EV prices currently too high but new report forecasts fall in costs by 2030
According to figures released by the Society of Motor Manufacturers and Traders (SMMT) today (6 September), just 812 buyers have taken up the Government’s £5,000 Plug-In-Car Grant so far this year, suggesting that electric vehicles are still too expensive for most consumer and fleet buyers.
'More than a dozen new electric and hybrid vehicles are set to hit the UK market over the next year, but most of them will be decorating showrooms unless manufacturers are more realistic on pricing,' said BVRLA chief executive, John Lewis.
'Ultra-low carbon transport is a necessity and electric vehicles have a big part to play in getting us there, but these vehicles are simply too expensive for most fleets at the moment.'
A simple calculation of ownership costs by the BVRLA suggests that a Nissan LEAF would cost £5,000 more to run than an equivalent diesel car over the typical three-year, 36,000 mile lifecycle of a company car.
'With existing concerns over range anxiety and residual values, potential customers will need to see some real cost benefits if they are to adopt this exciting new technology in significant numbers,' said Lewis.
'With the retail car market in the doldrums, it is the fleet market that is responsible for nearly 60% of new registrations in the UK. Fleet customers don’t buy on sentiment – cost is their main criteria.'
However, according to a new study pubilshed by action and advisory group the Low Carbon Vehicle Partnership, the cost of owning EVs will fall substantially to approach those of conventional cars within 15-20 years.
The report was prepared by Element Energy for, and in collaboration with, the membership of LowCVP, which includes major vehicle manufacturers and oil companies. It has examined how the total cost of owning a car can be expected to change to 2030 with the introduction of lower carbon technologies.
It adds that the difference in the total cost of ownership between conventional and ultra-low carbon family cars will fall from around £5,000 pa at present to £500-£750 pa by 2030. This is mainly because the car will become cheaper to buy as batteries and fuel cells fall in price. Fuel costs for ultra-low carbon cars will be much lower than conventional cars. With big improvements in the fuel efficiency of conventional cars annual petrol costs are anticipated to also fall, despite oil price rises. The net result is that by 2025 a tax break of £1-2k pa will be sufficient to equalise the cost of owning most electric or hydrogen cars.
LowCVP managing director Greg Archer said: 'Drivers will need to embrace ultra-low carbon technologies like electric and hydrogen vehicles as one of the measures to avoid dangerous climate change. But for many drivers to switch these cars must be both appealing and no more expensive to own. This study indicates that the cost of electric and hydrogen fuel cell vehicles will fall substantially and with modest tax and other incentives could be as cheap to own as conventional cars within the next 15-20 years.'