Demand for EVs falls as cost-of-living rises

Electric vehicles (EVs) accounted for fewer than a fifth (19 per cent) of new car inquiries sent to retailers through its online marketplace last month, down from 27 per cent in June 2022, when petrol reached almost £2 a litre. 

Auto Trader also reported that the number of searches and advert views for used cars has fallen by 13 per cent in the past 12 months.

The company's Road to 2030 Report showed the first year-on-year decline in demand for EVs since April 2020, shortly after the start of the coronavirus pandemic. 

Some of the causes of this change in trends have been attributed to changes in government policy. 

In his Autumn Statement, Chancellor Jeremy Hunt announced that new zero-emission cars will no longer be exempt from vehicle excise duty from April 2025, which was reportedly designed to make the motoring tax system “fairer”.

In February, MPs on the Transport Committee warned that the government faces a major funding gap for road infrastructure if it does not develop a new motor tax for zero-emission vehicles.

In addition to changing government policies, the Auto Trader report also underlined fundamental barriers to EV adoption such as the lack of choice and affordability. At the moment, there are five times fewer new electric models available under £30,000, meaning the majority of EVs are out of reach for the general public. 

These high costs can also be seen in second-hand purchases, with a used EV still costing circa £10,000 more than an equivalent petrol or diesel vehicle.

Electric car owners in the UK have also suffered a 42 per cent hike in the cost of using public rapid charge points in just four months, according to figures published by the RAC. These show that the average price for using EV chargers on a pay-as-you-go basis has increased by 18.75p per kilowatt hour (kWh) since May, rising to 63.29p per kWh. 

As a result of these figures, Auto Trader has pushed back its prediction for the time when EVs will account for 50 per cent of new car sales from 2026 to 2027.

“Although current sales figures look positive, the rapid decline in consumer appetite for electric vehicles reveals the market is on thin ice where mass electric adoption is concerned," said Erin Baker, editorial director at Auto Trader. 

“And with the forecast of new car electric sales reaching 50 per cent being pushed back to 2027, the market faces a precarious combination of factors which could cause major potholes on the road to 2030 without further action from government and industry to encourage mass adoption.

“There are some positive signs with running costs still in EVs’ favour and more affordable models in the pipeline, particularly those from Asia. But today’s slowdown in demand for EVs translates into lower sales as we enter 2023.”

Despite the high upfront cost and the additional burden of taxation, the report stressed that EV owners save on average £124 per 1,000 miles on running costs compared to an internal combustion engine vehicle.

Last year, the UK government announced that it would bring forward a ban on the sales of new petrol and diesel cars and vans in the country to 2030, although the restriction will not affect hybrid vehicles. 

However, a recent analysis from E&T has revealed a potentially huge investment gap that threatens the UK’s net-zero ambitions and the plans for a widespread uptake of EVs, with electricity demand set to increase by more than 70 per cent by 2050.