From fake news to gigafactory gaps: What are the key challenges facing the UK’s EV transition?
The UK this week passed the one-million electric vehicles (EV) milestone – but new research has indicated that long-term success is not assured, due to numerous loopholes in the Government’s strategies. In this article, edie delves into the bottlenecks that threaten to impede the transition to EVs in the UK.
Yesterday (5 February), the Society of Motor Manufacturers and Traders (SMMT) revealed that the has UK achieved the million-EV milestone.
The milestone was crossed due to 20,935 battery electric vehicle (BEV) registrations in January – a year-on-year rise of 21%. BEVs accounted for more than one in seven registrations.
The House of Lords’ Environment and Climate Change Committee, in the new report ‘EV Strategy: Rapid Recharge Needed,’ further emphasise that while the purchase of both new and used EVs is on the rise, alongside a growing number of EV leases, the current uptake is primarily driven by corporate fleets and early adopters.
The SMMT’s analysis highlights that the surge in EV adoption last month was primarily driven by the fleet market, which experienced a 29.9% increase, while private retail uptake witnessed a decline of 15.8%. Fleets accounted for more than 60% of new car registrations, an increase from just over half reported in the previous year.
The new Lords report underscores that substantial barriers still exist for the majority of drivers, particularly those with lower incomes.
It states that the initial momentum behind EV adoption, spearheaded by early adopters and corporate fleets, is slowing down due to upfront cost barriers that prevent the majority of drivers from accessing EVs. Here, edie explores the report’s recommendations for alleviating this barrier and other key hurdles.
Upfront costs of buying an EV
The report highlights two key challenges hindering the widespread adoption of EVs in the UK. Firstly, it points out the limited availability of affordable EVs, posing a significant upfront cost barrier for potential buyers, even in the second-hand market.
A 2023 Auto Trader poll of 4,000 UK drivers emphasises upfront costs as the primary barrier to EV adoption, with 56% of respondents citing this concern.
The House of Lords report suggests a reevaluation of targeted grants to alleviate these cost constraints and facilitate consumer adoption.
The Government currently provides incentives to reduce upfront costs for only motorcycles, mopeds, small vans, large vans and taxis. However, there is currently no grant in place for passenger cars.
In contrast to other European markets, the UK Government has phased out incentives, such as the Plug-in Car Grant, aimed at supporting private buyers in overcoming upfront costs for EVs.
The report argues that this move is premature, especially in the transition from early adopters and fleets to a broader segment of the population embracing EVs. It recommends a gradual tapering of incentives as EV prices decrease and approach parity with conventional vehicles.
In anticipation of the Chancellor’s Spring Statement, the SMMT is advocating for a temporary reduction of VAT by half on new BEV purchases. The SMMT contends that this measure would be a cost-effective alternative to the discontinued Plug-in car grant, potentially facilitating the rollout of another million EVs within the next two years.
‘Postcode lottery’ with public charging points
The report identifies consumer confidence in the charging infrastructure as a second primary concern alongside the upfront cost of EVs.
It stresses the importance of infrastructure development preceding demand, to instil confidence in consumers transitioning to EVs.
However, the current chargepoint infrastructure in the UK falls short of demand, exacerbating consumer anxiety. Although more than 53,000 public chargepoints exist nationwide, the Government’s target of 300,000 chargepoints by 2030 is viewed as lacking urgency by the Lords Committee.
Last year, regulations were introduced to ensure transparent pricing and contactless payment options at new public chargepoints. Despite major funding schemes, delays and inconsistent progress across the country persist, as per the report.
The report recommends extending the Local Electric Vehicle Infrastructure (LEVI) fund for three years to aid local authorities in deploying public chargepoints. It also suggests granting the Government authority to compel action from local authorities lacking sufficient charging infrastructure.
The Department for Transport (DfT) recently announced initiatives to expedite EV chargepoint installations, including grants for state-funded schools and nurseries, funding for local authorities, and proposals to increase chargepoint numbers. This package also includes LEVI grant allocations.
Tackling misinformation and building trust
The report also underscores that, along with infrastructure challenges, the Government’s failure to provide clear and consistent messaging has contributed to a lack of confidence among industry stakeholders and the public.
In September 2023, Prime Minister Rishi Sunak delivered a speech acknowledging the challenges of achieving net-zero, accompanied by rollbacks on key net-zero policies and a postponement of zero-emission vehicle (ZEV) mandate targets to 2035, intensifying uncertainties.
The mandate, now operational, requires the automakers to keep reducing the number of new petrol and diesel cars and vans sold each year, while increasing the share of ZEVs in their annual sales targets to support a complete phase-out of petrol and diesel cars.
The report criticises the Government for focusing solely on challenges without adequately highlighting the benefits of the transition, leading to a lack of public confidence.
Following the Prime Minister’s remarks, a survey by Auto Trader found that 37% of consumers expressed reluctance to ever purchase an EV.
The report underscores the need for a reliable source of comprehensive and balanced information to guide consumers amidst conflicting claims and sensationalised headlines.
An ECIU survey conducted last year revealed widespread misconceptions among Britons regarding EV ownership, including underestimations of off-street parking availability for private chargers and misconceptions about the cost of EVs compared to petrol cars.
Green Finance Institute (GFI)’s programme Director Lauren Pamma said: “Consumers need more information and a trusted source of information.
“There are so many mixed messages out there and confusion about making the right decision that consumers are worried about what they should do.”
The Lords Committee is advocating for a proactive approach from the Government in communicating a positive vision of the EV transition, emphasising the importance of clear, authoritative, accurate and balanced information.
Furthermore, it recommends the development of a collaborative communication strategy with industry partners and consumer organisations to ensure the dissemination of trustworthy information to the public.
Last year, the SMMT stated that a ten-fold increase in EV manufacturing could inject more than £100bn into the UK economy. Simultaneously, the Government introduced the Advanced Manufacturing Plan, allocating more than £2bn to the automotive industry, including investments in battery production.
The Advanced Manufacturing Plan outlines various measures, building upon announcements made during the Chancellor’s Autumn Statement last year. These include a total Government expenditure of £4.5bn on manufacturing, slated for distribution starting in 2025.
Recognising the UK’s inadequate battery manufacturing capacity, highlighted by the House of Commons Business and Trade Committee as lagging behind global competitors, the report deems these initiatives as pivotal in addressing the underinvestment.
The House of Lords is calling on the Government to provide an update on the progress of the Advanced Manufacturing Plan and Battery Strategy by the summer of 2025.
The report also found that the UK currently lacks the capacity to extract critical materials from used EV batteries.
This is attributed to several factors: regulations only mandate a 50% recycling rate for EV batteries, leading to material wastage; the UK lacks facilities to process black mass, resulting in exportation of valuable materials; and existing shredding methods are inefficient in recovering critical materials.
The report recommends that the UK enhance its capacity and standards for EV recycling to meet manufacturing demand and comply with EU battery regulations.
It suggests that the Government reviews current regulations to increase the minimum recycled amount of EV batteries and introduce minimum recovery targets for critical minerals like Lithium.
According to Green Alliance, EV battery recycling could supply 10% of the minerals needed for UK battery manufacturing by 2035, rising to 43% by 2040.
Last year, the Department for Business and Trade unveiled the highly anticipated UK Battery Strategy, reinforcing the previously confirmed £2bn package for the automotive manufacturing sector’s net-zero transition.
This funding, allocated from 2025 to 2030, will focus on three key areas: developing new technologies, expanding supply chains and manufacturing capacity, and fostering future growth through skills planning and collaboration.
Moreover, the Government plans to initiate exploratory work on new R&D centers co-located with EV manufacturing hubs this year.
Additionally, consultations on new rules and guidelines for end-of-life battery management are expected to commence before the general election this year.