Automotive review Q4 2021

Battery electric vehicles (BEVs) make up just over 10% of the market share of new vehicles registered in the UK as of July 2021, according to the Society of Motor Manufacturers and Traders (SMMT). It’s a figure that’s set to increase rapidly as the UK moves towards its target of zero tailpipe emissions by 2035.

To meet this target, consumers will need encouragement to buy BEVs. The strong take-up of hybrids shows that consumers are willing to adapt.  But they remain concerned over battery range and a lack of domestic, public and private EV charging infrastructure in the UK. The government will need to overcome these anxieties to make its climate change targets feasible.

EV market set for electric growth

The UK transport sector accounted for 27% of total greenhouse gases emitted in 2019. Reducing this is a now key focus for the government and a crucial driver for the 2035 zero tailpipe emissions target.

The next 10 years should see significant take-up of EVs with the SMMT estimating 14 million EVs on the UK roads by 2030 and 49 million by 2050. This will also increase energy demands, of course. The Climate Change Committee (CCC), the government’s independent adviser, suggests an annual increase in demand for electricity of 20-30% over today’s levels at 65-100TWh.

To EV or not EV – what’s holding consumers back?

Surveys by the AA and Zap-Maps indicate two key consumer concerns about purchasing an EV.

Lack of a charging infrastructure

The number of public charging points versus the number of plug-in hybrid electric vehicles (PHEV) and BEVs on the road brings this into sharp focus. At present there are an estimated 306,954 PHEVs on the road and 298,190 BEVs (Competition and Markets Authority Electric Vehicle Charging 2021): on average, 23.5 cars per public charging point – clearly not enough to meet demand but this is growing at a rapid rate.

The situation is exacerbated by the uneven spread of these charging points across the UK. London has the densest level of charging points with 80 charging points per 100,000 population versus an average across Great Britain of 35 per 100,000 population.

Lack of confidence in existing infrastructure

People’s experience of charging points is also not ideal. There are concerns around whether the charging point works, the payment process, the use of minimal apps to find and pay for charging, and so on.

Only nine percent of all charging points offer contactless payment and only 50% are rapid/ultra-rapid charging points. An average of one in 25 charging points and one in 10 rapid charging points are out of service at any given time.

What’s the plan to build consumer confidence in EV charging?

An ambitious rollout strategy to 2030 and beyond is needed to build up consumer confidence in the charging network. This strategy is expected to include the following five points.

The private and public sectors need to work together to generate a strategy and the government needs to support it. There has already been a public announcement of financial support.

The government’s rapid charging fund is set to deliver 6,000 high-power charging points with an investment of £950 million. Ofgem has announced £300 million for additional network investment and half of this will go to EV charging infrastructure, which will support 1,800 rapid chargers and a further 1,700 rapid public chargers.

And the cost to consumers? In most cases, domestic consumers won’t need to pay for upgrade works. Non-domestic customers, however, will have to pay for most of their upgrades. These could be sizeable, involving the installation of substations and other infrastructure requirements.

The cost to meet the public charging infrastructure for 2030 is estimated to be £3-5 billion, which does not include network and commissioning costs.

En-route charging provision is critical if EVs are to be used successfully for longer journeys. Currently there is a lack of choice of such charging infrastructure, a lack of chargers and limited competition on the motorway charging points.

Electric Highway is the largest motorway operator of EV charging points, accounting for approximately 80% of all rapid and ultra-rapid chargers on UK motorways. Including a small range of amenities, such as hotels, Electric Highways still has 59% market share. More rapid, and ultra-rapid, chargers owned by different operators are needed.

Furthermore, Electric Highways has long-term contracts on many of these motorway charging points. Investment to generate the required charging infrastructure to meet demand is expected to cost a minimum of £7 million for each site, which includes the charging points and the required infrastructure. But this could be as high as £27 million for the largest motorway sites.

Both the poor EV charging infrastructure and Electric Highways’ long-term agreements need to be resolved before motorway charging can start to grow strongly. The high cost of investment for charging infrastructure also carries the risk that low-density population areas would not generate the investment returns required to install a satisfactory EV charging infrastructure.

A significant proportion of potential EV owners don’t have the ability to charge their vehicles at home. The lack of driveway or having to park vehicles in the street means they must rely mainly on public or workplace charging.

Fifty-seven percent of households in social sector housing do not have off-street parking and 86% of households in social sector flats do not have off-street parking. Without an increase in on-street charging, take-up of EVs is expected to remain limited.

In Great Britain, street furniture – which includes road signs and streetlamp posts – is owned by the local authorities. It is down to the local authority how and where street charging points are located. According to research by Zap-Map in February this year, there are relatively few on-street charging points (5,737) with 4,594 of those located in London.

More on-street charging is needed. The Climate Change Committee (CCC) estimates that 50,000 3-7kW charge points will be needed while energy consultancy Delta-EE suggests the number is far higher – 275,000 charge points (22kW and below).

Either way, there will need to be significant investment in the number of on-street charging points.

Of the number of EV home chargers in the UK, Pod Point has the highest market share of 50-60% followed by BP Pulse with 10-20% and Rolec with 5-10%.

The home charging market is supported by the government’s £350 Electric Vehicle Homecharge Scheme (EVHS) grant but from April 2022 only those in rented or leased accommodation qualify for this. The decision on which charging company they use when installing a charger depends on the advice consumers receive from the EV manufacturer or car dealerships.

The biggest risk is that some customers may not be fully informed and may not be purchasing smart chargers that could provide a better long-term service – adjusting the speed of charge and charging at times when electricity is cheaper, for example.

The home charging network is expected to grow strongly, in line with the sale of both new and used EVs. Access to better information will give consumers choice in deciding which charger best suits their needs.

While the lack of charging infrastructure is a concern for potential BEV purchases, the charging process needs to be as simple and convenient as filling up for petrol or diesel. Evidence shows that this is not the case for EV charging:

• Reliability of the network – on average 1-25 charging points did not work
• A simple and consistent payment method – 87% of EV drivers told Zap-Map that one app or a contactless payment system would make payment easier
• Lack of clear pricing – across public charge points; no comparison to petrol or diesel; difficult to review EV charging process from pay-as-you-go to bundling contracts
• Interoperability – public charging points may be operated by different charging companies with different apps and payment systems; public options need to be available all EV drivers through a single app or payment system

Challenges and opportunities for battery electric vehicles

To meet the target of zero tailpipe emissions, the cost of BEVs needs to fall in parity with internal combustion engine (ICE) vehicles. In the short term, government or original equipment manufacturer (OEM) support can help achieve this. In the longer term, improvements in battery technology will help to drive down prices.

Price alone won’t ensure uptake. EV charging infrastructure needs to be scaled up rapidly and distributed evenly, rather than just where demand is high. Without government or local authority intervention, less densely populated areas will be EV charging deserts. And the usability of EV charging points needs serious work – whether the charging points are working, ease of payment, standard software for charging points, and so on.

There’s a difficult road ahead. If the government’s 2035 targets are to be met and consumers successfully encouraged to buy EVs, private and public bodies will have to ensure the quality and growth of the charging infrastructure in the UK. It is critical that the UK charging network is well planned and structured to provide this BEV growth.