• EV market “on thin ice” amid rising living costs and surging energy prices
  • Used EV stock doubles as supply exceeds demand for first time ever
  • Forecast for new car sales 50% electrified pushed back to 2027
  • Education around EV running costs – still £124 cheaper per 1,000 miles - and range essential to revitalising consumer demand

Appetite among drivers for electric vehicles (EVs) is waning amid rising living costs and surging energy prices, new Auto Trader research shows.

Electric vehicles represented over a quarter (27%) of the share of new car enquiries being sent to retailers through Auto Trader’s marketplace in June, when petrol reached almost £2 a litre. But by November, as energy prices rose and fuel prices softened, EVs accounted for less than one in five (19%) of enquiries, according to the latest edition of Auto Trader’s Road to 2030 Report, published today.

The report also reveals that, for the first time since the start of the pandemic, year-on-year (YoY) demand[1] for used EVs is in decline with a double-digit (12.6%) slide in the past 12 months as wider market dynamics, coupled with consumer fears over rocketing electricity bills, throw Government ambitions for the electrification of the UK automotive industry off course.

As demand softens, the stock of used EVs has been building in recent months as previous years’ new cars enter the second-hand car market. Stock levels have doubled from 10,600 in at the start of 2021 to 20,600 in Q3 2022. Ordinarily this growth would be greeted as good news enabling more used cars buyers to make the transition to EVs, but it’s coincided with the demand dip with the supply of used EVs overtaking demand for the first time.

The report also underlines fundamental barriers to EV adoption such as the lack of choice and affordability. And with five times fewer new electric models (17) than ICE under £30,000 (the £20,000 - £30,000 price bracket is the most popular on Auto Trader) the majority of EVs are out of reach for all but the most affluent car buyer.

A used EV still costs circa £10,000 more than an equivalent petrol or diesel vehicle, whilst a brand-new model is still over a third (36%) more expensive, an increase from 31% at the start of 2022 and an alarming move in the wrong direction away from a vital price parity point between EVs and their petrol or diesel equivalents.

These market factors have therefore pushed back Auto Trader’s forecasts for when EVs will account for 50% of new car sales from 2026 to 2027. With an expectation that around 90% of sales will be fully battery electric vehicles by 2030 (with the remaining new cars being hybrid vehicles), meaning that the later stages of the UK’s road to electrification are going to be particularly steep.

Education and transparency vital to revitalise demand

The industry as a whole will have an important role to play in revitalising consumer demand, not least in educating consumers around monthly total cost of ownership to reduce upfront price concerns. This includes the fact that running costs are, despite rising energy prices, still in favour of EVs, with owners saving on average £124 per 1,000 miles compared to an internal combustion engine (ICE) vehicle. Even if the Government energy guarantee were totally removed in April 2023, EVs would still be cheaper per 1,000 miles, with the comparative saving dropping to £80 per 1,000 miles.

Ian Plummer, Auto Trader’s Commercial Director, commented: “With running costs still in EV’s favour, and with an improving pipeline of more affordable electric models, particularly from Asia, we anticipate the slowdown in demand to be a temporary one. It is, none the less, a significant pothole on the road to 2030, and highlights that urgent action is required to drive adoption beyond just the most affluent who can afford the “green premium” of EVs. Education and transparency will be key to overcoming barriers to entry, and the entire automotive industry will need to come together to play a vital role in demystifying EVs, especially in informing car buyers on potential TCO savings, growing range potential and expanding re-charging solutions.”

As well as making the switch to electric more affordable, the significant growth in the used EV market means creating trust in second-hand models will be essential. This will require training of front-line sales teams and technicians to communicate the benefits (e.g. growing range capabilities, driving experience, lower servicing costs etc.) and discussing consumer concerns (e.g. charging infrastructure, battery degradation etc.). And from an operational perspective, real-time supply, demand and pricing data to help identify EVs that will sell in local markets, will enable retailers to capitalise on the opportunities offered by this increase in EV stock availability.

Plummer added: “Despite the softening in consumer appetite, demand is far from collapsing, and given the wider slowdown of sales of younger age cohorts of petrol and diesel stock, the surge in second-hand EVs represents a profitable opportunity for the used car market. Armed with live-market data, retailers can ensure they’re buying the right electric stock for their forecourt, at the right price, and in the process secure the best potential margin.”

The latest Road to 2030 report also contains a list of suggested actions for retailers, OEMs and the government to take in order to drive consumer demand and rebalance the electric market. You can read the report here.