Once the preserve of the eco-conscious ‘early adopter’, research suggests it won’t be long before electric vehicles (EVs) become the norm on UK roads.
According to a recent report by Deloitte, a third of all new vehicles globally will be electrified by the end of the decade, with sales expected to exceed 31 million by 2030.
This is 10 million more than its analysts predicted back in January, which Deloitte attributes to falling prices, stricter emissions targets, government incentives and a growing number of EV choice.
In the UK, Deloitte’s research suggests that almost half of consumers are now considering an EV for their next car.
EV switch could cut emissions by 12%
Indeed, if all UK drivers swapped to an EV, it would cut the UK’s overall annual emissions by 12% – or 42 million tonnes of CO2, according to a study carried out at Nottingham Trent University and released in May.
And while the Covid-19 pandemic may have reduced spending in many areas, attitudes around travel may increase EV demand.
For example, bi-weekly research into consumer behaviour trends carried out by Deloitte suggests that more than two-thirds of UK consumers now plan to limit their use of public transport in the future.
Covid-19 drives increased car demand
According to Deloitte Insights: “In the short term, this will likely accelerate demand for cheap second-hand cars, but in the long term this could translate into increased demand for EVs” – especially among those who don’t currently own a car.
Indeed, according to the Energyst’s EV Report 2020, registrations of new battery electric vehicles (BEVs) more than tripled in June, up 262% year-on-year.
This is despite the International Energy Agency forecasting a 15% contraction in the overall passenger car market this year.
Despite higher numbers of employees working from home, demand for EVs in the company car market is also increasing, especially since new tax breaks were introduced in April.
Tax breaks increase company EVs
Changes to Benefit in Kind (BIK) rates for EVs mean that company car drivers will pay 0% this tax year, only 1% for 2021-22 and 2% for 2022-23. Previously, company car tax liability would be calculated at 16% of the car’s value (for example, a £30k car would generate a taxable benefit of £4,800).
As a result, of 327 businesses surveyed between March and June by the Energyst, 32% believe the change in BIK will substantially increase the numbers of EVs within their organisation, and 52% expect a moderate increase.
Investment in more workplace charging infrastructure also appears to be a priority, with 76% of those surveyed saying their business was planning to install more charging provision within the next 12 months (and 23% within the next one to two years).
Changes to the tax rules back in 2019 mean employers can also provide EV charging at work without generating a BIK. So employees can now benefit from both a free car and free fuel.
Charging infrastructure still a concern
That said, currently, a lack of sufficient charging infrastructure has overtaken driving range as the most common concern among consumers, with 33% citing it as an issue now versus 22% back in 2018 (source: Deloitte Insights).
But almost daily, more organisations and local authorities unveil plans to install new smart charging innovations.
For example, earlier this month, a bus garage in north London began hosting the world’s largest vehicle-to-grid (V2G) trial, with 100 double-decker electric buses fitted with bi-directional chargers.
At any one time, 28 buses will be hooked up to the grid, recharging when electricity demand is low and releasing energy back to the grid when demand is high. Overall, this will provide around 1MW of flexibility.
Potential to save £270 million with V2G charging
It’s projects like this that could cut around £270 million off the cost of running the UK power system, according to research into the benefits of V2G charging by a consortium of experts including National Grid, Western Power Distribution and leading car manufacturers.
Indeed, many of the businesses we work with are looking at utilising on-site generation or storage (existing or new) to provide flexibility to reduce energy invoices, including EV charging provision.
If you’d like to understand more about how EVs, smart charging infrastructure and flexible energy provision fit into your future energy strategy, please contact your Client Lead (existing customers). Or drop us an email to nBS@npower.com.