According to the AA, as petrol and diesel prices drop and the cost of electricity surges, the number of motorists interested in purchasing electric cars has significantly decreased.
The AA’s research indicates that less than one-fifth of car buyers are considering buying an electric car this year, down from one in four a year ago.
In addition, the CEO of Stellantis, which owns Vauxhall, has warned that electric cars are currently unaffordable for the middle classes without government subsidies. Carlos Tavares has stated that the main challenge of electrification is reducing costs to make electric vehicles affordable for people without subsidies.
Our current focus is on reducing costs as quickly as possible to make electric vehicles affordable for people without relying on subsidies.
Rampant inflation has caused the upfront cost of plug-in vehicles to become unaffordable for many buyers, making models more expensive. For instance, a Volkswagen Golf has a starting price of around £25,000, whereas a similarly-sized all-electric VW ID.3 begins at approximately £36,400. Meanwhile, the combustion engine model of Nissan’s Juke has a starting price of £20,700, whereas the battery-powered Leaf starts at £29,000.
Consequently, with falling pump prices, many drivers are holding onto petrol and diesel cars for longer. After reaching a high point in the summer due to Russia’s invasion of Ukraine, petrol prices have decreased from over 191 pence per litre to an average of 148.4 pence per litre. Additionally, diesel prices have declined to their lowest level since the start of the Ukraine conflict.
Electricity prices have become more expensive due to higher wholesale gas prices, which has made it more costly to charge an electric vehicle at home and on the road.
In addition to this, the limited availability of charging points on UK roads has put pressure on the uptake of plug-in vehicles. According to the Society of Motor Manufacturers and Traders (SMMT), only one new public charger was installed for every 53 electric cars sold last year.
Despite the current cost-of-living crisis, 22 per cent of surveyed drivers stated their intention to purchase a car this year, as reported by the AA.
Mark Oakley, the Director of AA Cars, has stated that although many drivers intend to purchase a car this year, stretched household budgets have resulted in alternative purchasing decisions. Based on AA Cars’ search data, it appears that buyers are expressing more interest in smaller, affordable cars that are inexpensive to run. This could be a contributing factor to the decreased interest in electric vehicles, as they are generally more expensive upfront than their petrol or diesel counterparts.
Additionally, in January, the RAC published data that showed the cost of charging an electric car for long drives on the road is now more expensive than filling up petrol and diesel equivalents.
Furthermore, according to the AA, eight out of ten drivers who plan to purchase a car this year have stated that they would switch their existing petrol or diesel vehicle for another combustion engine model.
According to recent data, it costs around £21 to charge an electric car battery to 80% at home based on the current electricity price cap, while a rapid public charging point costs an average of £30, with some options costing as much as £46.
However, starting in April, drivers may have to pay even more to charge their electric cars at home due to an anticipated 20% increase in energy prices under the UK Government’s energy price guarantee. This increase will raise a typical household bill to £3,000 per year from £2,500.
The interest in electric cars has decreased steadily in recent months. In January 2023, electric vehicles accounted for only 13% of all new cars sold, compared to an average of 17% throughout 2022. Additionally, the limited availability of second-hand plug-in cars meant that they represented only 1% of used car sales last year.
Stellantis CEO, Mr Tavares, has highlighted the success of large subsidies in driving electric vehicle sales in countries like the US and Germany. He also stated that new battery designs and the use of lithium iron phosphate (LFP) batteries could reduce costs, as LFP batteries do not require expensive and limited resources such as nickel and cobalt.
However, the industry continues to struggle with the limited availability of public charging points, which is necessary for electric vehicles to become a long-range travel option instead of solely a commuter car. The Society of Motor Manufacturers and Traders lobby group has urged the UK government to accelerate the rollout of public charging points and ensure that their pricing is straightforward and consistent.
