Cost of living crisis dampens demand for EVs

The cost of living crisis has significantly reduced buyer interest in electric cars, data from What Car? Insight has revealed. Between March and July 2022, more buyers signalled their intent to buy an EV than they did a pure petrol or diesel model. The proportion of buyers who planned to go electric peaked at 41.8% in July, when petrol prices hit a record 186.2p per litre. But as pump prices fell, the cost of rapid-charging an electric car rose. In September, charger operator Osprey announced a price hike to £1 per kWh – 50% more than the previous rate of 66p per kWh. Osprey CEO Ian Johnston called the increase “unavoidable” in a video to customers, citing the inflated cost of wholesale electricity. That month, What Car? asked 943 car buyers not in the market for an EV whether the rise in electricity prices put them off making the switch, and one in three responded in the affirmative. Meanwhile, interest in petrol and diesel cars overtook that in electric cars, at 42.0% for petrol/diesel and 25.9% for EVs. This was the most dramatic swing recorded in favour of ICE cars, as the October announcement of the energy price cap coincided with a slight rebound in demand for EVs, to 27.8%. Following the announcement, more than 500 prospective EV buyers were asked whether they would have been in the market for one without the price cap. One in five said it helped them to make the switch, demonstrating the importance of government incentives in maintaining the momentum of EV sales. When the two-year price cap was then scrapped, more than 900 non-EV buyers were asked whether the U-turn influenced their decision not to go electric. Although 75.6% of respondents said they never planned to buy an EV, the remaining 24.4% said the cap’s cancellation had influenced their decision. “Government support for the industry and consumers has a clear impact on people’s vehicle choice,” said What Car? editor Steve Huntingford. "Schemes such as the energy price cap provided reassurance for buyers, which was reflected in greater interest for EVs.” How long were buyers willing to wait? What Car? has tracked new-car waiting times since January 2021, when global Covid lockdowns forced factory closures and created supply shortages. Between January 2021 and July 2022, the proportion of buyers willing to wait more than 16 weeks (four months) more than doubled, from 23.7% to 48.9%. In response to how entrenched the shortage of new cars had become by July 2022, What Car? changed its survey to ask buyers to rate their willingness to wait against particular periods. Less than 10% were consistently willing to wait more than a year for a new car, while 40-50% were willing to wait three to six months. EV buyers were often willing to wait longer than petrol or diesel car buyers. Buyers were also asked what they would do if their wait was longer than expected. This revealed another marked difference between EV and ICE car buyers. The former group more often considered switching to cars from other manufacturers, whereas the latter was more likely to consider their chosen maker’s stock, nearly new or used cars. Brand awareness and taxation What Car? also polled buyers on various other industry questions during 2022, such as the rise of new players in the EV market. Of the brands included in the survey, Polestar was the most familiar to UK buyers by a significant margin, reflecting the value of having an established sibling brand (Volvo), of product availability and of marketing activity. For reference, nascent American brand Rivian was the next-most familiar brand, heard of by 10% of buyers. What Car? also researched how motorists would like EVs to be taxed. Of 1140 survey respondents, 32.8% favoured a flat annual tax. The next most popular option was a progressive tax based on the car’s list price. The least favoured method was a combination of road pricing (charging per mile driven) and tolls. Industry and government demands Buyers were asked what car manufacturers should prioritise in 2023. Almost half of respondents said that makers should focus on reducing vehicles’ cost – an unsurprising result, given the sharp rise in costs over the past few years. For example, an entry-level Ford Fiesta 1.1 75 Trend 3dr cost £167 per month on PCP finance, pre-pandemic. Almost two years later, the equivalent 5dr model costs £226pm – a significant rise, likely to grow further as unstable interest rates disrupt car finance. The next highest suggested priority for manufacturers was to improve EVs’ ranges between charges. This shows that, although significant progress has been made over the past few years, range anxiety still clouds the public perception of EVs. Less than 5% of those surveyed were interested in improvements to self-driving technologies or over-the-air software updates, despite these being key areas of investment for manufacturers. As for what the government should prioritise, most respondents said it should be improving the standards of the UK's road network. Improving the EV charging infrastructure and scrapping smart motorways were also high on buyers’ agendas, indicating that they would rather the funding earmarked for the latter be used to prepare the charging network for mass electrification.

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Cost of living crisis dampens demand for EVs

What Car? data reveals interest in electric cars declined as interest rates and living costs spiked

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Cost of living crisis dampens demand for EVs

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