UK’s EV transition ahead of the curve despite mounting challenges

The UK remains on course for its transition to electric vehicles despite challenges surround public charging infrastructure, VWFS reports.

Volkswagen Financial Services UK (VWFS) has published its quarterly EV Tracker Report, with figures based primarily on data gathered during Q2 of 2022. The report continues to assess the progress towards increased adoption of electric vehicles – both cars and light commercial vehicles (LCVs) – as we approach the 2030 ban on sales of new petrol and diesel vehicles, as well as broader economic factors.

The second report, published in July, highlighted continued rapid momentum in the switch towards EV adoption, although this was tempered by continued concerns around the availability of an adequate charging infrastructure.

Meanwhile, well-documented economic issues such as low consumer confidence in the economy and rising fuel and food prices driving the cost of living crisis were heavily influencing decisions around EV adoption.

This third report helps to bring further clarity on longer-term trends, and the real and perceived factors impacting EV adoption levels. While the report shows there is continued growth in the number of electric vehicles on UK roads, there are a number of speed bumps that could soon bring a sharp halt to the progress we are making. These challenges come in the form of perceived misconceptions on EVs, a record low in consumer confidence, and also the public charging infrastructure not being at the required optimum availability levels.

This latest edition of our tracker series harnesses data from independent, reputable sources, alongside exclusively commissioned consumer research of more than 1,500 individuals nationwide, to present a truly contextual picture of the current status, as well as recent and likely progress, of EV adoption across the UK.

The EV adoption curve

EV adoption across the UK clearly continues on a strong trajectory. During the second quarter, the total number of ultra-low emission vehicles (ULEVs) of all kinds on Britain’s roads reached 901,819. This represented an increase of 76,965 over the previous quarter and accounted for 2.4% of all cars and LCVs.

More recently, the month of September also saw a key milestone with the UK’s one millionth plug-in electric car registered.

Perhaps more gratifyingly, the figure is 151,236 ahead of the exponential adoption curve which shows the rate at which adoption must increase if the UK is to meet its target of 55% of all light vehicles being battery powered by 2032 (a total of 23.2 million) – and so achieve its net zero goal.

These figures are particularly impressive given ongoing issues in the supply chain which are creating shortages of new vehicles. This is especially the case in LCVs where demand is outstripping supply significantly. Overall, new ULEVs actually form a smaller part of the fleet. It remains to be seen whether this will continue given that the general expectation is that the supply of semiconductors, which are crucial to EV construction, was scheduled to improve during the second half of 2022.

More recent figures for September demonstrated that the trend towards battery electric vehicles (BEVs) rather than plug-in hybrid vehicles (PHEVs) also continued, with 38,000 BEVs sold during that month alone – while PHEV registrations fell on a year-by-year basis. In LCVs, BEV growth saw a massive increase of 70% during the month, lifting market share to 4.4%. This is a clear demonstration of how the sector is investing in the end game.

For comparison, according to figures from the SMMT, battery electric vehicle registrations for the year to date to September was at just over 175,000 – up 50,000 on the same period in 2021. For the same period, diesel registrations plummeted by a massive 43% compared with 2021 and similarly, petrol vehicle registrations dropped by more than 15%.

The public charging infrastructure challenge 

While EV sales have continued to rise, concerns still clearly remain around the available charging infrastructure and its ability to meet current and future needs.

The European Commission recommends a ratio of one charger for each ten electric vehicles. That means for the current fleet of just over 900,000 EVs, some 90,000 chargers would be needed. However, while there is overall growth, it is not at a sufficient pace to reach this ratio any time soon, with only around 600 new chargers being installed each month, and a total of 34,860 publicly available chargers at nearly 21,000 locations nationwide at the end of September, according to figures from Zap-Map.

Perhaps more importantly, the expansion of charger provision is far from uniform across the UK and has actually fallen in one region, Northern Ireland – although there was growth everywhere else. The highest provision is in the North East at 5.4 units per 100,000 people, with London not far behind at 5.1. However, other regions including the North West, West Midlands, East Midlands, South West, Yorkshire & the Humber, Scotland and Wales are all still at below three units per 100,000 people. This would seem to fly very much in the face of the government’s stated ambition of ’Levelling Up’.

Problems around insufficient provision (real or perceived) show that charging point availability would now put off 36% of potential EV buyers, compared with just 29% during the previous quarter.

However, this is to some extent mitigated by the growth in the number of home chargepoints, which is now estimated by Zap-Map to be at more than 400,000, and with roughly 40-50% of EV drivers able to charge at home, this leaves 50-60% of people relying solely on public charging infrastructure. Despite this fact, mass adoption may start to slow when more drivers without private driveways consider making the switch. We know that public charging is less reliable, less accessible and more expensive than home charging, and this significant barrier may negatively impact the UK’s rate of adoption as the demographic of EV considerers expands.

Meanwhile, figures from research conducted during June by Transport & Environment suggest there are 33,000 workplace chargers in place nationwide, with financial incentives available under the Workplace Charging Scheme set to see the figure burgeon in the near future.

One way of interpreting these figures is that there may now be a greater desire to use EVs for longer journeys and that there is a greater need for reassurance about not just the presence but the availability of chargepoints. This is in line with findings stating that the majority (69%) of those planning to buy a second-hand EV would expect to use it regularly for journeys lasting more than one hour, as well as for shorter journeys.

For confidence in the charging network to truly flourish, that coverage and availability needs to be paired with ease of payment, reliability and effective, rapid charging.

Consumer sentiment and influences

As a ‘big ticket’ item, the purchase of a new vehicle is arguably more susceptible than most to the impact of economic downturns and failing confidence among individual consumers.

Purchases may very reasonably be delayed or even shelved altogether as other areas of domestic expenditure take priority.

Current challenges around rising fuel, food and energy prices, as well as overall economic confidence, may all contribute to a planned EV purchase becoming less of a priority, even for those aware of – and keen to exploit – the economic and environmental benefits they offer.

Figures show that economic confidence remains at a record low, with net confidence for August, September and October at -52% or worse. This is paired with levels of net household financial confidence of between -39% and -41% during the same period, while expected household savings are also at very low levels. And given recent political events, there is little reason to believe that this is about to change radically any time soon.

In light of this, it is perhaps no surprise that net expectations for spending on ‘big ticket’ items reached a record low in September too.

On this basis, it stands to reason that price has become an increasing barrier to EV purchase. The latest figures put this as comfortably the largest obstacle, with 51% of respondents citing this as a factor, compared with 42% in the previous quarter.

Meanwhile, nearly two-thirds of consumers would now prioritise a cheaper purchase over one which would benefit the environment – very much in line with established thinking that broader concerns such as sustainability often fall in importance among consumers when tougher economic conditions take hold.

This compromise is also reflected in a growth in the number of people who feel it likely that they will buy a second-hand car: 22% said this was ‘quite likely’ compared with 16% three months prior. However, what is concerning is that of those expecting to purchase a second-hand vehicle, a lower number stated that it would be an EV than had been the case in the previous quarter. Indeed, only 15% said it was ‘very likely’ to be an EV purchase, compared with 25% previously.

However, while perceptions around cost may have caused some loss of enthusiasm around EVs generally, 7 of the top 10 best-selling new cars in the UK during the most recent period were EVs.

Educating the potential EV market 

The uptake of electric vehicles continues to gather pace and is on course to meet net zero targets, indicating that EVs are generally welcomed and regarded as a good thing. However, many misconceptions and gaps in knowledge remain among consumers.

Nearly one-third of respondents (32%) were still unaware that from 2030, they will be unable to order a new petrol or diesel car. However, of those that were aware of the ban, nearly half (49%) said the ban made it more likely that they would purchase an electric car.

A similar proportion of all respondents (48%) said they would be willing to wait up to three months for delivery of a new electric vehicle.

Another point of concern is that a majority of consumers still feel greater trust in second-hand petrol or diesel vehicles (60%). Meanwhile, some 65% of respondents believed that EVs are likely to lose value as a result of a degrading battery.

Furthermore, there has been a growth, albeit small, in the number of people who feel that EVs are too expensive. Concerns also remain around choice, with only a third believing there is sufficient choice in the EV market, but while there has been a very modest increase in those who believe the charging infrastructure is insufficient, this applied to only one in four respondents.

One point to be welcomed was that 58% of respondents believe electric vehicles are better for the environment, compared with 55% last time round.

Misperceptions around EV quality, reliability and range are something which all interested parties must take rapid steps to address if the upward curve of adoption and progress towards the stated net zero target is to be maintained.

eLCV status

Battery-powered LCVs continue to enjoy strong growth. The variety of vehicles available continues to expand, against a backdrop of lower taxation, purchase incentives and zone charge exemptions.

LCV market-share for BEV powered commercials has grown from 2.8% in 2021 to 5.3% this year – and the trend is expected to continue as further new vehicles and ranges are introduced, and continued high costs for petrol and diesel make electric vehicle investment more attractive.

Conclusion

Mike Todd, CEO at Volkswagen Financial Services UK, said: “Our latest EV Tracker continues to shed light on the rapidly evolving EV market and the factors influencing perceptions and overall adoption.

“Firstly, it is gratifying that the overall trend of adoption remains strong and puts the UK on course to meet the net zero target of 2032. Nevertheless, it would be wrong to assume that there is not still a long way to go.

“Economic conditions remain challenging and are likely to mean many individuals opt to delay a proposed EV purchase until their individual finances, and confidence in the future, are more favourable. Many people are keen to do more to be ‘greener’ but it’s not unreasonable or unexpected that they delay this in order to focus on more pressing financial considerations.

“Perceptions – whether right or wrong – remain about the inadequacy of the public charging infrastructure and these are deterring some from making the change to an electric vehicle. It is especially concerning that the playing field is not level nationwide when it comes to charging availability – and that any region, in this case Northern Ireland, has seen a reduction in its net quantity of chargers represents a significant disincentive to further take-up there.

“As a ‘big ticket’ item, the perceived cost of EVs continues to be a challenge for many considering adoption. As a finance provider, we continue to review the situation and develop innovative solutions that allow individuals to access the benefits of greener personal transport in a manageable and affordable way.”