true?

1)?????Fuel prices at the pump have reduced from their highs of 2022, but an increasing differential between petrol and diesel fuel now exists – where fuel prices peaked at around ￡2 a litre in July ‘22 there was a 7p gap between diesel and petrol, now in March ’23 a 19p divide exists.

2)?????The government’s announcement in November 2022 of a vehicle duty on electric vehicles of ￡165 per year (for new and existing vehicles) from April 2025, with an additional ￡355 a year for cars over ￡40,000 (current price).

3)?????This says nothing of the global manufacturing challenges, or parts and computer chips, that play such an important part in the supply chain that supports the automotive market (and electric vehicles even more so...) - and it's obviously unclear what impact this has on the volumes of demand, lead times and customer availability of the vehicle choice that they might want - what is known is that the inflator on goods has increased prices - and that this undoubtedly impacts the choice (both timing and expenditure) of a vehicle that is such a significant household purchase...

In a period of cost challenge to families across the country, the capital cost of replacement (for cars that now typically last longer) and then the increased tax may be enough to make plenty hesitate if not put off a push to EV.

It is not just the cost of the excise tax, but the comparative cost of purchase. ??Of those family EV options, the equivalent non-EV petrol option is over ￡10,000 cheaper (taking a bottom of the range Vauxhall Corsa Petrol at ￡18,000 versus it’s electric counterpart at ￡32,000.)?This means that many ‘family sized’ electric vehicles will top the circa ￡40,000 ceiling and require a total ￡520 per year pre-running taxation cost for many within a couple of years.

Finally (and not presented in the data) may be the challenges of lead times (both for the decision to purchase as a customer, and the manufacture of the vehicle with the ongoing constrained market for electronic chips that are essential to the operation of today’s technologically advanced vehicles).

But assuming that the data tells a picture that is representative of this mix of choice and socio-economics, then it leaves the government and manufacturers needing to work more closely together to incentivise change.?

And there are a number of ways in which this could happen – though none of them are fast to reality, a number of them could be timely given the Spring Budget expected next week.

Questions / options that should be explored

1)?????Should more public charging infrastructure be accelerated, with more public funding as coordinated in Scotland in a different approach to the English government’s local electric vehicle infrastructure (LEVI) schemes? - note that this does appear to be accelerating through the latest round of government funding

2)?????Should the government keep pushing towards an equivalent road pricing mechanism, rather than letting cities each create low traffic neighbourhoods or low emission zones, as point of entry taxation on the internal combustion engine? - note that this option already appears to be rejected by the latest government statements

3)?????Should the government and / or manufacturers do more to incentivise decommissioning of older internal combustion engine vehicles and / or the home infrastructure changes to support personal EV connectivity? - note that this has been done historically, but not currently in place

4)?????Should the government be doing more to incentivise us towards greater personal take-up of car sharing (of personal and / or public schemes)?

5)?????Should the government be doing more to change the policies and legislation about active (and electric mobility) travel to support the greater connective of an integrated transport system?

6)?????Should the government do more to be incentivising (through creating a genuine cost differential towards) mass public transit options like buses and trains?

7)?????Should / could total (single person) movement miles ever be considered as something society should cap to change behaviours?

Conclusions

Whilst the data set may not yet be (quite) strong enough to confirm a suggestion that the battery vehicle cliff has materialised, the very fact that such a statement is being muted is, and must be, cause for concern for an aspiration to change habits around the use (and choice) for transit.

Whilst BEV vs "petrol" is an interesting debate, the wider conversation must be on the multiple levers available to change habits around transport decarbonisation - the impact of road speed, cost of ownership and operation of a vehicle, together with a stronger creation of integrated transport system...

...these are not easy questions, with easy solutions. And yet we must move towards all parts of this challenge collectively and collaboratively. Zero emission vehicles (of whatever flavour) alone are not the answer, but they are one of many step we must take towards the decarbonisation goal.

Sources:

https://www.smmt.co.uk/vehicle-data/car-registrations/

https://www.racfoundation.org/data/uk-pump-prices-over-time

https://www.gov.uk/government/publications/introduction-of-vehicle-excise-duty-for-zero-emission-cars-vans-and-motorcycles-from-2025