SMMT Electrified 2023: good EV news, and items still on the EV to-do list

The SMMT Electrified 2023 Conference contained lots of good news about the UK’s electric vehicle industry, but it also highlighted some items that are still on the to-do list.

Good news

EV production in the UK

The good news included recent announcements about electric vehicle production in the UK, such as confirmation that electric MINIs will be built at Oxford (a £600m investment), the first electric vans rolling off the production line at the Stellantis plant at Ellesmere Port (a £100m investment), and Tata’s battery gigafactory getting the go-ahead (a £4bn investment) – as well as previous news from companies such as JLR, Ford and Nissan.

The government is on board

These announcements involved investment from the UK government, and the Secretary of State for Transport, Mark Harper, was on hand to reassure the audience that after a period where questions were raised about whether the UK government valued the automotive industry, the government does see itself as having a clear role to play alongside the industry, and wants to give confidence to the industry, investors and motorists.

EV sales figures

EV sales figures are positive – rising from 0.7% of the new car market in 2018 to an expected 18% in 2023 – with fleets and businesses being the main EV buyers, helped by government incentives such as low benefit in kind rates for company car drivers.

ZEV Mandate

One big issue at the moment is the ZEV Mandate, a proposal to mandate increases in manufacturer’s sales of EVs in the UK each year. The good news is that a plan for this exists, which manufacturers generally welcome – the bad news is that it’s been sitting in government for a long time without being approved, and it’s due to start on 1 January 2024, so time is running out for manufacturers to know what to plan for. But the Secretary of State for Transport said on a number of occasions that this would be signed off by the government ‘very soon’ – this was taken to mean in the next week or so… this will also hopefully give certainty for the deadline of the end of petrol and diesel car sales in 2030 (there has been a political wobble on this), and the end of plug-in hybrid sales in 2035 (exact definition around plug-in hybrid still to be confirmed). The main industry feedback at SMMT Electrified 2023 was that the ZEV Mandate is just one of many things that the industry needs certainty about from government.

Items still on the to-do list

Charging infrastructure

In terms of items still on the to-do list, electric vehicle charging infrastructure was top of the pile. The overall consensus was that consumers still find that EV charging isn’t user-friendly enough. And there’s definitely a postcode lottery; for example London has a good ratio of EV chargers to EVs; but areas such as the North West have a terrible ratio of EV chargers to EVs. And there’s the ‘inequality’ issue that households with off-road parking can charge an EV relatively cheaply overnight, but EV owners without drives have to pay expensive rates for public charging. One big issue remains the very slow timescales for rapid charging hubs to get electricity connections.

Incentives for private car buyers

The SMMT highlighted the lack of financial incentives for private car buyers to buy EVs. Only one-quarter of EV sales are currently to retail buyers, which is believed to be due, in part, to the lack of disposable income as a result of the cost of living crisis. However a survey showed that two-thirds of non-EV owners want to switch to EVs. The SMMT would like to see a form of incentive reinstated, whether this is the plug-in car grant, or some other mechanism such as the reduction/elimination of VAT on EVs for private buyers. EVs are seen as expensive by private buyers, even though the higher purchase price is offset by lower running costs when looked at on a whole-life cost basis.

VED

The favourable Vehicle Excise Duty (VED) rates for EVs are also due to be stopped, as VED rates for EVs are due to be reintroduced in 2025. And EVs are currently subject to the expensive car supplement.

Rules of Origin

Assuming that the ZEV mandate is resolved in the imminent future, another government issue is Rules of Origin, which is due to kick in from 1 January 2024 and is designed to encourage automotive components to be made locally, otherwise imported parts such as batteries will result in tariffs, which will add to the cost of vehicles. And on the subject of tariffs, the EU is due to investigate applying tariffs on Chinese EVs, which might create a more level playing field for European manufacturers, but this would make Chinese EVs more expensive for consumers.

Trucks

Getting trucks to net zero seems to have been overlooked over recent years; more focus on this area is needed, along with plans for public charging infrastructure for trucks, which is virtually non-existent in the UK at the moment.

Good or bad?

Hydrogen

What about areas where the jury is still out? Hydrogen topped this list. There were panel members who saw hydrogen as the best solution for long haul HGVs, but the general consensus was that battery electric vehicles were the solution for most duty cycles because the technology is here now.

Investment

Investment was highlighted as another area where the UK has had successes, but could do better. High growth UK technology companies with solutions in the area of zero emission vehicles struggle to get investment, as they’re seen as high risk.

Conclusion

Net zero has a target date of 2050; the end of plug-in hybrid sales (yet to be 100% defined) is due in 2035; the end of petrol and diesel car sales is 2030 (if the political wobble is brought under control). At the time of writing the ZEV Mandate is due to start in January 2024, but the final details still haven’t been signed off by the government. And then there are numerous other issues such as transitioning HGVs to zero emission, and creating a national charging infrastructure for HGVs. So time is running out. The UK and its political leadership needs to see net zero as an opportunity not a threat and take action accordingly. The US Inflation Reduction Act was referred to many times in the Conference – the UK government needs to take similar ‘big thinking’ action, as well as communicating effectively about the benefits from cleaner air, a stable climate, and a healthier planet.

Paul Clarke

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