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Public confidence lies at the heart of an electric future for transport

electric cars
By Andrew Adie
19 September 2024
Energy, Transport & Infrastructure
Community & Stakeholder Engagement
Green & Good (ESG and Impact)
Public Affairs
News

A crisis of confidence is gripping the EU’s Electric Vehicle (EV) sector, driven by a toxic combination of consumer concerns, government policy flip-flopping, and macro-economic manoeuvring.

The upshot is that the market for new EV sales is slowing, car manufacturers are altering their plans to roll out EV models, and some are threatening to close factories and lay off workers as demand for new EVs fails to meet supply. Earlier today, European carmakers were in the headlines once again, pleading with the EU to delay 2025 emissions targets, which risk subjecting them to “multi-billion-euro fines.”

Volvo, once at the forefront of the EU's EV car manufacturing movement, has recently stepped back from its commitment to only sell EV cars by 2030. The company cites slowing demand from consumers concerned by the higher prices of EVs and anxious about their range and the ability to charge them through Europe’s still nascent public charging network.

VW is also facing worker protests after announcing a review of its production facilities, which could result in the loss of two factories and up to 15,000 jobs as it tries to balance production supply with consumer demand.

The bedrock of the EV market—batteries—is also facing geopolitical tension and economic uncertainty. Leading European developers like Northvolt are struggling to raise new funds and are delaying factory roll-out plans. Global investors are pausing to assess the impact of slowing consumer demand for EVs and shifting international trends in battery production, influenced by the US Inflation Reduction Act, which is drawing investment into the USA, and the ongoing growth of China’s vast EV and gigafactory industries.

All of this causes headaches for car buyers and owners, but also for the environment.

With transport accounting for around 26% of UK carbon emissions—making it the largest emitter, ahead of even energy supply at 20%—gaining consumer support for EVs is critical.

Yet, securing any change in consumer behaviour requires confidence that the new system will work, coupled with excitement about what that change represents.

When it comes to excitement, while the EV products offered by car manufacturers are innovative, enthusiasm for the ‘new’ is curbed by the modest cost savings that running an EV brings. Some studies suggest the savings can be as little as £200 a year when considering higher insurance costs for EVs, fast depreciation, and significantly higher purchase prices.

On the confidence front, the rollback of the deadline to ban sales of new petrol and diesel cars from 2030 to 2035 by the previous government dented consumer confidence and seeded doubt in the minds of both buyers and the car industry. Although Labour has reversed this decision, with new petrol and diesel cars banned from 2030, the allowance of hybrid sales until 2035 (in line with EU rulings) does little to calm the nerves of car buyers worried about spending more on an EV. Unless an EV is charged at home, buyers will be heavily reliant on a comprehensive public charging network.

That network is growing, with data from ZapMap suggesting that the UK now has more than 60,000 public charging points for EVs. However, this must be balanced against the fact that there are over a million EVs in the UK, out of a total fleet of around 41 million vehicles. Many of those charging points are concentrated in urban areas, leaving rural Britain—where reliance on cars tends to be higher—lagging in terms of charging infrastructure.

Why does this matter? Because the carbon footprint of the transport sector is such that it is in everyone’s interest to decarbonize transport. Yet, perceptions of the EV industry and concerns about the user-friendliness of EVs remain major blockers to the successful achievement of net-zero targets.

Reducing the price of EVs seems like an obvious solution (though funding that through subsidies is less clear). In reality, used-EV prices are relatively low, so buying second-hand significantly reduces the price barrier. But confidence remains an issue here too, with consumers reportedly worried that warranties on batteries are too short (typically around eight years) and that the cost of replacing a faulty battery is prohibitively high. A study by Autocar earlier this year stated that 75% of used-car buyers have ‘serious concerns’ about purchasing an EV.

News of potential alternatives, such as hydrogen fuel cells—developed in partnership by BMW and Toyota—further complicates matters. Are EVs simply a transitional technology, or could something else replace them?

While most commentators argue that the shift to an EV future has unstoppable momentum, the tipping point will not be determined by government policy alone, but by consumer confidence and demand.

Although the products may be exciting, the past few months have shown that building consumer confidence will require a solid plan for charging infrastructure and action to make the cost of buying and owning an EV a more compelling reason to switch cars and technologies.