The UK Government last week announced that – together with some other changes to the Net Zero goalposts – the ban on new diesel and petrol cars would be pushed back from 2030 to 2035. This was followed by an updated mandate setting out the percentage of new zero emission vehicles that manufacturers will be required to produce each year, which will start at 22% of new cars in 2024, rising to 80% in 2030, and finally to 100% in 2035.
Government commentary describes this as “the most ambitious regulatory framework for the switch to electric vehicles (EVs) in the world”, and suggests that the revised (unequivocally less ambitious) path to the ban will support manufacturers and families in making the switch to electric, while providing additional flexibility not allowed within the previous timeline.
Will this set the EV industry back in the UK and materially affect our Net Zero target?
The (growing) size of the UK used car market, and the long lifespans of petrol and diesel vehicles, means that a shift of attitude among the public was always going to be important to increase the uptake of EVs in the near term – with new ICE cars available for purchase until 2035, it is likely that a large number will still be on the roads past 2050.
Some of the most prevalent consumer concerns that will need to be addressed to combat the impact of the delayed phase-out are:
Government intervention could address consumer concerns over the cost of buying and running EVs. Tax breaks, such as road tax exemption until April 2025, have been used to incentivise the use of EVs. However, the Department for Transport has ended subsidies for purchasing most EVs.
More long-term government intervention would incentivise consumers to invest in EVs. For example, many are pushing for the reduced rate of 5% VAT for charging at home to be extended to charging points in public places – the higher, 20% VAT rate that applies to charging in public disincentivises those who are unable to install their own charging points, such as renters or those without off-street parking, from buying EVs. This also results in inequality, since those without the luxury of a driveway and home charging solution will inevitably pay more than those with one. The Government could also choose to disincentivise the use of petrol and diesel vehicles by increasing taxes despite public disapproval.
The EV industry is also looking to scale up supply chains so that the price of EVs can compete with petrol and diesel counterparts. In the recent announcement the Government suggests that the delay to 2030 ban will enable families to wait to take advance of falling prices – but there are fears that the delay might in fact cause price reduction to stall by decreasing the incentive for manufacturers to invest in their EV business in the short-term.
The range of modern EVs is typically 150-300 miles. Despite this being sufficient for most consumers’ daily usage, many consumers still have ‘range anxiety’. This is a barrier for the used EV market because many consumers are concerned about battery degradation. With around 80% of UK car sales being in the used market, the EV industry must address concerns relating to battery health.
The EV industry can address some of these concerns through continuing to improve battery technology, educating consumers and providing dealerships with more information on battery degradation. A formal, standardised programme to provide assurance on the condition of used EVs, through ‘Battery Health Certificates’, has also been proposed as a solution.
Charging infrastructure is another major challenge for the EV industry. Although there has reportedly been more than a 500% increase in the number of public charging points in the UK over the last six years, we still trail behind other European countries – reports state that the UK now has 11.3 EVs for every publicly accessible charge point, compared to countries like Sweden with 8.4 and the Netherlands ahead with 2.8. This is then exacerbated by the lack of infrastructure in large parts of the country, meaning that drivers struggle to take their EV everywhere they would be able to take an ICE equivalent.
While the Government has announced that it continues to work at pace to grow charging infrastructure for EV drivers – with applications recently opened for the first round of the Government’s £381 million Local Electric Vehicle Infrastructure (LEVI) fund which aims to support thousands of new chargers in all areas of the country – private investment remains crucial to the success of the industry and there are concerns that the Government’s update to the ZEV mandate (which delays mandated EV roll-out by up to 5 years) could shake investor confidence, resulting in a delay to the expansion of the charging network.
One positive coming out of the recent announcement is the new approach to grid connections, with projects that are ready first being enabled to connect to the grid first, preventing unused capacity from being tied up in pipeline projects which may be severely delayed, or never completed – we hope that this will be a route around at least one of the road blocks in the path to EV roll-out and look forward to hearing more on this from Government in the coming weeks.
The mandate sets minimum annual targets, starting with a requirement for 22% of new cars sold in 2024 to be zero emission, as originally proposed. This will rise each year up to 100% by 2035