Electric Vehicle Discounts Spark Interest Amidst Market Challenges
As electric vehicles (EVs) vie for a larger market share, consumers might find now an opportune moment to consider making the switch. Substantial discounts are being offered by dealers in a bid to invigorate the EV market.
Auto Trader, a well-known British online car marketplace, indicates that the average reduction off the recommended retail price of EVs is around 12%, with some markdowns reaching up to 28%. Furthermore, dealers may offer enticing finance deals to sweeten the pot. Fraser Brown from MotorVise notes, “They sweeten the deal via either a finance deposit or low-rate finance.”
Despite these incentives, Ian Plummer, Auto Trader’s commercial director, describes the transition to electric cars as an “uphill battle.” By the end of 2024, there were 1.3 million EVs on UK roads, with 382,000 new registrations in the previous year, marking a 21% increase from 2023. However, the majority of these vehicles are operated by fleet customers, while private buyer interest remains low, with only about 10% of them opting for EVs.
The shift from petrol and diesel vehicles is driven by government policies accelerating their phase-out. The UK administration has advanced the ban on new petrol car sales from 2035 to 2030, while hybrids can still be sold until 2035. The zero-emission vehicles (ZEVs) sales target is set to rise from 28% this year to 80% by 2030.
Cost remains a significant barrier, with EVs still priced approximately 24% higher than their internal combustion counterparts, despite the price gap narrowing from a previous 35%. New models like the Renault 5 and Dacia Spring have contributed to this decrease. Plummer emphasizes, “The cost factor is the biggest blocker on why more people don’t go electric.”
According to an AA study, 42% of drivers expressed they would either never purchase an EV or would continue using petrol/diesel cars “for as long as they can.” Although 52% of drivers anticipated buying an EV within five years, many expressed concerns over cost and range due to insufficient charging infrastructure.
The ZEV mandate stipulates hefty fines of £15,000 per unsold target vehicle, which the industry deems excessive amidst widespread discounting efforts. The Society of Motor Manufacturers and Traders (SMMT) estimates that EV discounts amounted to £4.5 billion last year, yet the UK narrowly missed the 22% sales target.
Stellantis UK’s Eurig Druce shared that while they met the ZEV target last year, future targets present mounting challenges. He argues that the £15,000 fine is not a “sustainable business model,” calling for government support to meet upcoming targets, such as halving the 20% VAT on EVs or extending “cash-back” measures.
Heavy discounting could be unsustainable, with Druce stating, “It’s a great time to buy an EV now, but I don’t think any car manufacturer is getting rich selling electric vehicles now, put it that way.” Plummer adds, “The £15,000 fine is five times what they are making on an individual car. This is not a stick, this is a branch of a tree.”
Industry veterans like Tim Tozer, former chairman of Vauxhall Motors, describe the situation as dire, with production levels mirroring those of 1954. He criticizes the penalties as “utterly ridiculous” and asserts that manufacturers are primarily focused on avoiding fines, impacting production.
Amidst these challenges, some manufacturers, like Polestar, continue to forge ahead. Polestar’s CEO Michael Lohscheller states that their focus remains on growing market share, despite the decline in their market capitalization from $22 billion to $2.4 billion.
The road ahead for EV pricing remains uncertain. As Auto Trader suggests, predicting new EV prices is challenging due to rapid model introductions and fluctuating inflation. However, new brands are expected to launch models priced under £20,000 soon. In the meantime, MotorVise’s Brown recommends considering second-hand EVs, noting that a two or three-year-old Mercedes EQC, originally priced up to £80,000, is now available for about £25,000.
Original Story at www.thetimes.com