Today, the electric vehicle is still more expensive, the RRP for the best-selling BEV, the Nissan Leaf, is circa £25K and the comparable ICE the Nissan Juke is £15K. The subsidies and support are also not clear enough; if anything it only remains confusing for people to take real notice. Using calculators and spreadsheets to combine the costs of subsidy, fuel, tax, etc. to find a net saving it too much effort for many of us. Even considering the general fuel and tax benefits, at present we are not pushing the majority of consumers past the tipping point in considering an electric car. The level of skepticism and anxiety is in essence having a negative effect on the general market with many consumers simply putting off the decision to purchase a new car. The industry in general is therefore facing many business challenges and the simple price point of the battery cell to produce and bring to the market is not reducing fast enough to dent the headline prices. At the moment, it is simply not viable for OEMs to reduce prices with no long-term sustainability of production costs coming down and volumes increasing.
The UK’s perception of owning an electric car is somewhat unconvincing in terms of outlining the consumer benefits. The infrastructure of charging stations, which is still a problem in the UK with no national standard of access, is a fundamental problem. The perception of a lack of availability of said charging is all perceived to make it a complex process and the perception is not shifting quick enough. This causes anxiety and doubt when it’s time to buying that new car. If we look at the investment in China as an example (which is making up near 50% of the global BEV market today) and the comparable UK investment, it is not sufficient to get anywhere near the penetration targets our own government is setting.
The model proliferation is simply not exciting enough to the UK consumer. Remember when we first got our hands on the iPhone? Is there really any car on the market today that has that “must-have” appeal and is joining up all the demands the UK consumer is expecting of a modern car and its subsequent ownership journey?
Over the past six months at its peak, we are seeing approximately eight percent of cars registered as PHEV/BEV. With BEVs alone, to get a penetration equal to 50% of the total market, we are looking at mid-2040s, with consideration to the recent growth patterns over the past 18 months. So, what is required to get us moving?
Increased charging points: The UK needs to invest in the infrastructure and needs to align and increase the pace of public, robust charging solutions covering locality, payment methods, and effective management of the utility demand. It needs to spend a lot more on the communication and advice to support the industry and consumers in understanding the benefits and the ease of use. Across the UK today, a lot of initiatives are developed in vacuums, solving one problem at a time. We need a far more robust, joined-up strategy. To this end we could invest in a shining star that is real and works. A city that can take the lead and develop such restrictive measures against the ICE platform that allows us to move forward with electric, semi-autonomous, and connected mobility solutions in a controlled way.
An industry that needs to focus: As an industry, we need to ask ourselves whether we truly want to shift our focus towards electric vehicles across the timescales we have collaboratively set with governments across the world. We are one leg in and one leg out with all daily demands still on the ICE platform. We need to give an honest appraisal of where we are and where we want to go – which is away from the CEO soundbites. The industry thus needs to set collaborative targets for emissions, emission testing, crash testing, etc. It may mean a reorganization of the entire supply and then delivery market to allow us to bring products to the consumer quicker. It may mean a further consolidation in the industry to achieve the realized economies of production costs, which move us to a more efficient price point. But we need to make a shift.
New model line-up: We need to look at a model line-up that is focused on electric technology at the forefront and are not simply adaptations of the incumbent ICE models. Exciting the consumer is important and todays offering is lacking.
Connected mobility solutions: By this I mean looking at how we travel and adapting provisions and consumer solutions around that. This goes across the type of travel – whether it be public transport, shared ownership, private rental, etc. Today, all these providers work and compete in their own microeconomy, with the consumer wanting holistic solutions to move them in the most economic, simple, and efficient way.
If we focus on these pitfalls, the market will be able to move forward, also considering the new brands coming in 2019–2020 and the mainstream manufacturers producing further product lines and ownership offers in the coming years. With more flexibility and more digital subscription services, it is an exciting time for this industry. The focus must be to push towards being more collaborative to realize the ambitions of less pollution and more efficient road and wider transport solutions.
Please find out more information on challenges facing the electric vehicle take up in our latest Capgemini study :