Written evidence from EDF (ELV0115) 

Memorandum from EDF responding to the House of Lords Environment and Climate Change Committee’s inquiry into Electric Vehicles

Introduction and summary

1. EDF is the UK’s largest producer of low carbon electricity. EDF operates low carbon nuclear power stations and is building the first of a new generation of nuclear plants. EDF also has a large and growing portfolio of renewables, including onshore, offshore wind and solar generation, and energy storage. With around six million electricity and gas customer accounts, including residential and business users, EDF aims to help Britain achieve net zero by building a smarter energy future that will support delivery of net zero carbon emissions, including through digital innovations and new customer offerings that encourage the transition to low carbon electric transport and heating.
2. EDF welcomes the opportunity to respond to this inquiry. EDF is actively supporting the move to electric vehicles (EVs) through a range of commercial activities. As a major energy supplier, EDF offers EV solutions to customers, including electricity tariffs and chargers; EDF holds a majority stake in Pod Point, one of the UK's leading providers of EV charging infrastructure solutions; and EDF Renewables UK is delivering grid-scale battery storage and EV power infrastructure.
3. Our key points in this submission, under the headings in the call for evidence, are as follows:

• Government approaches - Above all, Government must deliver the Zero Emission Vehicle (ZEV) mandate, which is the fundamental policy that will drive the EV market. Other policies to target up-front consumer costs (e.g., through tax treatment), as well as to expand public charging infrastructure will also facilitate EV adoption.
• Experience of using an EV - There are clear benefits for consumers compared with using a petrol or diesel car, with analysis showing greenhouse gas emissions savings, and lower running costs for those charging at home. Availability of public charging is a consumer challenge. Continued Local Authority focus on charging infrastructure is needed, as is urgent action from Government to deliver on its delayed rapid charging fund.
• National and regional issues - Smart EV charging and flexible demand side response can help contain the scale of investment in new grid infrastructure, but additional electricity grid capacity is needed. Building network efficiently and quickly will be aided at the transmission level by prompt implementation of reforms recommended in the Winser report, and at the distribution level by supporting well-evidenced anticipatory investment.

Government approaches

Q1.  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?

4. EDF supports the phase-out dates which have been set. They are achievable, provided the ZEV mandate goes ahead as planned. It mandates an annually increasing share of zero emission car and van sales to meet the phase-out dates.
5. Government has already considered and proposed realistic and achievable ZEV mandate trajectories to meet the phase-out dates. It has consulted twice on the ZEV mandate[1]. The second consultation took on board industry feedback and proposed updated trajectories and flexibilities for vehicle manufacturers to help manage operational change.
6. Implementing the ZEV mandate to these achievable trajectories is fundamental to creating strong financial and regulatory incentives on manufacturers to promote and sell EVs to their customers. Recent announcements of investment in UK EV and battery manufacturing by major automotive companies illustrates that the automotive industry can and will respond to clear signals provided by the ZEV mandate.
7. To supplement the manufacturer push created by the ZEV mandate, Government should look further at the policy measures in place to drive consumer pull. This includes increasing the financial incentives on consumers at the point of purchase and accelerating efforts to support investment in charging infrastructure, which will remove concerns around range anxiety.

Q2.   

Q3.  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?

8. The uptake in electric cars has increased very substantially in recent years. They are now an established and significant part of the new car market. Battery EVs have accounted for 16.4% of new car registrations so far in 2023, compared with 14.0% to the same point in 2022[2]. Sales are only modestly below the 22% target proposed for the first year (2024) of the ZEV mandate.
9. This rise in popularity was promoted by clear ambition from successive Governments, particularly through the plug-in car grant, which was available from 2011 to 2022, alongside other tax-based incentives such as zero Vehicle Excise Duty and favourable company car tax for zero emission vehicles. Continued commitment from Government to existing or new policies is important to maintain, especially as recent increases in the cost of electricity have removed some of the running cost benefits of switching to an EV.

Q4.  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?

10. Yes. It is important that information from authoritative sources is available to the public. Such information should respond to concerns or knowledge gaps that drivers may have on issues directly associated with using an EV – e.g., charging, real world range; or wider issues such as environmental benefits and the decarbonisation of electricity supply. EDF makes information available on its website where consumers can learn more about electric cars, including the benefits, the costs and how electric cars work.[3]

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Q6.  What are the overall environmental benefits that would result from achieving the 2030 and 2035 targets?

11.          There are environmental benefits from the decrease in exhaust emissions, which degrade air quality, impact human health, and contain greenhouse gases that contribute to global warming.
12.          Greenhouse gas emission savings from EVs are often debated due to the emissions from the manufacture of the vehicle (particularly the battery) and the sourcing of materials. While these upstream emissions are relevant, a wide range of analyses have demonstrated there is a very substantial net greenhouse gas saving in using an electric car compared to a petrol one. For example, analysis by the International Council on Clean Transportation has shown that full life-cycle emissions for a battery electric vehicle in Europe (the EU and UK) are typically around 66-69% lower than a petrol equivalent.[4]
13. The carbon savings that could be realised from the ZEV mandate have been quantified in the Government’s Carbon Budget Delivery Plan[5] at 23.4Mt of CO2 annually in the Carbon Budget 6 period (2033-2037). Carbon savings from achieving the 2030 and 2035 phase-out targets are therefore extremely significant and it would be unrealistic to consider the UK could remain on track to achieve its carbon reduction targets without implementation of the ZEV mandate.

Q7.  What are the likely costs that will be faced by consumers as a result of the Government’s phase-out dates for non-zero emissions 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?

14. EV purchase prices are expected to decrease over time and reach parity or become cheaper than petrol and diesel equivalents.[6] The ZEV mandate will be an important factor, incentivising further investment in EV manufacture and sales. Alongside similar regulatory measures internationally, increasing volumes of EV production will drive economies of scale which will reduce EV costs.
15. However, consumer affordability remains a current barrier and Government should investigate what policy interventions it can make to tackle cost barriers both at the point of purchase and in the ongoing running of an EV.
16. Changes could be made to current plans for Vehicle Excise Duty for EVs. The exemption of EVs from Vehicle Excise Duty is due to end in 2025. Some differentiation in treatment could still be retained, for example by adjusting relative Vehicle Excise Duty rates for EVs and fossil-fuelled cars in the first years of ownership and by increasing the expensive car supplement threshold for EVs in recognition of their relatively higher purchase price.
17. Residual values for EVs are falling as the market matures, which should feed through to more affordable prices in the second-hand market. Many second-hand EVs come to the market when company car fleets are renewed. To continue this trend in the second-hand market, Government could extend the favourable company car tax arrangements for new electric cars beyond 2025.
18. As a more significant option, the Government could consider a system similar to the French “bonus-malus” scheme linked to the purchase of cars and vans. This idea involves removing some of the purchase price incentive to buy a petrol or diesel vehicle over an electric one, by providing a grant (bonus) towards the purchase of the EV that is balanced out by a tax (malus) applied to the purchase of the petrol or diesel vehicle. This would create a stronger incentive for the purchase of an EV within an overall scheme which is revenue neutral for Government.
19.          EV consumers who do not have access to home charging will rely largely or solely on more expensive public and rapid charging. This cost differential is exacerbated by differences in VAT treatment, where home charging is taxed at 5% and public charging at 20%. The Government should seek to equalise VAT treatment across charging types.

Experience of using an EV

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Q19.                 What are the main benefits that UK consumers could realise from using an EV?

20. Consumers can cut the running costs of their vehicle. Analysis we provide to customers estimates that an electric car can travel 20 miles for 46 pence when charged on the current prices offered on EDF’s time-of-use tariff ‘GoElectric Overnight’ (2.3 pence per mile).[7] For home charging on a standard tariff at October 2023 Ofgem price cap rates, running costs equate to around 8 pence per mile.[8] By contrast the RAC estimated a petrol car cost 16 pence per mile to run in June 2023.[9]
21. The achievable savings in running costs decrease if the consumer depends more on public charging. Zapmap’s public charging price index[10] from July 2023 calculates the weighted average price per mile for an EV charged on the public charging network is 14 pence for slow or fast chargers and 21 pence for rapid or ultra-rapid chargers. Savings compared to a petrol equivalent become less significant for these consumers, or they may even face higher running costs.
22. Other consumer benefits include reduced carbon footprint; expected maintenance savings due to EVs having fewer parts to maintain and a regenerative braking system[11]; and vehicle-to-grid technology may in future provide opportunities to export power stored in the EV battery.

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Q21.                 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?

23. Public charging infrastructure is expanding quickly. Between July 2022 and July 2023, the overall number of installed public devices increased by 38%. The number of public rapid charging devices increased by 42%.[12]
24. The step-change in investment required in charging infrastructure will only be made alongside certainty over EV adoption. It is paramount therefore that the ZEV mandate is in place. Roll-out of charging infrastructure ahead of an uncertain level of EV adoption could lead to uneconomic outcomes where charging infrastructure is underused.
25. Local Authorities will have a key role in pushing forward new public charging infrastructure. The Government should look at ways of ensuring Local Authorities are active in planning for EV infrastructure, for example through a statutory duty on them. It will also be important that Local Authorities are fair and transparent in their procurement of chargepoint providers, fostering an open, competitive market in chargepoint provision that delivers value for money.
26. Rapid charging is an area that needs particular attention from Government. The substantial delay by Government in delivering the £950m rapid charging fund is concerning. Not only is this delaying much needed public investment, but the uncertainty will also impact on private investment. The Government should implement the scheme and open it for applications without further delay. We also believe there would be clear benefit in extending the rapid charging fund to cover new rapid charging sites, not just existing motorway service areas.
27. To promote the cost-effective roll-out of all charging infrastructure at motorway service stations and enhance consumer choice and offerings, an open and competitive market for chargepoint providers at motorway service areas will need to be achieved and we consider that Government and the Competition and Markets Authority (CMA) will need to look again at the competitive position in this area.

Q22.                 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 standardized and reliable for consumers?

28.          EDF is generally supportive of the measures in these Regulations and believe they will improve the experience for users of public charge points. There will be material impacts on chargepoint operators, therefore we encourage continued industry engagement from the Office for Zero Emissions Vehicles to clarify details and discuss issues, so that changes can be implemented, and compliance achieved. 

National and regional issues

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Q29.                 What are the challenges or concerns around grid capacity in relation to significantly increased EV adoption?

29. Adoption of EVs will rise gradually as the phase-out dates are met in 2030 and 2035 and the remaining stock of petrol and diesel vehicles decreases through the 2030s. This will create a gradual increase in the overall electricity demand that EVs create on the electricity system.
30. An expansion in electricity generation and network capacity will be needed to meet the combined growth in demand from several electrification technologies - including EVs, heat pumps, electrification in industrial processes and electrolysis to produce hydrogen. Smart EV charging and greater adoption of flexible demand side response can play a major role in containing the scale of new infrastructure required but will not remove the need for significant new investment.
31. To ensure new electricity network is built quickly and efficiently, reformed regulatory mechanisms are needed. EDF supports the recommendations made by Nick Winser in this respect, which aim to cut the time it takes to develop new electricity transmission projects. We also support moves by Ofgem to facilitate well-evidenced anticipatory investment in distribution networks.
32. The overall increase in electricity network costs to reach Net Zero in 2050 was estimated by the Department of Business, Energy and Industrial Strategy to be between £40-110bn.[13] The analysis also showed the cost of the network per unit of electricity generated (and therefore the cost of the network paid by consumers for each kWh, including to charge their EVs) will not increase but stay broadly the same. This is due to the fact that network costs will be recovered over many decades and spread across an increased volume of electricity.

EDF

September 2023