Written evidence from the Advanced Propulsion Centre UK (ELV0107) 

The inquiry on Electric Vehicles (EVs) is examining the importance of the decarbonisation of transport and transition to EVs to secure Net Zero targets.

You can submit evidence until Friday 15 September 2023.

Kindly note that our principal focus and area of expertise lies with funding ‘on-vehicle’ technology projects associated with low carbon propulsion systems and lightweighting and not generally directly with charging infrastructure.

Government approaches

1. What are the main obstacles to the achievement of the Government’s 2030 and 2035 phase-out dates? Are the phase-out dates realistic and achievable? If not, what steps should the Government take to make the phase-out dates achievable?

There are two main obstacles: first, a perceived lack of charging infrastructure, and second, the affordability of electric vehicles, including hybrids.

According to Zapmap the number of public charging points is currently 48,450, an increase of 42% from this time last year. Infrastructure is continuing to increase, supported by the UK government infrastructure strategy providing £450 million of funding (£1.6bn including private investment). The UK government provides a number of grants to support workplaces and residential charging installations. However, an inequity currently exists between regions of the UK, with Greater London accounting for 34% of the charging installations which creates a perception of a lack of infrastructure, particularly in Wales and the North East with just 4% and 3% of the UK installations, respectively. The Society of Motor Manufacturers and Traders (SMMT) has recently conducted a study into charging infrastructure disparities between regions and it is recommended that this report is reviewed.

See SMMT-EV-Infrastructure-Position-Paper-FINAL.pdf  and SMMT-Position-Paper-Charging-and-Refuelling-Requirements-for-the-Heavy-Goods-Vehicle-Sector.pdf

Electric vehicles (EV) (including hybrids) currently have a higher upfront cost than Internal Combustion Engine (ICE) vehicles, whilst EVs have total cost of ownership benefits the upfront cost is important to widespread adoption. Currently, forecasts of when the typical EV will reach price parity with ICE-led vehicles varies with a window between 2026-2032. Even if EVs are affordable there will be cheaper ICE vehicles available, and we could see a rush on these just before the phase-out date in 2030 – subject to ZEV mandate constraints. Studies by the International Council on Clean Transportation (ICCT) have shown that low-income buyers are more responsive to incentives than a direct price or Total Cost of Ownership (TCO) comparison. Targeted incentives could help with the phase-out.

In 2035 hybrids will be phased out, hybrids will remain a popular choice in regions where there is a concern over infrastructure. Therefore, targeting those regions ahead of 2035 will help with the phase-out.

Different market dynamics apply to the light and heavy commercial vehicle markets, and heavy-duty vehicles have a later phase-out.

2. Do the 2030 and 2035 phase-out dates serve their purpose to incentivise the development of an EV market in the UK? To what extent are car makers focusing on one date or the other? What are the impacts of the deadlines on the ability of the UK supply chain to benefit and how could the Government seek to further support the development of the UK EV industry? Would the introduction of a plan with key dates and timescales support the development of the EV industry in the UK?

The UK looks set to be ahead of Europe as a whole with the percentage of EVs being manufactured compared to ICE-led vehicles approaching 2030. In the APC’s quarterly demand forecast published in March 2023, 73% of UK production was forecast to be zero emission vehicles compared to 63% for Europe. This number is expected to go up even further with recent announcements from both JLR and BMW Mini.

JLR TO INVEST £15 BILLION OVER NEXT FIVE YEARS AS ITS MODERN LUXURY ELECTRIC-FIRST FUTURE ACCELERATES | JLR Corporate Website (jaguarlandrover.com)

Major BMW EV announcement to take UK auto investment to over £6bn - GOV.UK (www.gov.uk)

It must be noted that the UK exports around 78% of the vehicles it produces and imports up to 90% of those which we drive. The UK OEM base is skewed towards premium and high-performance vehicles compared to Europe as a whole. Market regulation does influence UK OEMs but as part of a wider global and regional market consideration.

The challenge seems to be on the upstream supply chain for vehicle manufacturers, as they shift their productions towards zero-emission vehicles. The introduction of the UK critical minerals strategy and the follow-up UK battery strategy can and will boost UK OEMs’ confidence in that respect. There is, however, a need to ensure these strategies are materialised / operationalised, which means encouraging and leveraging private investment to build a resilient supply chain for the automotive industry.

The ZEV mandate is seen as a particular challenge by the industry due to late policy confirmation versus the long planning cycles for developing and producing vehicles and building supply chain capacity in the newly required commodities.

Materials requirements for batteries especially are significant and lead times to build new supply chain capacity increase further up the supply chain. For example, mining and intermediate refining plant assets will typically have lead times in excess of 4-5 years for mid-stream processing, e.g. nickel refining, and over 10 years for a new mining asset to be built-out and permitted. Conversely, market ‘forcing function’ has been accelerating at such a rate that the industry is experiencing significant transient tightness in supply – leading to price spikes, impacting affordability. Recycling of these materials is unlikely to benefit the industry in this respect for many years due to the longevity of these vehicles and low availability of ‘end-of-life’ vehicles to produce feedstock for recycling plants.

3. What specific national policies, regulations or initiatives have been successful, or have hindered, EV adoption to date? Are these policies or initiatives fit for purpose?

The UK has a number of grants in place to support consumer adoption, e.g.

• EV Chargepoint grant for tenants and flat owners
• Infrastructure grant for residential car parks
• EV Chargepoint grant for landlords
• Workplace Charging Scheme
• Infrastructure grant for staff and fleet
• Plug-in grant to reduce the cost of vehicles

Interestingly, the plug-in grant no longer applies to cars. All EVs are exempt from vehicle excise duty until 2025. These various grants could be better publicised and simplified to improve uptake.

Added to this, ULEZ zones and equivalents alongside aligned scrappage schemes have encouraged further zero-emission vehicle adoption in those regions.

The Automotive Transformation Fund (ATF) has supported the transition of automotive companies and growth of the supply chain. Alongside the ATF the Advanced Propulsion Centre UK (formed in 2013) has provided support for almost 200 projects with projected savings of 350 million tonnes of CO2 – the equivalent of removing the lifetime emissions from 14.1 million cars.

UK government is investing in removing barriers to entry for consumers, particularly around access to charging, and investing in supporting the transition of the automotive industry.

The affordability of EVs in the UK remains an obstacle for wider EV adoption. Removing the plug-in grant for cars and applying vehicle excise duty from 2025 are counter to tackling affordability.

4. Given that the Government should apply a behavioural lens to policy—which involves people making changes to their everyday lives, such as what they purchase and use—is there a role for clearer communication of the case for EVs from the Government? If so, who should take the lead on delivering that?

We do not feel it is appropriate for the APC to address this question.

5. What is your view on the accuracy of the information in the public domain relating to EVs and their usage?

There have been conflicting stories in various media and some poorly researched and/or out-of-date information published both in online/printed media and broadcast media.

6. What are the overall environmental benefits that would result from achieving the 2030 and 2035 targets?

Transport and Environment and Element Energy conducted analysis in 2020 on the expected CO2 emissions reduction of a proposed 2030 and 2035 complete ICE sales ban. Note that with hybrid vehicles remaining on sale until 2035 the scenario is closer to the 2035 baseline.

The graph below shows the forecast vehicle stock behind on this scenario.

The reduction in ICE vehicles and large increase in zero-emission vehicles has an added benefit on air quality.

The-impact-of-a-2030-ICE-phase-out-in-the-UK.pdf (greenpeace.org.uk)

7. What are the likely costs that will be faced by consumers as a result of the Government’s phase-out dates for non-zero-emission vehicles? Are there policies or initiatives that the Government could use to specifically target barriers arising from unpredictable costs to the consumer, for example significant fluctuations in the cost of electricity, changes to road taxes, or the introduction of low-emission zones?

EV Market and Acquiring an EV

These questions relate to the UK EV market and uptake of EVs by UK consumers.

We do not feel it is appropriate for the APC to respond to this question.

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

We are not able to address this question.

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

We are not able to address this question.

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

The price difference between a mid-range EV passenger and ICE-led passenger car is currently between £7-10k. Available grants are:

• Motorcycles: up to £500
• Mopeds: up to £150
• Small vans: up to £2,500
• Large vans: up to £5,000
• Taxis: up to £7,500

Of note, there is no grant currently in place for passenger cars.

11. Do you think the range of EVs on offer in the UK is sufficient to meet market needs? Which segments are under-served and why? Why is the UK market not seeing low-cost EVs, particularly in comparison to China?

We are not able to address this question.

12. What is the future role of L-segment and personal light electric vehicles, and how will that impact car ownership and usage? What is inhibiting their uptake?

We are not able to address this question.

13. What is your assessment of the current second-hand EV market? How is the second-hand EV market projected to develop between now and the phase-out dates?

We are not able to address this question.

14. What is the relationship between EV leasing and the second-hand market and how do they interrelate?

We are not able to address this question.

15. What barriers are there to achieving a sufficient supply of second-hand EVs, mindful that second-hand vehicles make up a high proportion of all vehicles purchased?

One potential barrier is the value in batteries. The EU has minimum recycled content requirements coming into force in 2030, DEFRA is currently consulting on similar regulations. At the same time a market for re-using batteries for stationary storage is developing, with Tesla, Nissan and JLR all taking advantage of this added revenue stream.

The potential exists that ‘serviceable’ vehicles will be removed from the road before technical end-of-life as they may be worth more as a source of recyclate material feedstock than as a used vehicle. This may also have the effect of compressing residual values towards the end of life (i.e. artificially elevating residual values for aged vehicles). It is not certain how these market dynamics may evolve.

16. What is the value and role of alternative transport models such as car clubs and micro mobility vehicles in the Government achieving the 2030 phase-out date, and how should the Government consider their roles and opportunities for use in transport decarbonisation?

We are not able to address this question.

17. Are consumers charged higher rates of insurance for an EV when compared to an internal combustion engine (ICE) vehicle, and if so, are these higher rates justified? Can the Government do anything to mitigate this?

We are unable to address this question.

18. What are the main challenges that UK consumers face in their use of EVs?

The often-cited challenge is access to charging. This is improving all the time with 48,450 public chargers currently installed – an increase of 42% from this time last year. The government has committed £450 million to improving charging infrastructure and provides a number of grants to support domestic and business installations.

One current challenge is the inequity between regions of the UK, with most chargers found in the greater London area while Wales and the North East are lacking in infrastructure.

Beyond charger provision (ratio per capita of local residents), reliability of chargepoints is also a current concern, especially with older installations.

The wide variety in accounts, access apps and payment method is also potentially deterring many potential EV adopters and ‘walk-up’ contactless payment methods may still lead to differential pricing, disadvantaging some.

19. What are the main benefits that UK consumers could realise from using an EV?

See answer to question 25.

20. How prepared are car dealerships, service networks, repairs and maintenance organisations, breakdown services and aftermarket suppliers to meet the growing EV uptake?

We are unable to address this question.

21. How does the charging infrastructure for EVs need to develop to meet the 2030 target? Does the UK need to adopt a single charging standard,e.g., the Combined Charging System (CCS)) or is there room in the market for multiple charger types?

See SMMT-EV-Infrastructure-Position-Paper-FINAL.pdf  and SMMT-Position-Paper-Charging-and-Refuelling-Requirements-for-the-Heavy-Goods-Vehicle-Sector.pdf

Transport and Environment conducted a piece of research on the number of required chargers presented below:

TE-Workplace-Charging-Study-Publish-20220311-signature-page-removed.pdf (transportenvironment.org)

The UK government has a target for 300,000 public charging points by 2030 and is providing grants to encourage the installation of ‘work’ and ‘home’ charging points. These grants could be better published to ensure the required uptake. According to the research from Transport and Environment more than 10 million home charging points will be needed by 2030.

We are still in a period of innovation in charging technology and standardisation does include a risk of reducing potential innovation.

22. The Government recently published the draft legislation of “Public Charge Point Regulations 2023”. What assessment have you made of the draft legislation text, and what contribution will it make in ensuring the charging experience is standardised and reliable for consumers?

We are not able to address this question.

23. What assessment do you make of the requirements set out in the draft legislation of “Public Charge Point Regulations 2023” for charge point operators to make data free and publicly available, and how may this improve the EV charging experience for consumers?

We are not able to address this question.

24. In terms of charging infrastructure, are there unique barriers facing consumers in areas of low affluence and/or multi-occupancy buildings, such as shared housing or high-rise flats? Do you consider public EV charging points to be accessible and equitable compared to home-charging points? What can be done to improve accessibility and equitability?

Multi-occupancy buildings and those without dedicated off-road parking (that is contiguous with their property and residence electrical connection point) face particular challenges in private charging provision, with costs likely to be prohibitive. There is a risk of effective exclusion from domestic charging opportunity, exposing these users to higher charging costs (including VAT at a higher rate for public charging than domestic supplies).

25. Is there a financial benefit to the consumer of choosing an EV over an ICE vehicle? Are there further benefits, aside from financial, that a consumer may gain from EV use?

An EV is cheaper to run, even if using only public charging, but even more so with home charging - based on home charging an EV can be 60% cheaper to ‘refuel’. Annual tax and maintenance costs are around 50% lower, although tax will be introduced for EVs in 2025. Insurance costs for EVs are around 25% higher.

EV users with home charging and solar power can potentially take advantage of their vehicle to balance power-loading over the day. Early vehicles and home charge points may not have bidirectional charging capability and standards are not yet clear.

EVs, currently, do not depreciate in value as quickly as ICE vehicles although this is a dynamic situation and highly model-dependent – some models that were ‘pushed out’ by OEMs in order to satisfy CO2/fleet average or ZEV credits at certain ages are now coming off lease terms and are at risk of depressed residuals, impacting new sales. Recent retail price reductions by Tesla on certain models has impacted residuals on second-hand models, for example. Auto Trader has produced some analysis which is very informative in this regard.

26. What options are there for consumers for end-of-life management of batteries and EVs, and what impact does this have on consumer attitudes towards buying an EV?

There is no difference from a consumer point of view between an end-of-life EV an end-of-life ICE vehicle. The OEM has responsibility to provide free take-back and the consumer will hand the vehicle over as per current regulation. In most cases today, there is an inherent scrap value in the vehicle at end of life due to current commodity prices.

27. What are the current regulations and responsibilities of disposal and recycling for EVs, and how effective are they? How much of the battery can be recycled from a technical standpoint, and how much of that is economically feasible?

The question of economic feasibility is about scale, the UK does not currently have the scale of end-of-life batteries to support a full end-to-end battery recycling value chain which means that battery recyclers in the UK are currently shredding batteries to black mass, a lower value material compared to the materials contained within, and selling the black mass on the open market or setting up specific contracts. Typically, this material goes to the Far East, although Europe is starting to buy some of this material, possibly with a view to meeting minimum recycled content requirements. We are seeing some emergent competition for black mass supply contracts from primary dismantlers / shredders in order to support European metals recovery plants which need significant scale in order to be economically viable.

Near-term contracts for supply of black mass from the UK end-of-life fleet being secured in favour of overseas metals recovery plants will potentially undermine the early viability of any UK investments as the potential future feedstock is increasingly already ‘committed’.

The question of scale is about gigafactories placed in the UK both needing to recycle scrap material and purchasing recycled material plus a supply of end-of-life vehicles. Given that vehicles are likely to last more than 10 years and some batteries will be used for second applications, the supply of end-of-life batteries is unlikely to be significant compared to other sources until well after 2030.

Technically, almost all of a battery can be recycled, electrolyte is generally lost but otherwise all other materials can be recovered. However, the cost to recover some materials may never be economically viable compared to virgin material and may require regulation to ensure recycling. For example, graphite anodes are currently not recovered despite it being technically possible.

The EU is introducing successor legislation to the EU Batteries Directive (The EU Batteries Regulation) which introduces requirements for passporting, embedded carbon footprint declaration, recyclability thresholds and recycled content minimum levels at various stages over the coming years. Given UK OEM exposure to the EU27 markets, it is expected that all manufacturers will strive to comply with this EU legislation even in the absence of any UK standard.

28. Is there a risk that the residual value of EVs may be lower than the value of the EV as a source of recoverable critical minerals, and how might this effect the flow of EVs into the second-hand market?

Yes, covered in question 15.

29. What are the challenges or concerns around grid capacity in relation to significantly increased EV adoption?

According to National Grid if everyone switched to EVs overnight the resultant increase in demand would be just 10%. National peak demand has dropped by 16% since 2002 and therefore any resultant increase can be managed.

Busting the myths and misconceptions about electric vehicles | National Grid Group

The UK government has also introduced the smart chargepoint regulations which enables load to be spread out avoiding large spikes in demand.

Regulations: electric vehicle smart charge points - GOV.UK (www.gov.uk)

30. What is the role of distribution network operators in ensuring EV infrastructure can be rolled out sufficiently to meet 2030 target?

We are unable to comment on this question.

31. What are the requirements, challenges or opportunities for the development of public chargepoint delivery across the UK? How will the development of EV charging infrastructure in the UK interact with existing planning regulations?

We are unable to comment on this question.

32. What are the issues facing rural residents, urban residents, and sub-urban residents and how do they differ?

We are unable to comment on this question.

33. What role do you see local authorities playing in the delivering the 2030 phase-out target, particularly in relation to planning regulations, chargepoints and working with District Network Operators? How can government best support local authorities in their roles?

We are unable to comment on this question.

34. What are the successful approaches to the rollout and uptake of EVs in other countries, and what can the UK learn from in these cases?

US – The Inflation Reduction Act includes a personal tax credit of up to $7,500 bringing electric vehicles much closer to ticket price parity. The Infrastructure Act also provides $7.5 billion for EV charging network projects. This has seen the US overtake Germany as the second largest EV market behind China.

Germany – Under the Environmental bonus scheme EVs under €40k receive a €4,500 subsidy. Further incentives are available including tax incentives depending on battery size. Germany has committed €900 million for home and business EV charging infrastructure.

France – The ecological grant provides €5,000 for EV, hybrid or FCEV vehicles costing under €47k. Low-income households can claim €7,000 for zero-emission passenger cars and €8,000 for vans. A zero-interest loan of up to €30,000 is available for anyone living in low-emission zones for purchasing cars and vans with emissions below 50g/km.

A 30% tax credit is available for residential charging infrastructure.

Norway – In Norway subsidies are being reduced however non-EVs are disincentivised via an additional purchase fee, increasing the vehicle cost and are subject to 25% VAT regardless of price. EVs below ~£40k are exempt from the 25% VAT.

What can the UK learn from this? To encourage EV adoption, the gap in ticket-of-entry price between EVs and ICE vehicles needs to be closed especially for entry/mainstream vehicle purchasers who may not be able to afford the premium and for whom ‘step-in’ cost is a higher priority than longer term cost of ownership. Although total cost of ownership for an EV is lower (although reduced if users must rely on public charging infrastructure alone) the cost of entry for many is too high. This gap can be closed with direct subsidy of some form, or as in the case of Norway, a combination of incentive and disincentive. Subsidies in European nations are generally targeted either based on the vehicle cost or personal income. This ensures that those who need the most help are able to access it. Whilst EV manufacturing cost is coming down, forcing demand ahead of capacity being built in the supply chain will likely slow the scale-related cost reduction opportunity.