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Gloucestershire Business News

ANALYSIS: Potholes or road blocks: is the EV in trouble?

We've just seen the best March for car sales since 2019, with the moment when the new number plate lands being a key driver for sales.

The latest dataset from the Society of Motor Manufacturers and Traders shows that more than twice as many new EVs (48,388) were registered last month than diesel cars (23,312), yet negative headlines are popping up everywhere as a welter of stories suggest the electric revolution is coming unplugged.

So what's going on? Jon Yoemans, who writes for the Times, has no doubt. 2023, he wrote at the end of the year, had been a Great British year for the battery brigade: Tata confirmed a plan to build a multibillion-pound gigafactory; Nissan said it will build three new EV models in Sunderland and BMW finally confirmed the electric Mini will be built in Oxford. Clearly the British built car was alive and sparking.

But significantly, 2023 also marked the unexpected moment when Rishi Sunak shunted the phasing out of fossil fuel engines from the UK's target of 2030... to 2035.

After the gasps had died down, the industry realised that with the rules remaining unchanged for the ratio of emissions-free models makers have to build, the headline making little ultimate difference to the UK's transition timetable.

But the move whispered to consumers that they didn't need to buy their first EV as their next wheels, there being plenty of time to delay such a decision. And with that consumer can kicked down the road, the sector's number punchers are already beginning to see how the anticipated hockey stick of EV takeup is more of a subtle rise.

In the absence of an obvious green energy strategy, many interpreted the Prime Minister's five-year stay of execution for internal combustion - along with the government's campaign against London's ULEZ clean air initiative - as a signal that it sought to appeal to the wallets of motorists who do not want to embrace new tech. As Yoemans wrote: "electric cars have been sucked into the culture war — take the US, where Donald Trump warned earlier this year that they would "decimate" auto jobs."

Anti-EV sentiment is also alive and kicking over here. Last July – three month's ahead of the Prime Minister's five-year pushback, Car Dealer magazine identified that a "distinct anti-EV agenda has dominated news pages recently - in the Daily Mail, The Sun and the Daily Telegraph."

And perception changes among consumers clearly translate into economic facts - albeit facts that perhaps don't quite support the belief behind current headlines.

The Daily Telegraph announced this week: "Electric car demand plunges across Europe", stating that EV sales "plummeted... as demand dried up despite the EU's push to ban petrol and diesel vehicles by the middle of the next decade."

The data for this report comes from the European Automobile Manufacturers' Association (ACEA) and what it actually states is that the share of EV sales fell in March from the previous 2023 period's 13.9% to 13%. Measured in decline, that was a fall of 11.3%, which ACEA said, "reflected the broader market downturn" and which, within national details, included huge variation. EV sales rose in France, for example, by 10.9% and in Belgium by a dramatic 23.8%.

And the killer stat overlooked by the Telegraph? "The first quarter of 2024 ended with a total of 332,999 new battery-electric cars registered, a 3.8% rise from the same quarter in the previous year."

In terms of pinpointing more certain trends, one remains easy: if there is a buyer handbrake on EV sales here in Britain, it'll take a cheaper proposition to release it.

In February, a House of Lords cross-party environment and climate change committee slammed the government for prematurely killing off EV grants, failed targets on chargepoint installation, and for giving "mixed messages" about battery cars.

EV ownership remained 35% more expensive than petrol or diesel motoring, the committee said, and a key element to that issue remains with the prices of EVs currently available in the UK. Chinese automakers are already getting their boots on to address that issue, while Dacia will introduce a sub-£15,000 model, the Spring, later this year as a signal that Europe is eager to take on the east in any price war.

Manufacturing costs are also coming down, too, as the EV business gathers momentum: US technology research analyst Gartner say that by 2027 it predicts EV production costs will fall faster than the cost of the battery component (which accounts for about 40% of an EV production cost) with EVs rolling off the line at less cost to the maker than petrol and diesel cars.

And if all this discussion of new car buying trends feels abstract, the good news is that used car buying activity, which is where most of household purchasing is enacted, saw a signficant fall in the cost of seconhand EVs across 2023. Auto Trader found that average prices dropped by a hefty 22.5% in all, while the arrival of cheaper new EV options in the coming year will add more downward pressure on the market.

Clearly there are many piecs to the jigsaw that make up the bigger picture of our transition to zero-emissions transport – and the road ahead for EVs is assured by legislation and global commitment, but the path will not be smooth.

In his analysis of buying electric, Forbes writer Neil Winton said the EV is currently paused at base camp, with mass-market uptake being the next key stage of the climb.

"Unless there is a compelling value proposition," he said, "private buyers won't part with their own money. The electric revolution is at stake."

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