[LONDON] Sales of electric cars are on the rise in the UK, although the numbers are still well short of the government’s official targets as part of the national effort to go green on the roads.
According to fresh figures from the Society of Motor Manufacturers and Traders – the trade association for the UK’s motor industry – there were nearly 1.1 million electric cars on the roads as of March this year. This is up sharply from just 98,000 in March 2019.
As a whole, electric vehicles (EVs) made up 15 per cent of total new car sales in the first quarter of 2024, down slightly from 17 per cent in the same three-month period last year.
Prime Minister Rishi Sunak’s government has a mandate that sets minimum annual targets for car manufacturers, with a requirement that 22 per cent of all new cars sold in 2024 to be zero emission. This will go up each year to 80 per cent and eventually reach 100 per cent by 2035.
Manufacturers have been forced to slash prices of their EVs in order to boost demand, with many consumers still staying away due to hefty premiums and a perceived lack of public charging points.
Manufacturers that fall short of the 22 per cent target this year will be fined £15,000 (S$25,500) per car below the required threshold.
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Of late, many auto makers are offering discounts of up to 20 per cent in a bid to beef up sales. Auto Trader, a popular car sales website in the UK, said that some EV models have seen their selling price fall by several thousand pounds in the last few months.
‘Terrible’ policy
Stellantis – the maker of Peugeot, Citroen, Vauxhall and Fiat cars – has seen prices of the Peugeot E-2008 drop from £37,000 to £30,000, while the Citroen e-C4 now costs about £27,000, down from £33,000.
British media reported that Stellantis chief executive Carlos Tavares had complained to Transport Secretary Mark Harper that the government’s EV regulations and fines were a “terrible” policy, claiming that these rules would flood the market with EVs and erode the profitability of auto makers.
The “natural demand” for EVs among individual motorists in the UK is roughly about 11 per cent today. EVs that are used by companies elevate the rate slightly to about 15 per cent, he said.
“I am not going to sell cars at a loss,” said Tavares. “If the government is sincere about having manufacturing activity in the UK and protecting it, then something must change.”
He predicted that carmakers would rather leave the UK completely than subject themselves to a double whammy of unprofitable EV sales and fines.
Other heavily discounted electric cars in the UK market today include the Honda E, which is down 20 per cent from a year ago to £29,600. Prices of the MG ZS and MG5 from China are also down by about 13 per cent from a year ago.
“Lower prices are good news for car buyers,” said Ian Plummer, commercial director of Auto Trader. “Affordability will be the key to unlocking the mass adoption of electric vehicles.”
In a recent editorial, The Times newspaper was also highly critical of the government’s EV policy.
“Boosting demand for electric cars will not be achieved by official diktat. Ministers can best help by installing chargers, not punishing firms for making too few EVs,” the newspaper said.
“A top-down target for production of a consumer good is not economic rationality. In a market economy, this function is served by the price mechanism, not by the fiat of ministers and civil servants.”
Trio of challenges
Motor industry analysts highlighted three challenges that could slow the EV take-up rate in the UK.
First, they said the resale value has not met sellers’ expectations.The value of second-hand electric cars in the UK market fell by almost 20 per cent in 2023, which was below the rate for the overall car market.
Analysts also pointed out that it is more costly to insure an electric car than a combustion-engine model. This is partly due to the length of repair times and the cost of component parts. Insurers are also concerned about potential damage to expensive batteries, they said.
And third, with many drivers having to travel long distances in the UK, they remain concerned that there is a lack of available charging points.
The latest data shows that the UK has about 54,000 public charging points, and more than 680,000 domestic and work-charging points. This means that the ratio is about 10 points for each electric car on the road today.
