News analysis


The road to zero: Co-ordinating efforts to boost EV adoption BVRLA’s corporate affairs director, Toby Poston, on how business leasing has driven the battery electric market. B


usiness leasing has been a driving force behind the adoption of battery electric vehicles (BEVs), bolstered by targeted incentives. However, as the BEV market continues to expand and the targets of the Zero Emission Vehicle (ZEV) mandate increase, a co-ordinated approach involving fiscal incentives and government interventions is essential to get us over the line. All market segments and distribution channels need to progress in tandem to ensure balanced growth.


The current trajectory remains one of the haves and the have-nots.


Phase-out targets and sales mandates are beginning to force the industry’s hand, but will not succeed in isolation. Where incentives have been present, registrations have followed. The sectors currently benefitting from such support cannot bear the weight of the full transition alone and the burden is growing as the gap between corporate and private demand grows. The financial risks are being concentrated on one part of the supply chain, which is unsustainable. The UK Government’s 2030 Phase Out target for banning new internal combustion engine (ICE) car sales poses significant risks unless paired with robust support measures. For vans, that timeline is unachievable.


The ICE Phase Out timings and the terms of the ZEV Mandate create a period of uncertainty from 2030 to 2035. What officially qualifies as a ‘hybrid’ vehicle holds the key and will be the focus of a consultation from the Department for Transport before the end of the year. It will


focus on the specifications required for vehicles to be classified as ‘hybrids’ that can continue to be sold from 2030 to 2035. For the ‘EV ecosystem’ to thrive sustainably, it must be nurtured across all sectors.


Although business leasing has seen notable success, other market areas need focused support to boost EV adoption and meet the ambitious targets. Whether starting its journey in rental, corporate fleets, or as a private purchase, nearly every vehicle eventually enters the used market. Currently, the used BEV market is underdeveloped and highly


volatile, with residual values plummeting in recent years due to a surge in volume.


While good news for used EV buyers in the short term, the scale of value destruction being absorbed by the vehicle leasing industry, which is responsible for 75% of new EV registrations, is unsustainable.


Used EV car prices are predicted to fall by a further 28% between now and 2030. This fall is on top of an existing slump that has already seen them lose half of their value over the past two years. Lease


rates on new EVs are priced on the loss of value or depreciation a vehicle will experience over the length of a contract rather than its total cost. As the depreciation experienced by EVs increases, so does the price of leasing a new one.


Registrations of new EVs won’t grow without a healthy used market.


Launched in the House of Lords earlier this month, our Happy EV After campaign is shining a light on the issues holding the used EV market back, suggesting a host of steps that should be taken to see it succeed. It is bolstered by a BVRLA-commissioned report from Oxford Economics, which has highlighted the urgent need for interventions based on intensive market analysis and forecasting.


The Happy EV After campaign is built on addressing three critical points: boosting confidence, balancing cost of ownership, and expanding accessibility.


Above: Used EV car prices are predicted to fall by a further 28% between now and 2030.


While government action is essential to address many of these issues, it is not a standalone solution. Government intervention is a key component of the broader strategy, but it must be complemented by industry collaboration, private investment, and innovative solutions. The transition will require a combined effort from all stakeholders. Just as the health of new and used vehicle markets is interconnected, the success of the EV transition hinges on coordinated efforts between public and private sectors. Together, these efforts will be vital in driving the sustainable growth of the entire EV ecosystem.


www.businesscar.co.uk | September/October 2024 | 11


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