According to the findings from Auto Trader’s latest Road to 2030 report, the current fuel crisis is sparking consumer interest in electric vehicles (EVs). But when fuel prices drop, the interest wanes.
The proportion of electric cars viewed on its Auto Trader’s marketplace had dropped from a high of 26% in late September 2021 when the petrol crisis took hold, to just 16% in February. But since prices at the pumps started to rocket, so has consumer interest. Over the past week alone, consumers are conducting 27% more advert views for new electric vehicles than they were the previous week, and now account for 20% of all advert views.
Last year, the industry made good progress with the sale of EVs (accounting for 11.6% of all new car sales last year), driven, in part, by manufacturers offering more choice than ever before (with four times as many new electric models available (75) on Auto Trader compared to 2020), as well as investing significantly more in driving consumer awareness. In fact, 44% of all brand advertising spent on Auto Trader last year was to promote an EV, which was up three times on the prior year.
Accordingly, interest in electric vehicles saw significant growth on Auto Trader throughout 2021, with the share of new car advert views increasing from just 6% in January to 18% at the beginning of September, before rocketing (26%) in response to the fuel shortage crisis. As the queues at the pumps subsided, so too did the proportion of electric cars viewed on its marketplace, falling to just 16% in February. However, as motorists start to feel the pinch of record high fuel prices and rising living costs, demand has again begun to climb.
It suggests that without the impetus of rising petrol prices or challenges to access, interest in EVs is waning. With the average new EV costing 35% more than an internal combustion engine (ICE) car, the report highlights the ‘green premium’ as a major barrier to entry for most buyers. And it’s not just brand new EVs commanding a significant margin; there’s also a significant differential in the used electric market where EV models are on average £8,000 more expensive than their petrol/diesel equivalents.
This is backed up by the findings that 55% of those looking at a potential EV purchase have incomes above £50,000, far higher than the 37% of Auto Trader’s overall audience in that bracket (which is reflective of society). And more than half, or 56%, of EV viewers were 45 or over, compared to 45% of the marketplace’s audience overall.
The gap between hybrids and petrol/diesel cars is significantly narrower at 6%, which is a major factor, no doubt, for the 49% of people surveyed by Auto Trader who intend to purchase a hybrid as a steppingstone to a full EV. Hybrids currently account for one in five new car advert views on Auto Trader (more than twice as many a year earlier).
Whilst there are more electric models available than ever before, the report highlights the huge disparity with fossil fuelled vehicles, with buyers able to choose from four times as many new ICE models as EVs. This disparity in choice only increases in the lower price brackets. In fact, the number of EV models priced under £20,000 dropped from 11 in 2020 to just three in 2021.
Whilst consumer demand is yet to reach the huge spikes recorded during the fuel crisis, the recent growth does highlight motorists’ concern for running costs; a recent poll on Auto Trader revealed that if petrol prices continued to increase, 39% of motorists said it would make them drive less.
Ian Plummer, Auto Trader’s Commercial Director, highlighted the opportunity this presents to the industry: “At a time when consumers are facing increasing financial pressure, it’s perhaps no surprise that even the more affluent motorist may be hesitating to make the switch to EVs. However, with fuel prices at record levels, and only set to increase over the coming months, there’s a clear opportunity for the industry – information and education on the lower running costs of EVs have never been more important. Our analysis shows that EV owners can save £140 every 1,000 miles, which is up on the £100 we recorded just a few months ago – it’s this level of detail on cost savings that will be key to softening the impact of the green premium and bringing EVs into line with their petrol or diesel equivalents.”
Auto Trader believes that incentives are also key to driving adoption, as they help average earners cover the upfront cost and stimulate the demand needed to make affordable EV production commercially viable.
However, the limited financial incentives on offer to UK motorists are set to be withdrawn altogether, with the Electric Vehicle Homecharge contribution coming to an end in April for most home owners[i], the Plug-in Car Grant ending in 2023, and the benefit-in-kind tax break set to stop in 2025. Therefore, Auto Trader is calling for more incentives to give EV owners a variety of benefits over ICE vehicles from tax exemptions, to grants, and from driving zone benefits or bus lane use to free parking.
Plummer concluded: “We need to see EVs become genuinely attainable for everyone, not just the wealthiest car buyer, with sufficient model and price point options that meet every need. We firmly believe, that realising this objective will require an increase in Information, Investment and Incentives from industry and Government with collaboration between the two. Unless these areas are addressed, the road to 2030 is at risk.”
Keyword: Demand for EVs increasing as pump prices rise