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By Simon Harris, head of valuations at UK Vehicle Data

Company car drivers and fleet operators have, for many years, been able to take advantage of incentives that encourage adoption of new electric cars.

It has been hugely successful, with 2023 electric car registrations reaching more than 300,000 units and a market share of 16.5%. For 2024, manufacturers have been set a target of 22% of registrations.

For some car manufacturers, this is an unrealistic target. Over the next couple of years they will be able to compensate for missing it by buying ‘credits’ from brands with higher EV volumes. But after 2026, they will face heavy fines for not reaching the annual target, which by then will have reached 38% of registrations, on its way to 80% by 2030.

Mixed messaging from the Government, equivocation on the deadline to end new sales of pure ICE cars, and a public charging infrastructure that is far from consistent might have already delayed a first electric vehicle purchase for many consumers.

For fleets, it’s a different story. Company car drivers switching from an ICE or hybrid car into an electric car effectively reward themselves with a pay rise thanks to the extremely low BIK tax liability. And in these times of higher living costs, who can blame them?

Salary sacrifice has also been an effective way of persuading many employees to choose an electric car.

But the case for private buyers to choose one weakened with the end of the plug-in car grant a few years ago. And during the last 13 years of electric car sales in the UK, what incentives have encouraged take-up among used car buyers? None at all.

Yes, there’s no annual VED – an extremely small component of total running cost – and charging an electric car at home (with a £1,000 charging point) is still substantially cheaper per mile than filling with petrol or diesel. But there has been precious little else.

And this lack of a joined-up approach is partly responsible for the crash in used electric car values we have witnessed during the last 18 months.

Why on earth would a typical used car buyer spend £30,000 on a used, high-performance Tesla Model 3 or Jaguar I-Pace for a short daily commute, school runs and a couple of other trips each week? And it’s these premium-priced cars – chosen by high-ranking employees – that have become too prevalent on the market in recent years.

Put simply, used electric car supply is out of sync with demand by a staggering margin.

And this is where we are with 315,000 EVs registered in 2023, and fewer in earlier years. Based on an annual new car market of 2 million, the ZEV mandate will require around 400,000 electric cars to be registered in 2024, and increase to more than 1.5 million a year by 2030. With used EV demand in the doldrums, forcing registrations in this way and flooding the market with unwanted used cars of the future is hardly sustainable.

In a few years, car manufacturers will begin to introduce solid state batteries, which are said to offer 40% more range than batteries using current technology. This will present the opportunity to offer similar range with a much smaller, lighter, cheaper battery, or hugely increase the distance capability of an electric car on a single charge with batteries the same size.

These will take a while to replace previous EVs in manufacturer line-ups, but by 2030, they could be a significant proportion of the new plug-in cars available, which risks making cars using the current technology seem obsolete and less desirable.

Current policy favours pushing new electric cars, using technology that risks becoming out of date within five years, into a market that is incapable of sustaining the numbers without further pressure on used values.

Urgent action is needed to demonstrate we have a robust and reliable charging infrastructure, to make electric cars more appealing and relevant to used car buyers, and ensure those buyers understand the benefits.

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