Written evidence from Carwow (ELV0084) 

Written Evidence on the transition to Electric Vehicles from carwow

1. Introduction to carwow

carwow is an online car marketplace, helping motorists research, buy a new or used car, and sell their old one. Operating in the UK, Germany and Spain and headquartered in London, our mission is to be the leading platform for anyone looking to change their car by helping customers decide on the right car for their needs, before connecting them to car brands and car dealers. Through our proprietary technology, we allow consumers to easily and simply compare hundreds of cars makes and models on a single platform, supported seamlessly by our independent editorial content to help give them total car confidence in their decision making. Since being founded in 2011, we’ve helped over 2.5 million people find, buy, or sell a car in our markets.

1.2 Our reason for submitting evidence.

The call for evidence is a welcome opportunity to consider progress on the transition to Electric Vehicles. We support the inevitable shift to electric and welcome tough targets that will significantly help increase the adoption as soon as possible. Our data shows that 2 in 5[1] carwow customers would consider an EV as their next car, but we think that the vast majority of new car buyers should be considering electric cars today. Our submission is focused particularly on the sections of the Committee’s inquiry related to the main route’s consumers acquire EVs and the main consumer barriers. The 2030 and 2035 phase out dates for achieving a zero-emission fleet of vehicles is a significant milestone - the scale of which necessitates a co-ordinated, whole-society strategy in response. Improving the volume of private EV sales in the UK requires partnership between the government, the motoring industry, mobility and transport services and wider civil society.

2. EV Market and Acquiring an EV

The committee questions we will address in this document include:

What are the main routes for acquiring an EV? Which aspects of these routes are working well, and which aspects could be improved?

What are the main consumer barriers to acquiring an EV, either through purchasing, leasing, or other routes? and.

How is the government helping to ensure that EVs are affordable and accessible for consumers, and are these approaches fit for purpose?

2.1 The main routes for acquiring an EV.

The main routes for acquiring an EV in the UK are much the same as for traditional ICE cars; via car dealerships, directly via a car manufacturer/brand, or online - either via marketplace sites such as carwow that connects users to motor industry partners, or, via an online car dealer - such as Cazoo or Cinch. The biggest additional route for acquiring an EV is via the electric car salary sacrifice scheme and Benefit-in-Kind system which are both tax-efficient ways to get an EV and have worked well for company car drivers adopting EVs.

2.2 Routes that are working well.

In the case of an electric car salary sacrifice scheme, a motorist chooses a car from a list of vehicles approved by their employer based on how well the vehicle suits their needs and budget, then each month a portion of their salary will be automatically deducted, prior to tax, and this will cover the monthly repayment on the car. The car is leased from a third party firm by the employer, who in turn leases it to the employee under the scheme. Salary sacrifice can considerably lower the cost of any electric car, while benefit-in-Kind (BiK), also known as ‘company car tax’, is the tax that you pay if you take a car under a salary sacrifice scheme through your employer. At 2%, it is much lower than the BiK rate for ICE cars, whilst drivers can also make other savings on Income Tax and National Insurance. These incentives have worked particularly well to drive EV sales, as demonstrated by SMMT’s latest August 2023 figures showing that battery electric cars took the highest monthly market share for the year, accounting for 20.1% of new cars reaching the road.

However, this surge in registrations was driven by fleets, not private owners. In H1 2023, less than a quarter of EVs were sold to private buyers, with the majority going into Fleet. This is not surprising given these tax incentives are a win-win programme both for employers and employees. For employees, not only can they save a significant amount of money on a new EV, but the amount of included services make it a hassle-free way to get a new car. If new to EVs it can also be a good route as the employee doesn’t own the car, meaning less personal risk on the decision to switch fuel-type. For the employer, it can make a firm more attractive to potential employees, they can make savings in employee National Insurance Contributions, and it can go towards reducing the company’s carbon footprint. Businesses are also able to benefit from The Workplace Charging Scheme (WCS) a voucher-based scheme that provides support towards the up-front costs of the purchase and installation of electric vehicle charge-points in company car parks.

It's telling that there’s strong correlation in the growth in EV registrations and strong incentivisation for company car drivers. We believe a similar approach to incentivising private drivers into new and used EVs would have the potential for a similar impact.

2.5 Aspects that could be improved - understanding consumer purchasing behaviour, the role of industry in becoming educators and government purchase subsidies.

2.6 For car-buyers considering an EV, from their first visit to carwow, to purchasing a vehicle is on average, a period 192 days, compared to 149 days for an ICE vehicle. Typical buyers will create 32 configurations of 9 different models, across 5 brands, and get in touch with three dealers before they finalise that 1 purchase. With EV buyers, where there is a lot less confidence, we see that fluidity between car brands go up even more; typically configuring 10 different models, across 6 different brands. This demonstrates the additional cognitive load that private EV buyers have to make above and beyond someone buying an ICE vehicle, which is already very high.

2.7 We know that during those five months of decision-making, 75% of car buyers on carwow haven’t made up their minds and are open to suggestions on everything from ownership models, finance options, makes and models and whether they buy new or used. From consumer interviews and research conducted, we still believe that there is more the car industry can do to train consumer facing dealership and car brand staff, to help educate and inform prospective new car buyers about the advantages and realities of electric vehicle usage and ownership. For a motorist who hasn’t bought a new car in the last 3-5 years, everything has changed, and many don’t necessarily know what they should be asking for. There is a huge role to play for the whole motoring industry to become educators, focused on relaying the positives of EVs, with in-depth, detailed product knowledge.

2.8 The proposed role of government mandated EV sales targets for manufacturers, should encourage better conversion. The target will require car manufacturers to ensure at least 22% of new sales in the UK come from ZEVs, rising to 80% by 2030 and 100% by 2035. While manufacturers face a potential penalty of £15,000 for every car sold that does not comply, there are flexibilities for banking, borrowing, trading, and pooling. However, there’s still a lack of clarity on the details of the rules (which are due to come into force in 2024). Like the rest of the motoring industry in the UK, we would welcome more detailed information on the government’s rules to better work with manufacturers and see what more could be done to boost take-up and help ensure these targets are met.

2.9 The government has discontinued the support that made EVs affordable and accessible for consumers. While the Plug-in Car Grant, which supported the sale of nearly half a million electric cars, was removed in the UK in summer 2022, similar schemes continue to operate in 20 European countries today.[2] It is undeniable that funded EV subsidies can accelerate uptake of private electric new car sales, as has been seen in Germany. While government measures to tackle charging infrastructure reliability are welcome, we question whether the stated ambition - that 2030 will see the end of all sales of new petrol and diesel cars in the UK - has been backed up with effective action when it comes to directly helping consumers (not businesses) make the switch to EV.

3.0 What are the main consumer barriers to acquiring an EV, either through purchasing, leasing, or other routes? and Why is the UK market not seeing low cost EVs, particularly in comparison to China?

3.1 In the case of private ownership of EVs, our data shows that 2 in 5[3] carwow customers would consider an EV as their next car, and our recent survey found that 1 in 4 (25%) said ULEZ has made them consider an EV[4]. A third (33%) of motorists we polled would like to switch to an EV due to environmental benefits, this was equal to lower running costs (33%), while 18% said they wanted to have the latest technology in their cars. We know there is interest and appetite to go electric, however a lack of infrastructure is still putting many drivers off making the switch, as it is considered a main challenge that UK consumers face in their use of EVs.

3.3 When we asked carwow customers, what their top concerns were with going EV they said:

●        23% - there aren’t enough charging points.

●        20% - they are more expensive than other cars.

●        20%- the range isn’t long enough.

3.4 There is much more that could be done to reassure the public and alleviate some of these primary concerns when it comes to making the switch. Taking those concerns in turn, in the following, we talk about the work we’ve done to build digital tools and editorial content to help our consumers in these key areas and meet these challenges. In the following pages, we share some of the ways the government and private firms can help support these needs as the UK transitions towards an EV future.

4.0 Charging Points - The single biggest challenge to the continued adoption of electric vehicles is the UK’s public charging network. We welcomed the publication of the Public Charge Point Regulations 2023 which has the potential to give EV drivers the trust that charge points will work when they need them to. The new regulations dictate that charging points must be operational 99% of the time should prompt providers into making sure more chargers are readily available or face a £10,000 fine per charging point. They must also have contactless payment technology and 24-hour phone help if there are problems. Transparency about charging cost and open data to give real-time information on whether a charging point is working or already occupied will go a long way to relieve charging point infrastructure concerns, particularly if the deadline of Summer 2024 is achieved. Anecdotally, this is something we see in Tesla customers, who typically have less anxiety about range due to the quality of the Tesla charging infrastructure network.

4.1 By 2026, roaming providers must be given access to charging points from multiple networks and we think this will also drive major improvement in consumers' EV charging experience. This will mean that a driver will have a single account that pulls together all public charging data into one place. That will be particularly convenient for business drivers who, if submitting an expense from different providers right now, need to email some charging companies to request a receipt.

4.2 However, this new set of government rules doesn’t do anything to increase the number of public charging points which are not growing fast enough to keep pace with the number of new EVs hitting roads. Given that infrastructure, combined with range, appears in a multitude of studies as the barrier for drivers thinking about moving to EVs, more must be done by the government to incentivise the building, provision, and maintenance of public charging points. We believe that if the convenience of EV ownership can catch up to that of ICE cars, the decision on whether or not to buy an EV will become about the power of choice (a positive reframing), not as it is for many people now, a decision based on how best they personally can overcome the many hurdles associated with ownership. The majority of car drivers in the UK are not ‘petrol heads’, they care about what they drive to the extent that it gives them convenience, reliability and suits their lifestyle and needs. All of these benefits EVs can provide, with the correct level of investment in infrastructure.

4.3 If the government is committed to making the 2030 target, the UK needs help lowering the cost of going electric for consumers - through targeted incentives or subsidies (such as has been seen in Germany) - not additional tax burdens. Previous audience profiling showed that electric vehicle buyers are middle-aged, male, well-educated, affluent, and live in urban areas with households containing two or more cars and with the ability to charge at home.[5] To meet the target in 7 years’ time, EVs will need to become more accessible to those who don’t fit into this profile bracket. There has been a “green premium” to going EV, but we need solutions that are affordable for everyone.

4.4 While any tax-break incentives for EVs on new cars would likely require taxation money being spent on those that typically already have higher-incomes (as they are considering a new car purchase), we believe the government should take the opportunity to relook at incentivising public and private charging points, for instance:

-         Create targeted charging incentives with social equity in mind - making charging infrastructure equitably dispersed with subsidised, low-cost charging available to those in lower income residential areas. This could be qualified by registered address/ postcode matching to the payment card ensuring that the scheme was targeted to those it was intended for.

-         Drop the VAT applicable on public charging to better support those unable to charge at home. We would add our voices to those in our industry already calling for this change; charging on the road is significantly less cost-efficient. Drivers able to rely on charging at home are already benefiting from the government’s energy price cap guarantee, protecting them from much of the recent energy price increases. There’s also a VAT saving to be made with just 5% VAT applicable on home energy, compared to 20% VAT when using public chargers.

-         Better incentivisation for at-home chargepoint installation - with EVs already having multiple barriers to purchase consideration for consumers, an additional hurdle is that motorists have to pay (on top of the purchase of leasing costs of the vehicle) in the region of £1,000 for a home-charging point to be installed. The original incentive which closed to house owners on 31 March 2022 gave grants of up to £350 towards the cost of having a home charger installed. It is now only open to people who own flats, and people in rented accommodation. While the idea to target EV uptake in densely populated urban areas is valid, targeting landlords or those living in leasehold flats will not help the UK reach wider targets for mass adoption while expanding this grant to include those in terraced homes (for example) would go much further towards that goal while still targeting urban regions. 

4.5 The charging infrastructure for EVs must develop to meet the 2030 target, by providing accurate information about chargepoint availability, especially on motorways. In France, for example, motorway service signs flag to motorists whether there’s a full charging station at that site; this should be replicated in the UK. On all public charge-points, signage must be improved so that consumers know before they are plug-in, the cost per kWh and how powerful that EV charger is. The government must work hand-in-hand with third party providers to ensure that the infrastructure exists in more remote areas (such as motorway service stations) to enable the installation of high-powered, super-fast charging stations giving all motorists confidence in the reliability and accessibility of the public charging network.

4.6 Mainstream awareness of charging infrastructure also needs to improve. There is no shortage of jargon-free content online on EV charging waiting to help users when mass adoption takes place. However, recent waves of negative publicity, from op-eds by celebrity actors, to MPs speaking out on charge-point queues and columnists sharing their views on how hard it is to recharge on the move, will lead many readers to query whether they should continue to wait before changing their car’s fuel-type. One of the ways in which carwow has helped drive understanding of charging infrastructure is via our online tools, including our interactive EV charging map that helps drivers find the electric vehicle charging points nearest them, with additional FAQs on how much it can cost, how long it can take, and how different charging sockets work. The provision of additional, reliable public charging points with a range of charging speeds will mean that more positive experiences are heard by mass audiences.

5.0 Expense - There are far more affordable new EVs on the market than there were in 2019. Although not considered “cheap”, EVs are now finding their way onto carwow’s used EV marketplace for as little as £6,400[6], making the switch to EVs more accessible than ever before. There are also options such as leasing which can significantly reduce the cost of buying a new EV. The range of available EVs - both new, used and leasing - we believe is sufficient to meet market needs.

5.1 Consumer perception, at least for now, remains that EVs are more expensive than their ICE counterparts. carwow’s technology allows users to compare the best EVs by new, leasing or used prices on our site, with the fastest delivery times which helps to showcase the variety of finance options available. We’ve also invested heavily in tools such as our help guides to highlight the most affordable EVs that don’t compromise on performance.

5.2 However, with the government's plug-in grants gone and the road tax exemption only lasting just one year, more can be done by the government to financially incentivise individual (non-fleet) EV uptake. As previously mentioned, the removal of the last remaining consumer subsidies for electric cars in July 2022 left the UK as the only large European country without any individual incentives for electric cars, with more taxation on the way. At the moment, electric cars with a list price of less than £40,000 are exempt from paying an additional £355 a year vehicle tax, but this is due to change: the expensive car supplement will be due for EVs registered after 1st April 2025. In additional research, 66% of carwow customers said that the government should do more to help make electric vehicles more affordable to the general public, with 23% saying the government should consider subsidising the price of an EV.[7] 

5.3 There are also new market entrants. Electric vehicles are where Chinese brands are focusing; they have invested for decades in lithium battery mining operations around the world, have battery processing and production capabilities and can produce high-quality, long-range EV much more cheaply than European manufacturers. With Chinese brands setting their sights on new markets in Europe, this is likely to drive the price of EVs down, while also increasing choice in the market over the next 24 months. 1 in 4 carwow customers we polled said they would consider a Chinese brand for their next car and one of the most popular car brands on carwow is made by a Chinese-owned manufacturer – MG – with its model, MG4, winning our Car of The Year Award 2023 – due to its design, quality, and outstanding value for money. When it comes to pricing, the Chinese manufacturers can afford to offer EVs at lower price-points.

5.4 Hand in hand with the purchase costs, is the running costs. Fundamentally, both buying and running electric vehicles should be easy and cost-effective, which is why we have also invested heavily in content to showcase the comparison of running costs of an ICE car with an electric car, and ran an out of home media campaign to encourage petrol or diesel drivers to consider an EV[8]. However, more can be done by the motoring industry to help educate and highlight the total cost of ownership over the lifetime of the car / lease. One of the main benefits that UK consumers could realise from using an EV is lower running costs - for at-home charging, exemption from paying for Clean Air Zones or Congestion Charge, or even public parking charges (as in the recent case of Bath City Council). When it comes to servicing, depending on the model, drivers could save 30–50% in service costs compared to non-EV cars. Our analysis of 50 million MoT tests in 2022 showed that electrified vehicles pass more often than petrol and diesel counterparts. More needs to be done in the form of greater marketing and promotional activity to increase awareness and talk to wider financial benefits, beyond a simplistic energy charge vs. pump price calculation.

6.0 Age as an additional opportunity - Our research found that over two thirds (67%) of drivers polled aged 55+ said a concern about price is currently putting them off acquiring an EV. This group is also more likely to cite the lack of charging infrastructure to support EVs as a reason why they would not give up their petrol or diesel car, with 43% saying it is a barrier, compared to just 23% of drivers aged under 44.

6.1 This is a huge, missed opportunity due to there being 17.4 million drivers with a full licence aged 55 and over, equivalent to 42% of the total UK driving population. This is typically the age group most likely to buy a new car, thanks to greater buying and borrowing power[9], and people in this age bracket are more likely to live in larger homes with off-street parking for easy at-home charging[10], making them, in many ways, ideal EV owners. We see a huge opportunity for the government to help educate this age group on the pros for EV ownership and address some of the misgivings around EVs which mature drivers seem to have; if this is done, a precedent will be set for other age groups. Currently, close to a quarter of EV drivers are 55 or older, making it the largest age group for EV drivers in the UK, suggesting that once these concerns are overcome, they’re the age group most likely to take up an electric car.[11]

7.0 Range Anxiety - busting the myths and false perceptions of range which is irrelevant to the vast majority of journeys taken by private car.

7.1 We have invested heavily in content that helps overcome range anxiety. Our YouTube channel (with over eight-million subscribers) has conducted multiple range tests, including by car type and manufacturer claimed range, showing not only which make and model of vehicle travels furthest but the percentage of the manufacturer claimed range achieved. And importantly, what really happens when the battery does run out.

7.2 More recently we’ve seen the advent of concerns around battery degradation but with the vast majority of new car buyers financing or leasing their car this doesn’t need as high-profile a worry to the majority of new car buyers. There’s also manufacturers' warranties to highlight - for example, if battery performance drops off by a certain amount before eight years since purchase, manufacturers will guarantee to repair or replace. There is more education to be done to reassure motorists that they won't need to replace an EV battery at huge expense after five years.

We welcomed this opportunity to share our user insights, experiences, and views.

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