Only 16% of drivers believe Government should go ahead with 2030 ICE ban

Consumer confidence in electric cars has dropped significantly from two years ago, with only 9% of buyers, in a recent survey, saying their next car would be electric.

Fleet sales continue to drive the majority of electric vehicle (EV) sales, which achieved a 20% market share in August, raising questions over future residual values.

In the first half of 2023, less than a quarter of new EVs were sold to private buyers and supply outweighs demand in the used market.

A joint study by Electrifying.com and The AA found that just 16% of people agree that the Government is right to pursue the 2030 deadline for banning the sale of new petrol cars.

Surging prices for new EVs is one issue that is hampering sales. The survey found that 87% of buyers believe they are "too expensive".

Edmund King OBE, AA president, said: “There is no doubt that the higher initial cost of EVs and charging difficulties, particularly for those without off-street parking, are putting off a significant proportion of drivers from being able to make the switch. 

“Financial incentives are needed to help ‘level up’ the affordability for those drivers not able to benefit from salary sacrifice or company car discounts. Once drivers are able to go electric they will enjoy the financial, driving and environmental benefits and will not look back.”

Auto Trader data shows new EVs are, on average, 33% more expensive than traditionally fuelled vehicles.

It also shows a 23% contraction in second-hand electric prices over the past 12 months, bringing greener options within reach of more drivers. According to Auto Trader data, more than a quarter of all used EVs were priced under £20,000 in August – up from 7% a year earlier. EVs between three and five years old have seen even bigger price drops of 40%, making some EV models such as the Nissan Leaf cheaper than petrol or diesel equivalents for the first time.

As a result of the softening in prices, which has been fuelled by a significant growth in supply as brand-new EVs bought on finance or leasing contracts three-four years ago re-enter the market, demand for second-hand EVs on Auto Trader has increased significantly.

While the oversupply of EVs has been effective in driving down used prices and encouraging consumers to consider the switch, uptake is still limited. 

In its latest Outlook Report, the BVRLA said: "Leasing companies do sense a bit more stability in the fledgling used electric car market, but there is no avoiding the fact that the supply-demand seesaw is at risk of tipping sharply in the wrong direction as the first major volumes of used BEVs hit the market, unless authorities and the fleet industry can stimulate greater demand."

The report highlighted that new EV entrants are starting to offer models with cheaper prices and longer ranges than the secondhand values forecast for the first wave of leased EVs, a scenario that threatens to undermine values further.

Thanks to pessimistic residual value forecasts made three or four years ago, leasing companies are still comfortably in the black for these first end-of-contract EVs. But the forecasts they feel forced to adopt for contracts written today, due to competitive pressures, are "shredding nerves".

Auto Trader is calling for the Government to make EVs more affordable by using incentives in the tax system rather than relying on unsustainable market dynamics.

Ian Plummer, commercial director at Auto Trader, said: “There is still much more work to be done to achieve a mass transition to electric vehicles before the 2030 ban on new petrol and diesel models and ensure no driver is left behind. Support from the tax system to put the used EV market on a more robust footing is vital for the sustainability of the entire EV market and our chances of successfully transitioning to EVs by 2030.

“Consumers are still worried about affordability and charging, which is why we need a clear statement of intent from the Government. Penalising drivers who have to charge in public with higher VAT is simply unfair: we need to end this charging injustice.”

Research from Turo found that 43% of Brits say they won’t consider switching to an EV when they purchase their next vehicle. Among older generations, this figure rose to 53% among Gen X and Baby Boomers, and dropped to 25% of Gen Z and Millennials.