Fleet demand for EVs continued to surge during 2024, but are the underlying incentives leaving some households behind? Alex Grant, our editor-at-large, investigates.

FW editor-at-large Alex Grant

With an election looming and manufacturers facing the first ZEV mandate targets, 2024 was always going to be a busy year for electric vehicle headlines – and, in that respect, it didn’t disappoint. With a flat retail market and the first ZEV mandate targets, I’d imagine most brands were thankful for generous fleet-targeted incentives to boost EV demand. However, fleets can’t prop up that market on their own.

Electric vans are a world of pain in their own right, so I’m focusing on cars here. It’s a market that has enjoyed a decade of cheap products and credit, abruptly halted by spiralling living costs and interest rates. SMMT data shows retail registrations were down 9.1% year-to-date (versus 2023) at the end of November 2024 and still-pricier, under-incentivised EVs are hardest hit. Around 80% are company owned, though obviously not all of those are company cars.

This year’s ZEV mandate target is 28% of new cars, which the SMMT has highlighted is a 53% increase in registrations and 90,000 more than currently forecast. It’s also voiced concerns about “unsustainable” discounting – echoed by the BVRLA – and how those affect residual values. Could incentives be part of the problem?

This is being discussed. Shortly before the last Autumn Budget, a think tank called The Resolution Foundation put out a less-than-complimentary report taking aim at the EV incentives that the Chancellor has since extended to 2030. Notably, it alleges those tax breaks make EVs cheaper for those who could afford a new car anyway, while offering less support for households who need the financial leg-up to switch.

Nudging wealthier drivers is a good thing, but the data is eye-opening. The report highlighted HMRC statistics showing 760,000 people paid company car tax in 2022/23 – 40,000 more than the previous year, with 29% driving an EV. Two-thirds (66%) earn more than £50,000, of which almost half (32% of the total) earn more than £75,000. Only 2% earn less than £20,000.

Salary sacrifice schemes, often praised for democratising EV ownership, don’t fare much better because they’re linked to income tax savings. The Resolution Foundation calculated that a basic-rate taxpayer would pay around 28% less for an EV via salary sacrifice than leasing privately, whereas someone earning £100,000-£125,140 would save 62%. Wealthier drivers are also more likely to have off-street parking and solar panels to maximise the savings. It’s noteworthy that 79% of EV drivers surveyed by Zapmap charge at home, while 78% said going electric was saving them money. I wonder how much those two groups overlap?

In turn, the used market is distorted. The average median list price of the 10 most-registered new cars in the first half of 2024 (according to the SMMT) was £35,206, compared with £52,939 for the most popular EVs. Like a lot of used buyers I’d be wary of an out-of-warranty luxury SUV, but I can see the appeal of something smaller. Recent Cap HPI data suggests that’s what’s happening in showrooms, where three- to five-year-old EVs are selling faster than fuel-burning models. The Kia Niro EV, Tesla Model 3 and Volkswagen ID.3 were shifting faster still.

And that’s where I think we’ll see the headlines in 2025. There’s a glut of affordable, compact EVs on the way – Citroën e-C3, Ford Puma and Renault 5 among them – and that’s where sal-sac will come into its own, getting electric to the masses. As they’ll also help get electrification within reach of more budget-constrained new and used car buyers – perhaps there’s some balance on the horizon at last.