Industry impact: EV volume growth

In this article: Electrified vehicles are the future, but how quickly will their market share grow

The electric car is meant to be the technology that will wean us off the combustion engine and help reduce our impact on the environment, but how much impact are EVs having on the UK market?

Carbon emissions targets soon to be set by Europe may be impossible to hit due to limited electric vehicle production, according to research by Cap HPI. The data, revealed at the Vehicle Remarketing Association 2020 Vision conference at the end of last year, showed a higher proportion of electric and hybrid cars were needed to be sold to hit new CO2 targets than were likely to be produced.

Cap HPI consultant Matt Freeman

Speaking at the conference, Cap HPI consultant Matt Freeman said: “All manufacturers are facing enormous fines under the new legislation if they don’t meet the emissions targets in Europe, so we have to remember there's going to be a huge amount of investment in this to ensure that the manufacturers don't end up having to pay those huge fines.”

Freeman believes it is only battery electric vehicles that are going to provide us with the kind of CO2 reduction that we need in order to avoid the financial penalties. “Most consumers have exited diesel in the new marketplace and have moved themselves up into petrol. That is not a sustainable position to be in. That's contributing to that rise in CO2,” he said.

He added that while PHEVs offer a suitable alternative for those coming out of diesels because of their range and efficiency, some have been put off by recent changes in PHEV taxation.

Freeman has run scenarios to model the uptake of low emission vehicles. Using a scenario that keeps the UK on its current track, results in a slight increase in hybrid and plug-in vehicles, but doesn’t meet the EU target.

Car makers are aiming to hit a target of 95g/km in 2020 and then a new target for 2025, based on emissions targets that will be set in 2021.

This scenario, said Freeman, means that “by 2025, about 70% of people will still be buying internal combustion engine vehicles, simply because by 2025, there isn't going to be enough choice or enough opportunity for people to move. For those who can move and are in a position to move, then you're looking at relatively small beer, so you're looking at mild hybridisation, taking it to about 14%. HEVs at about 5%, 6% for plug-ins, and about 7% for BEVs. It takes us to 113g/km. So, we still wouldn't be, in a realistic scenario, in a strong enough place.”

The result by 2025 is a vehicle parc of 1.2m hybrids, 680,000 PHEVs and 716,000 BEVs.

The issue that Freeman believes will hinder progress with fleet planning and investment is that there isn’t the car manufacturing capacity to supply a greater level of full EVs. “We've got to sell three quarters of a million hybrids, just over half a million plug-ins, and just under two thirds of a million electric vehicles.

“Let's put that in perspective. The factory Volkswagen opened earlier this year at Zwickau to build its electric vehicles has a stated capacity of about 300,000 units a year. We would have to be buying, in the UK, a huge amount of the capacity of that factory. Volkswagen of course also has to sell those cars in Germany and France and Italy and Spain and China and everywhere else. There's going to be a huge amount of demand,” he said.

The situation worsens under a stronger EV scenario, modelled by Freeman, that meets the EU CO2 target using Norway-style policies and incentives.

“That's 850,000 electric vehicles in five years. So then again we come up to the problem of how do we actually source those vehicles and get them into our marketplace. That I think is the big challenge.” He added that even if the UK leaves the EU, it is still likely to keep the same CO2 targets, although possibly with smaller fines.

There’s no arguing that electrified vehicles are here to stay, but their uptake in the market could take a lot longer than some people think.