Electric Vehicle Sales Drop Ahead of ZEV Mandate
The UK is experiencing a decline in battery-electric vehicle (BEV) registrations just weeks before the implementation of the zero-emission vehicle (ZEV) mandate. According to the latest figures from the Society of Motor Manufacturers and Traders (SMMT), there was a 17.1% drop in BEV registrations in November compared to the previous year, with a market share decrease from 20.6% to 15.6%. This downward trend is concerning as car manufacturers are required to have 22% of their sales as BEVs from 2024 or face fines of £15,000 per non-compliant car.
Challenges in Meeting the ZEV Target
To meet the 22% target, the market share of electric vehicles needs to increase by nearly 50%. While BEV sales to fleets and company car buyers remain strong due to the significant benefit-in-kind advantage, there is a lack of growth in private buyers. This poses a challenge in achieving the ZEV target as private demand for BEVs needs to increase substantially.
Predictions and Potential Strategies
The SMMT predicts a 22.3% market share for BEVs in 2024, but meeting this target will require various tactics. Car manufacturers can strive to reach the target organically, purchase credits from competitors who exceed their targets, defer compliance to 2025, or pay fines. However, it is likely that a combination of these options will be utilized.
To stimulate private growth in BEV sales, discounting will be crucial. Data from What Car? Target Price reveals that EV discounts have already increased significantly, surpassing discounts for other fuel types. Further discounts are expected, as there are no indications of government incentives for private buyers. These discounts aim to bridge the affordability gap and encourage more consumers to choose BEVs.
Additional Strategies and Potential Implications
In addition to discounts, car manufacturers may resort to other strategies to boost BEV sales. Some may pre-register internal combustion engine (ICE) vehicles before the end of 2023 to avoid impacting 2024 sales. Lead times for ICE models may increase, while BEV models’ availability may decrease to entice buyers to choose BEVs sooner. Towards the end of the year, there may be a surge in pre-registered BEVs to further bolster manufacturers’ BEV registrations.
It is worth noting that some car makers are highlighting comparable monthly payments between EVs and ICE cars in their range. However, this may be a result of recent price increases for ICE cars, artificially reducing the price gap with BEVs. Consumers should be cautious when considering these offers.
Challenges and Government Intervention
The UK government’s decision to delay the ban on non-BEV sales until 2035 has negatively impacted consumer confidence in BEVs. Overcoming challenges such as higher purchase prices, limited charging infrastructure, rising insurance costs, and uncertain residual values is crucial for wider adoption of BEVs among average car buyers.
In conclusion, meeting the ZEV target requires significant growth in BEV sales, particularly among private buyers. Car manufacturers will employ various strategies, including discounts and pre-registrations, to achieve compliance. Overcoming challenges and addressing consumer concerns are vital for the success of electric vehicles in the UK market.