Written evidence from Society of Motor Manufacturers and Traders (ELV0117)

Call for Evidence – Electric Vehicles

SMMT Response – 15 September 2024

About our industry

1. The Society of Motor Manufacturers and Traders (SMMT) is one of the largest and most influential trade associations in the UK. The SMMT represents the UK automotive industry in the UK and globally. The automotive industry is a vital part of the UK economy, and integral to supporting the delivery of the agendas for levelling up, net zero, advancing global Britain, and the plan for growth. We contribute £78 billion turnover and £16 billion value added to the UK economy, and invest around £3 billion each year in R&D. With more than 208,000 people employed directly in manufacturing and some 800,000 across the wider automotive industry, we account for 10% of total UK goods exports and generate £94 billion of trade.
2. More than 25 manufacturing brands build more than 70 models of vehicles in the UK, supported by more than 2,500 automotive component providers and some of the world's most skilled engineers. Many of these jobs are outside London and the South East, with wages that are around 14% higher than the UK average. The automotive sector also supports jobs in other key sectors, including advertising, chemicals, finance, logistics and steel.
3. The automotive industry has made huge strides towards developing zero emission vehicles and battery technologies, decarbonising its manufacturing processes, and investing in net zero skills. Going forward, it will be critical for Government and the automotive industry to work together to deliver net zero in a way that maximises economic opportunities and minimises any adverse impact on the automotive market. This will require a holistic approach to regulation and policy across all Government departments, based around a common direction of travel towards a shared goal. We need a comprehensive industrial strategy to secure investment in the vehicles and their manufacturing facilities and supply chains, and which addresses the international competitiveness challenges posed by the US Inflation Reduction Act and the EU’s Net-Zero Industry Act.
4. The UK’s net zero success depends on a rapid transition to zero emission vehicles, manufactured with and powered by renewable-sourced energy. The UK automotive industry is committed to the delivery of zero emission mobility, ensuring both private consumers and businesses are provided with desirable, practical and affordable products. Sales of battery electric vehicles (BEVs) have been rising steadily since 2019 and, by the end of 2022, accounted for 16.6% of all car registrations, surpassing diesel for the first time to become the second most popular powertrain after petrol. In the first eight months of 2023, the overall volume of BEV car registrations has risen by 40.5% and over the full year are expected to take a 17.8% market share. In July 2023, a new battery electric car was registered every 60 seconds. In the first eight months BEV LCV registrations have risen 16.4%, equivalent to a 5.4% market share.
5. In addition to rapid decarbonisation of vehicle emissions, manufacturers also recognise the impact of their industrial activities and processes on the wider environment, with many already embracing science-based targets for decarbonisation and sustainability, and many investing in significant energy efficiency measures and on-site zero carbon and renewable energy generation. Despite the impact of the Covid-19 pandemic on production efficiency, UK manufacturers have reduced their CO2 emissions per vehicle by -51.3% and water use per vehicle by -26% in 2022 compared with 2001 levels.

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?

Q2. 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?

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?

6. We prefer to group questions 1-3 as they cover a variety of interacting issues.
7. Government has now made clear its preferred regulatory process for delivering zero emission cars and vans and the automotive industry remains committed to engaging with Government on the successful implementation of the ZEV mandate. However, the significant and ongoing delay to the publication of the final ZEV mandate regulations has created huge uncertainty for our industry. The ZEV mandate – along with binding annual targets for rolling out zero emission vehicles – is proposed to commence at the start of 2024, now only a matter of weeks after the final regulations are due to be laid before Parliament. Our industry needs regulatory clarity as a matter of utmost urgency.
8. Many market questions remain unanswered, including a lack of clarity on regulation post-2030. The ZEV mandate, once published, will only cover the relatively short period up to 2030. Therefore, alongside this regulation, we also need urgent clarity about how vehicles will be regulated between 2030 and 2035.
9. With product development cycles typically requiring 5-8 years to bring new vehicles from concept to market, the cars and vans that will be sold in 2030 are being designed today, with investment and allocation planning for these future years already underway. Continuing lack of clarity around both the ZEV mandate itself, but also the post-2030 regulatory requirements, threatens to hinder or delay ZEV investments at a time when rapid progress is required.
10. New regulations are due to come into force at a time when the pace of growth in EV sales has slowed, particularly for private customers, with a combination of high energy costs, high interest rates and insufficient charging infrastructure softening demand, and with new Rules of Origin (ROO) requirements on batteries and electrified vehicles traded between the UK and the EU potentially resulting in billions of pounds of additional tariffs from January 2024. In this regard, an agreement between the UK and the EU to delay the introduction of overdemanding origin rules on batteries would allow more time for the British and broader European industry to build a robust e-mobility supply chain while ensuring continued tariff-free trade of electrified vehicles in the next future. Moreover, the renegotiation of Free Trade Agreements (FTAs) with major trading partners such as Mexico, Korea and Canada and the negotiation of FTAs with new trading partners offer an opportunity to ensure these deals deliver tariff-free trade of electrified vehicles. Such an outcome would build economies of scale, provide meaningful commercial opportunities, lower manufacturing costs, and increase the attractiveness of the UK as a production and international trade hub for EVs, batteries and related components.
11. Alongside the ZEV mandate, Government should set ambitious and binding targets for rolling out EV charging infrastructure for both cars and vans, with progress monitored and reported annually. Government should commit to acting swiftly and decisively should these infrastructure targets not be achieved. In the three years between 2019 and 2022, the number of BEVs on the road grew by a staggering 602%, while rapid/ultra-rapid charger stock grew by only 143%. In the same period, plug-in cars on the road grew by over 300%, but slow/fast public chargepoints grew by just 121%.
12. SMMT believes EV charging should be as easy and uneventful as refuelling. Our industry is determined to work with government and all stakeholders to jointly deliver an ambitious transition to zero emission mobility that has consumers at the heart of it and is accessible and affordable for all. Consumer-centricity must be based on three fundamental principles: adequacy, experience and equity. No socioeconomic groups or communities, particularly those in rural areas or reliant on on-street residential charging, should be disadvantaged or left behind. Public charging must also be affordable so that consumers are not “penalised” in the pocket for not having a private driveway and access to a dedicated home charger.
13. SMMT welcomed Government’s recent announcement of new measures to improve their EV charging experience. Legislation introducing minimum standards for consumer experience of charging must be passed in Parliament as soon as possible. The focus of new regulations on improved reliability, ease of payment and pricing transparency reflect the key issues faced by consumers when charging their vehicles. The next step should be to enable contactless credit or debit card payments at public chargers below 8kW, which would benefit drivers who rely on on-street and destination chargers. Furthermore, VAT rates on public EV chargers should be reduced to 5% to align with home charging, thereby offering a fair price for all and supporting those who are unable to charge at home or in dedicated on street parking.
14. More broadly, SMMT recognises the need to develop the future motor taxation roadmap as the industry transitions to zero emission vehicles, but this must be carefully crafted as consumers make the shift to new technologies – allowing consumers to make an informed choice and have greater understanding of their total cost of ownership, which is also being impacted by high energy prices.
15. While manufacturers already provide attractive purchase incentives, these need to be complemented by government-backed incentives. For example, reducing VAT on EV purchases would mirror existing discounts on other environmental products such as solar panels and heat pumps and improve Exchequer receipts.
16. With this in mind, we have significant concerns around the introduction of Vehicle Excise Duty for electric vehicles from 2025, notably BEVs being covered by the Expensive Car Supplement. The current threshold captures any vehicle above £40,000 and was designed to add a premium only to the very top end of the market (circa 20%). However, the average new electric vehicle is approximately £47,500 according to industry recognised JATO figures and, as a result, SMMT analysis suggests this measure could capture more than half the battery electric vehicle market. This could approaching £3,000 to the cost of the vehicle over the first six years of ownership – and notably hitting years 4-6, when it would typically be in the used car market, which could limit demand and so residual values.

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?

Q5. What is your view on the accuracy of the information in the public domain relating to EVs and their usage?

17. We prefer to group questions 4 and 5 as they cover a variety of interacting issues.
18. Consumers receive a great deal of information, opinion and debate about EVs through both traditional and social media. These views present a broad spectrum of factual accuracy, ranging from the ill-informed, incomplete and outdated to the expert-led and best-available. As consumers consider the benefits of adopting new EV technology, or an intermediary technology, it is critical that they are provided with a trusted, single source of information that allows them to overcome any potential confusion and make informed decisions.
19. The Go Ultra Low campaign ended in 2021 due to a lack of Government funding. Until that point, this partnership between government and vehicle manufacturers helped to provide consumers with the knowledge they require to support them when making a decision to purchase a plug-in vehicle. This government-backed campaign provided the necessary reassurance that the information they were receiving was accurate. Furthermore, the Electric Vehicle Experience Centre, which was part of the Go Ultra Low campaign, allowed consumers to test drive vehicles from various brands without any pressure to purchase.
20. Both DfT and industry have published myth busting literature to provide a greater understanding of some of the topics debated. However, even when the information is accurate, it is often presented through the lens of drivers who have already made the transition. Many early adopters have been able to do so because they have off-street parking and can afford the cost of the vehicle, with many having previously taken advantage of the plug-in car grant, which is no longer available. More information and support is likely to be needed for those drivers for whom the benefit of making the transition is more marginal – through both cost and practicality/convenience and especially for commercial vehicle users.
21. Across the economy, consumers are increasingly making purchasing decisions based on environmental and ethical, as well as economic, considerations. This highlights the importance of the ongoing work within the automotive industry to accurately capture and report information from across the entire vehicle manufacture and supply chain process, particularly with regard to the whole-life carbon emissions associated with the manufacture of zero emission vehicles. Recent research by Ricardo on behalf of the Department for Transport concluded that that electric powertrains used in UK road vehicles are expected to have significantly lower greenhouse gas impacts across all vehicle types.[1] Battery electric vehicles (BEVs) in 2020 were already estimated to save ~65% GHG emissions compared to an equivalent conventional petrol car, with further reductions expected due to ongoing improvements in battery technology, battery manufacturing and end-of-life treatment
22. Trusted information will be of particular value in the nascent but rapidly expanding second hand EV market as potential buyers seek to make informed decisions, particularly with regard to used battery health. The proposed global battery standards for durability and health monitoring (UN GTR) should help to provide confidence if communicated effectively to the public.

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

23. The Prime Minister’s statement on 20 September removed Government’s previous commitment to end  the sale of conventional petrol and diesel cars and vans by 2030, pushing this back to 2035 to align with the end-of-sale date for all non-zero emission cars and vans. However, the ZEV mandate proposals will still enforce strict targets on ZEV sales up to and including 2030.
24. In this context, the carbon benefits of achieving the government’s forthcoming 2030 ZEV mandate and 2035 end of sale targets will be a factor of both the final targets themselves, but also the success of the transition between now and then. Significant carbon saving during the transition is dependent on a thriving new car and van market.
25. Government’s ZEV mandate will set out the required trajectories for both cars and vans until 2030. In achieving its aim of meeting carbon budget targets, the mandate’s success will depend on the total volume of EV sales which, itself, will depend on strong consumer demand based on a combination of vehicle cost (both purchase and running costs), practicality and performance considerations. Rapid and visible expansion of charging infrastructure is also key to this (covered elsewhere in this document).
26. Government’s modelling for the ZEV mandate suggests the legislation is expected to achieve emissions savings of 31 MTCO2e in carbon budget 5 (2028-32) and 81 MTCO2e in carbon budget 6 (2033-37). In modelling this, Government acknowledges a degree of uncertainty, with variation in supply and demand-side drivers likely to affect the size of the car and van markets. However, in its assessment, Government appears to have dismissed the risk of lower consumer demand on EV sales, despite clear ongoing challenges related to charging and total cost of ownership, especially across some vehicle segments, socio-economic groups, and geographical locations. In making its assessment, it also remains unclear what assumptions Government has made about the size of the overall new car and van markets throughout the transition. In this regard, it is worth highlighting that carbon-saving modelling carried out previously by the Climate Change Committee assumed overall new car and van markets that were significantly higher than we see today.
27. While CO2 saving is the primary driver for the transition to zero emission vehicles, EVs will also contribute to further improvements in local air quality. Significant progress has already been made in this area through improvements to combustion engine technologies and fuels. The gradual uptake of these newer technologies through natural fleet renewal means that the contribution of road transport to air pollution in the UK has reduced significantly since 1970.
28. A notable improvement in air quality has been observed with the introduction of the Ultra-Low Emission Zone (ULEZ) and Clean Air Zones (CAZ) across the country.[2] These schemes have a minimum emission criteria of Euro 4 for petrol vehicles and Euro6/VI for diesel vehicles, as the fleet transitions to zero emission vehicles we can expect further reductions in nitrogen dioxide (NO2) and an overall improvement in air quality.
29. Finally, it must be noted that longer-term trends and uncertainties related to consumer behaviours will potentially impact both the transition to EVs and the environmental benefits of the 2030 ZEV mandate targets and 2035 ICE phase-out targets. Since the Covid-19 pandemic, there is plenty of evidence to show that consumer and employee behaviours have changed, with many people working from home and shifting their commuting patterns. It is unclear how these changes, particularly the average annual mileage of drivers, was accounted for in Government’s ZEV mandate modelling.

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?

30. After charging anxiety, affordability remains a key concern for prospective EV buyers. While the up-front cost of purchasing EVs tends to be higher than their ICE equivalents, the total cost of ownership provides a fairer comparison.
31. Zero emission vehicles (ZEVs) are more costly for manufacturers to produce compared to internal combustion engine (ICE) vehicles. In the case of battery electric vehicles (BEVs), this is largely due to the cost of the battery pack, which can make up between 30% and 45% of the total production cost and up to two-thirds of the powertrain cost.
32. Purchase incentives for EVs have been systematically reduced and removed in the last two years for the private owner, making the UK one of the few markets around the world to have no direct consumer incentives while other major markets still maintain them (such as Germany) or are introducing new purchase incentives in both new and used markets (such as the United States).
33. Producing a truly reliable total cost of ownership model remains challenging, depending heavily on a variety of cost factors and the circumstances and behaviours of individual consumers – e.g. purchase price, costs of finance, energy costs, charging location, annual mileage, taxation (vehicle and energy), incentives to purchase, servicing, insurance, residuals etc.
34. At the same time, the predicted timescale for achieving price parity between EVs and ICE vehicles is open to significant uncertainty, given the potential for supply chain disruption and increased energy costs caused by global, geopolitical events such as the ongoing conflict in Ukraine. Data by Bloomberg NEF showed that battery prices increased in real terms by 7% from 2021 to 2022, largely due to raw material and component price increases. They predict that average pack prices should fall below $100/kWh by 2026 – two years later than previously expected[3].
35. In light of the forthcoming end of sale dates and ZEV mandate, the tax structure should be geared to supporting the transition to zero emission vehicles by helping to reduce costs. Future taxation must be appropriate and proportionate for these new technologies, rather than acting as a deterrent to potential customers. A future motor taxation roadmap must allow consumers and businesses to make an informed choice and have greater understanding of their total cost of ownership. Given the current cost of living crisis, higher energy prices and production costs, any measures which further increase the cost of purchasing and running vehicles would be very unwelcome and damage fleet renewal.
36. Government will introduce vehicle excise duty on zero emission vehicles in 2025 and SMMT has highlighted concerns about the implications for the extended Expensive Car Supplement. The current threshold captures any vehicle above £40,000 and was designed to add a premium only to the very top end of the market (circa 20%). However, the average new electric vehicle is approximately £47,500, meaning the threshold could capture half the battery electric vehicle market, adding £3,500 to the total cost of ownership of an EV over the first six years.
37. We have also called on Government to normalise the VAT rate on recharging at public EV chargers to 5% (currently 20%), aligning with the rate for home charging. This would offer a fair price for all, regardless of their circumstances, and support a just net zero transition for those who are unable to charge at home or in dedicated on street parking. We welcome the upward revision to the Advisory Electricity Rates (AER) but still believe it is set too low, especially for those solely or primarily using public charge points which could cost consumers two to three times – or more in some circumstances – than a domestic home charger. A higher rate, therefore, might better encourage consumers to switch to electric vehicles.
38. Once consumers make the change to an EV, they seldom go back. Recent research by SMMT shows that nine in 10 electric car drivers say they wouldn’t go back to a conventionally fuelled vehicle, with most (57%) loving that they spend less on fuelling – although, overwhelmingly, those drivers have access to home charging (84%).[4]

EV Market and Acquiring an EV

Q8. What are the main routes for acquiring an EV? Which aspects of these routes are working well, and which aspects could be improved?

39. Almost a million (949,720) new cars joined UK roads in the first six months of 2023, with total registrations up 18.4% and BEV uptake at record levels. BEV market share in the first 8 months of 2023 is now 16.4%. However, it is business and fleets, rather than private buyers, that continue to drive this growth, thanks to the attractive fiscal incentives on offer (e.g. company car tax and salary sacrifice). The success of the business and fleet markets in switching must now be replicated in the private retail market. While manufacturers already provide attractive purchase incentives, these need to be complemented by government-backed incentives.
40. The private market has been softer more recently, following the end to government backed subsidies, such as the Plug-in-car grant. Although manufacturers are offering a range of BEV deals for private buyers, including flexible subscription models and attractive finance rates, more could be done by other stakeholders to make purchasing even more compelling. Greater support for the private buyer, at a point where the trajectory of the transition is targeted to rise significantly, would be very welcome.
41. For example, reducing VAT on EV purchases would mirror existing discounts on other environmental products such as solar panels and heat pumps and improve Exchequer receipts. Raising the threshold for the Vehicle Excise Duty ‘expensive car supplement’ from its 2017 level to reflect today’s costs – or exempting EVs altogether – would also help. Taxation would also be fairer if VAT on public charging matched home charging at 5%, not 20%.
42. Importantly, most consumers purchase their vehicles second hand, with the UK used car market typically 3 to 4 times larger than the new car market. A strong supply of EVs into the used market will be critical for its development and its ability to provide wide choice of affordable EVs to the majority of consumers.
43. Most vehicles, new or used, are purchased through finance. Rising inflation rates have made borrowing more expensive for potential buyers, adding further barriers to the transition.

Q9. What are the main consumer barriers to acquiring an EV, either through purchasing, leasing, or other routes?

44. See Q7 and Q8. SMMT does not collate this type of data directly.

Q10. How is the Government helping to ensure that EVs are affordable and accessible for consumers, and are these approaches fit for purpose?

45. See also Q7 and Q8.
46. Much of the growth in UK EV sales is being driven by the business and fleet markets. This success must now be replicated in the private retail market. While manufacturers already provide attractive purchase incentives, these need to be complemented by government-backed incentives.
47. For example, reducing VAT on EV purchases would mirror existing discounts on other environmental products such as solar panels and heat pumps and improve Exchequer receipts. Raising the threshold for the Vehicle Excise Duty ‘expensive car supplement’ from its 2017 level to reflect today’s costs – or exempting EVs altogether – would also help. Taxation would also be fairer if VAT on public charging matched home charging at 5%, not 20%.
48. SMMT argued that decision to scrap the Plug-in Car Grant in 2022 sent the wrong message to motorists and to an industry which is committed to Government’s net zero ambition. Whilst we welcome Government’s continued support for new electric van, taxi and adapted vehicle buyers, the UK is now the only major European market to have zero upfront purchase incentives for EV car buyers.
49. If we are to have any chance of hitting targets, government must use these savings and compel massive investment in the charging network, at rapid pace and at a scale beyond anything so far announced. Mandating targets for chargepoint rollout would help overcome the other issue holding back consumers – insufficient infrastructure. Such measures would improve the attractiveness of EVs to British consumers and flow through to the second hand market, increasing demand and helping address concerns about the residual value of these new technologies.

Q11. 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?

50. Battery electric models are now available in every vehicle segment and at an array of price points. The UK automotive industry is committed to the delivery of zero emission mobility, ensuring both private consumers and businesses are provided with desirable, practical and affordable products. Manufacturers have invested heavily in bringing an ever greater number of models to market and there are now more than 180 plug-in models available in the UK.

51. In transitioning to an ever-greater proportion of EVs between now and 2035, manufacturers will each follow their own, individual strategies and technology pathways, including the order and timescales in which they transition the different segments and model line ups within their overall fleets.
52. China is often cited as an increasingly significant source of smaller, cheaper EV imports into the UK and European markets in the near future. EVs made in China already represent more than 30% of the UK new BEV market with Chinese owned brands accounting for 10%. China has invested in EVs and their e-mobility supply chains for decades and is by far the most dominant player in the BEV segment. China was planning to end its highly competitive incentives for EVs but, with increasing concerns about a combination of overcapacity and low domestic demand, ultimately decided to extend this support to 2027. These concerns have also pushed Chinese manufacturers to export worldwide at very competitive prices. The response by the US to introduce a 25% tariff on imported EVs from China further encourages Chinese manufacturers to prioritise other markets, with the UK and Europe on top of the list.

Q13. 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?

Q15. 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?

53. We prefer to group questions 13 and 15 as they cover a variety of interacting issues.
54. SMMT does not produce market outlooks for the used car market, but we do track it. Our latest figures show that the UK’s used car market rose by 4.1% during the second quarter of 2023, with 1,832,267 units changing hands. The increase equates to an additional 72,583 transactions compared with the same period in 2022, reflecting sustained growth in the new car market and improving availability. The easing of supply chain disruptions has driven sales growth in every month so far this year and, although the Q2 market remains -9.9% below 2019 levels, its recovery continues apace.
55. Used battery electric vehicle (BEV) sales continued to soar in the second quarter, growing by 81.8% to 30,645 units, representing 1.7% of the car market – a new record – up from 1.0% last year. Double-digit growth also continued for plug-in hybrids (PHEVs) and hybrids (HEVs), up 11.4% to 18,437 units and 29.5% to 53,634 units respectively. The rising proportion of electrified vehicles meant that market share for conventionally powered cars marginally fell to 94.3% from 95.7% last year, even though volumes of petrol and diesel cars saw growth of 2.5% and 2.8% respectively.
56. There is clear consumer appetite for pre-owned electric cars. Development of the second hand market will depend on sustaining a buoyant new car market and on the provision of accessible, reliable charging infrastructure powered by affordable, green energy. This, in turn, will allow more people to drive zero at a price point suited to them, helping accelerate delivery of our environmental goals.
57. There are myriad reasons why customers choose to purchase a used rather than new vehicle, but the second hand market tends to be more price sensitive. If these consumers are reliant on public chargers, they will face costs that are twice the price of home charging and are less convenient to use. Measures such as the requirement to pay the expensive car supplement on VED could also add costs to the second hand market, so any lever which can help make EVs more attractive should be utilised – although not by raising costs on ICE vehicles, which would particularly impact those not able to switch and prove inflationary.

Q16. 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?

58. Government’s own research shows that car clubs can reduce overall CO2 emissions and vehicle kms travelled.[5] There is broad support among the automotive industry to incentivise car clubs through the awarding of additional ZEV credits, as set out in Government’s latest ZEV mandate proposals. While this is a potentially valuable source of additional allowances for many manufacturers of both cars and vans, there remains a large degree of uncertainty around the definition of a car club and, by extension, the types of scheme that would be eligible. The legal definition of a car club should be confirmed as a matter of urgency and should be, within reason, as broad as practicably possible, ensuring a robust criteria without inadvertently disqualifying new and innovative models of vehicle sharing.
59. In other markets, cheaper and shorter range EV “city cars” have proved popular and such vehicles may well provide a desirable solution for some urban dwellers and car clubs in the UK in future, particularly as Government develops its plans for improved public transport and sustainable mobility for all.
60. There had been growth in car clubs (prior to Covid), but issues around planning restrictions was a key barrier to their development. Local measures which can overcome these hurdles would aid growth in this area.

Experience of using an EV

Q18. What are the main challenges that UK consumers face in their use of EVs?

61. Government has made clear its policy ambition and regulatory process for delivering zero emission cars and vans, and we remain committed to engaging with Government on the successful implementation of the ZEV mandate. However, successful delivery of the ZEV mandate is not solely within the gift of the automotive industry. It requires a huge societal shift that encompasses significant changes to consumer behaviours, technologies, and infrastructure. We need concerted action now to address these ongoing barriers to uptake.
62. The Government’s own electric vehicle infrastructure strategy in 2022 acknowledged that the recent rapid increase in both the supply of, and the demand for, EVs means that charging infrastructure was “…the single biggest challenge…” to transport decarbonisation.[6]
63. The rapid timetable for switching to zero emission vehicles relies on the rapid development of a ubiquitous network of chargepoints at all locations. However, the early surge in electric vehicle demand means that public charging infrastructure has struggled to keep pace.
64. The LEVI pilot funding is a welcome step that will give drivers in the winning areas greater confidence to make the switch to electric motoring, and will hopefully help inspire operators and local authorities across the UK to increase the roll out of chargepoints.
65. However, recent SMMT research shows that a lack of charging infrastructure remains the primary barrier to EV uptake.[7] With manufacturers bringing ever-growing numbers of plug-in vehicles to UK roads, we cannot risk lacklustre infrastructure holding back Britain’s world-leading electric vehicle ambitions. We need a universal right to charge electric vehicles, for all drivers, wherever they live, wherever they travel, and whatever their needs.

Concerns about driving EVs and their infrastructure

Source: Department for Transport, National Travel Attitudes Study: Wave 7 (2023)[8]

Disadvantages of EVs

Source: Ipsos for Department for Transport (2022)

66. SMMT’s recent EV infrastructure position paper argued that the UK’s successful transition to zero emission mobility must be based on the following seven-point plan:[9]

• Embed consumer-centricity in policy and a national plan on charging infrastructure.
• Develop and implement a nationally coordinated but locally delivered infrastructure plan.
• Invest significantly to uplift all types of charging infrastructure, particularly public chargers, ahead of need.
• Set binding targets to ensure adequate public chargepoint provision and social equity.
• Enact proportionate regulation to deliver the best outcomes for consumer experience and expansion of provision.
• Provide adequate enabling support to incentivise and facilitate delivery of charging infrastructure.
• Ensure electricity networks are future-proofed and fit for purpose for zero emission mobility.

67. For those that have access to off street parking, charging at or near home on a day-to-day basis can be relatively easy, with public charging generally only required for long journeys. But while Project Rapid committed to 6 chargepoints at every motorway service area by the end of 2023, it seems that this target will not be met.
68. Drivers without access to off-street parking rely solely on public on-street and destination chargepoints. Where on-street chargepoints are accessible and available, they incur a higher rate of VAT than if charging at home, making the overall cost of charging more expensive for this group.
69. Government’s ambitious and binding targets for rolling out ZEVs must be underpinned by equally ambitious and binding targets for rolling out EV charging infrastructure for both cars and vans. It is critical that charging infrastructure progress is monitored annually by Government to ensure any lack of progress does not continue to undermine consumer confidence and create a barrier to ZEV uptake, with a commitment to act swiftly and decisively should this be the case.
70. As the number of zero emission and plug-in vehicle registrations has surged, public charging infrastructure expansion has failed to keep pace, leading to a worsening ratio of cars per charger. While plug-in cars on the road grew a phenomenal 359% in the three years between 2019 and 2022, slow/fast (AC) public chargepoints grew by just 121%. In the same period of time, BEVs on the road grew by a staggering 602%, but rapid/ultra-rapid (DC) charger stock grew by only 143%.

74. Left entirely to market forces, the rollout of chargepoints will naturally prioritise commercial rather than consumer interests, focussing predominantly on the more profitable types of chargers and high-utilisation locations. As a result, while the problem may not be a lack of chargepoints, the provision of public chargers risks becoming increasingly inadequate, inequitable and disproportionate as plug-in vehicle uptake continues to accelerate.

Cars to public chargepoint ratio, by type of cars and chargepoints, 2019-2022*

Source: SMMT analysis of Department for Transport data (2023)[10]

* Denotes cars in the parc and public charger stock.

** All plug-in cars are able to use slow/fast (3-22kW) public chargers, but rapid/ultra-rapid (50-350kW) public chargers are used predominantly by BEVs.

75. Without binding targets, Government expectations of a purely market-led delivery of charging infrastructure may not be realised. As an example of this, while Government expected the market to deliver six or more rapid/ultra-rapid chargers at every motorway service area in England by the end of 2023, recent research suggests that less than a quarter of the 119 motorway services reviewed currently meet this target.[11]
76. SMMT’s recent EV infrastructure position paper argued for binding targets of public chargepoint provision on a graduated basis, commensurate with expected plug-ins on the road over time.[12] Focussing primarily on the type of chargepoints that are less likely to follow an organic growth path, we suggest the following binding targets:

• Ratio of plug-in vehicles per fast (7-22kW) public charger in each of the economic regions, set appropriately and reasonably based on the unique characteristics and consumer needs in each region and reviewed annually for relevance. This target, like carbon budgets, should be binding on government itself, who should assume overall accountability but delegate responsibilities, by way of a statutory duty for planning and delivery oversight, to local authorities, whose combined performance influences the ratio of the region.
• Minimum number of rapid/ultra-rapid (50-350kW) public chargers per forecourt/hub/motorway service area, depending on the size of the site and expected traffic throughput, and reviewed every two years. This target should be binding on CPOs. Compared to fast public chargers, it is not expected that there will be material under-provision of rapid and ultra-rapid chargers, as these are the relatively more profitable chargers in a CPO’s portfolio.

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

77. Recent research carried out by Savanta on behalf of SMMT asked EV drivers what they most liked about their EV.[13] The leading benefits identified are around lower fuel costs, reduced environmental impact and quieter and more enjoyable driving experience.

What do you like most about your EV? Multi-choice

78. These findings are backed up by recent research by RAC Foundation that showed that running costs for EV owners were 9p per mile for those using 7kW home chargers and an Ofgem capped tariff.[14] This compares to 16p and 17p per mile for petrol and diesel owners, respectively. The costs for regularly using rapid and ultra rapid charging are higher.

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?

79. Until the long-delayed consumer experience of charging legislation is passed, EV users continue to encounter unreliable public chargers and are forced to carry multiple RFID (radio frequency ID) membership cards or download multiple apps just to charge publicly. However, the draft legislation in its current form contains several deficiencies, which we will elaborate in our answer to question 22.
80. There are already existing charger standards in both the UK and the EU, where Type 2 chargers have become the prevailing standard for AC charging, while CCS has emerged as the standard for DC charging. The CHAdeMO protocol continues to be used by a minority of vehicle models, while Tesla maintains its proprietary charging system (while also using the CCS standard in Europe/UK for a number of years now).

Consumer confidence with public charging

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?

81. The announced measures to improve the UK’s EV charging experience will give everyone increased confidence in the network, something that is crucial to driving uptake and reducing emissions. The regulations’ focus on improving reliability, interoperability and pricing transparency is good news as they reflect the main issues people have when recharging.
82. The next step should be enabling contactless credit or debit card payments at public chargers below 8kW, which would benefit drivers who rely on on-street and destination chargers. EV users continue to encounter unreliable public chargers and are forced to carry multiple RFID (radio frequency ID) membership cards or download multiple apps just to charge publicly.
83. To deliver the best outcomes for consumer experience that encourage and facilitate the transition to zero emission mobility, SMMT recommends:

• All public chargepoints, not just rapid and ultra-rapid chargers, must offer ad-hoc access and payment via contactless debit/credit card and network roaming.
• A mandated minimum reliability rate of 99%, measured per operator per annum.
• All public chargepoints must make available the “must have” static and dynamic (real-time) information set out in government’s consumer experience consultation.
• For pricing transparency, all CPOs should charge for the electricity they provide in p/kWh.
• All new public chargepoints should be developed and installed in adherence to BSI PAS 1899 requirements and recommendations on accessible charging infrastructure.
• A dedicated, fit-for-purpose regulatory body should be set up to monitor the market, including for price levels and affordability, and enforce the Regulations.

84. The current draft legislation fails to make charging as easy as, if not easier than, refuelling, as consumers will still have to either carry multiple RFID network cards or download multiple apps when using the vast majority of public AC chargers. The draft legislation requires every new public chargepoint of 8kW and above to provide contactless payment facility, despite the vast majority (estimated to be around nearly 90%) of all public AC chargepoints are below 8kW, thus rendering the measure almost meaningless. All public DC chargers are already required to provide contactless payment facility anyway.
85. While most of the measures will be in force a year and 23 days after the legislation is passed, the payment roaming requirement will be in force two years and 23 days after the legislation is passed. This means consumers could have to wait until early 2026 before they could roam freely across multiple charging networks, by which time the transition to ZEVs would already be in full swing as the ZEV mandate would have been in force for two years. Given the payment roaming requirement is relatively non-onerous, the long lead time for the measure to come into force is unhelpful to consumers wishing to make the transition.
86. The minimum reliability rate of 99% as set out in the draft legislation applies only to public DC chargers, while public AC chargers are exempt. This is despite a recent survey discovered that EV drivers who encountered faulty chargepoints most often did so at destination charges[15], the vast majority of which are AC chargers.
87. The Office for Product Safety and Standards has been designated as the enforcement body for these regulations. We believe a dedicated regulator that is properly equipped to regulate public charging services, not the safety of or standards related to the hardware, is needed. Social media is littered with numerous complaints of broken down public chargepoints, poor customer service and consumers left in the lurch, but with no recourse to formal complaint mechanisms or protections. Regulation without enforcement is less effective, whereas the creation of a dedicated regulator with powers to act will ensure market participants comply with regulations.

Q23. 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?

88. SMMT agrees that the availability and accessibility of real-time information about public chargepoints is important to enable plug-in vehicle users to plan their journeys and charging needs, or access infrastructure on demand. Plug-in vehicle users need to know not just where chargepoints are located, but also information on power ratings or pressure, connector type, price, payment options available, state of repair, availability, physical access restrictions and operating hours (if applicable).
89. Recent research shows that over 80% of EV drivers feel it is essential to know if a chargepoint is available in advance.[16] The “must have” data types set out in government’s consumer experience consultation should rightly be mandated.

Q24. 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?

90. There is a substantial proportion of the population that do not have access to off-street parking, thereby unable to charge their EVs at home. The English Housing Survey reveals that 67.1% of dwellings have a garage or off-street parking, 31.4% have only on-street parking and 1.6% have no parking at all.[17] These figures are supported by an RAC Foundation study that shows 65% of Britain’s 27.6 million households have, or could have, enough off-street parking to accommodate at least one car or van, although this figure drops to just 44% in London.[18] The one-third of British households without off-street parking rely heavily on on-street residential chargepoints and/or other chargepoints, including at the workplace and destinations.
91. These figures show the importance of public charging as the transition to ZEVs gathers pace and is embraced by more households without access to private (home) charging. While we welcome government’s Local EV Infrastructure Fund initiative, we believe the Fund must be disbursed as a matter of urgency and binding targets must be put in place to ensure adequate number of chargers of the right types are installed in the right places across all local authorities.
92. The VAT regime for public charging should also be reformed by applying the lowest rate (i.e. 5%) across the board for electricity used for charging regardless of where the vehicle is charged. Consumers should not be “penalised” in the pocket for not having a private driveway or garage. Less affluent consumers should still have access to affordable charging on demand.

Q25. 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?

93. See Q7

National and regional issues

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

Q30. What is the role of distribution network operators in ensuring EV infrastructure can be rolled out sufficiently to meet 2030 target?

94. We prefer to group questions 29 and 30 as they cover a variety of interacting issues.
95. National Grid ESO predicts annual electricity demand for cars could be as high as 39.2TWh by 2030 and 84.1TWh by 2035 – a 2,900% and 6,400% rise respectively on 2020 levels. In an average cold spell during winter, if all plug-in vehicles were charging at the same time during the evening peak, power demand could reach a high of 10.0GW by 2030 and 21.2GW by 2035.
96. National Grid have previously stated there is enough capacity to support EV charging. However, this must be considered in the context of a requirement to roll out a greater number of higher power chargepoints to accommodate all EV and plug-in vehicle types, including the heavy truck and equipment sections, as well as the increased future electricity demands from other technologies and sectors like heating.
97. At a local level, required DNO upgrades are not always straightforward. In the latter part of 2022, SSEN, National Grid Electricity Network (NGET) and National Grid Electricity System Operator (NGESO) wrote to the Mayor of London, Sadiq Khan, regarding the electricity capacity constraints in West London.[19]
98. SMMT has welcomed Government proposals to use smart charging and Vehicle-to-Grid (V2G) as demand side response mechanisms to help delay the need for costly electricity network reinforcements. However, smart charging must not be regarded as a panacea for network capacity constraints or an ersatz substitute for much needed network reinforcements. We believe the following measures are necessary:
• Government and Ofgem must put in place frameworks that enable Distribution Network Operators to commit to well justified anticipatory investments in local networks that are most constrained and in strategic locations to future-proof charging for heavy duty vehicles.
• Load limitation must be limited to the boundary of the home only, and not exercising control beyond the meter. It must not single out the plug-in vehicle as the only “appliance” that is being targeted for the purpose of load balancing and grid protection.
• Regulatory frameworks must encourage the development of flexibility services and markets that incentivise consumers to participate in smart charging and V2G.
• In order to ensure the electricity used to power and produce zero emission vehicles by 2035 is as green as the new cars and vans themselves, government must mandate 100% grid decarbonisation by 2035 and legislate for a binding target of 90% of electricity to be generated from renewables under normal operation by 2035. This mandate must be supported by increased investment in renewable electricity generation capacity and innovative reforms to electricity markets
99. While much of the current focus of debate, regulation and policy is on the rapid EV transition of cars and vans in advance of the 2035 end of sale date, the future electricity requirements of heavy goods vehicles cannot be ignored as part of the longer-term, strategic planning for the UK’s charging infrastructure, particularly with regard to depot charging.
100.                      Currently, there are considerable barriers to installing charging infrastructure at depots. In many cases the depot may not be owned by the operator and therefore they will require permission from the landlord. The cost of upgrading the local grid to provide sufficient power for vehicle charging is often a prohibitive factor. The current challenges should not be underestimated and government should act quickly to resolve these if net zero targets are to be met. To overcome these barriers, further regulatory support is required and government should, through its review of the National Planning Policy Framework, simplify and create a nationally consistent process for installing charging and refuelling infrastructure at depots. Furthermore, a simplified, nationally consistent process for connection to the grid to enable depot-based charging should be created.

Q31. What are the requirements, challenges or opportunities for the development of public charge point delivery across the UK? How will the development of EV charging infrastructure in the UK interact with existing planning regulations?

Q32. What are the issues facing rural residents, urban residents, and sub-urban residents and how do they differ?

Q33. What role do you see local authorities playing in the delivering the 2030 phase out target, particularly in relation to planning regulations, charge points and working with District Network Operators? How can government best support local authorities in their roles?

101.                      We prefer to group questions 31-33 as they cover a variety of interacting issues.
102.                      The responsibility of planning and delivering sufficient charging infrastructure cannot fall on any single organisation or entity alone as, by acting alone, no single organisation or entity is empowered to deliver this. Myriad organisations will need to play an integral role in the strategic planning and delivery of this charging infrastructure, including national and local governments, regional transport authorities, energy network operators, and private and public sector organisations. Only by acting together in a coordinated fashion, with all parties understanding and meeting their obligations, can a ubiquitous and effective network of chargepoints be developed at a pace that matches UK Government’s ambitious timetable for switching to plug-in vehicles.
103.                      The infrastructure sector and local authorities must be supported in delivering charging infrastructure through a raft of measures that should work in combination. These support measures are aimed at de-risking private investment and creating investable propositions to address genuine market failures and plugging recognised resource gaps at the local authority level. These measures include:
• Mixed high-low utilisation blocks for long-term tenders. Public chargepoint tenders issued by local authorities should be long-term and require both urban and rural, as well on-street and off-street, coverage, thus resulting in successful bidders operating high-utilisation urban and off-street chargers that offset potential losses from low-utilisation rural and on-street chargers.
• Modified contracts for difference. Akin to price guarantees, government should set a fair expected annual revenue (strike price) for normal operations, along with stringent service level agreements and other conditions, in specifically targeted low-utilisation, or commercially unattractive, blocks and cover the shortfall in the CPO’s verified annual revenues until the market is deemed to have matured.
• Anticipatory demand-led approach through an online portal. In areas with insufficient chargepoints, local residents intending to purchase or lease a plug-in vehicle within the next six months should be able to log requests for a chargepoint online. The local authority is then obliged to ensure a chargepoint is installed in the location of need within six months.
• Adequately supporting and resourcing local authorities. Statutory duty placed on local authorities to plan for and oversee the delivery of public chargers must be accompanied by greater levels of support in the form of resource funding, not just the existing capital funding.
104.                      The current disparity between local authorities on charging provision is such that the London and the South-East received 45% of the charger capacity in 2020, thus creating a postcode lottery.[20] Going forward, charging infrastructure investment must facilitate a just transition, with chargepoints rolled out in a way that reflects the variety of socio-economic needs across different parts of the UK, rather than in areas where there is most short-term profit.
105.                      Relatively lower demand for chargepoints makes it challenging to deploy chargepoints in rural areas (as the business case can be worse). Conversely, in urban areas the demand for charging may be higher, therefore utilisation is higher, and therefore the CPO can charge less per kWh for chargepoints in urban areas compared to rural areas.[21]
106.                      Currently, the roll-out of charging infrastructure across different local authorities remains inconsistent, with each authority having its own rules and processes for planning consent. Progress must not be hampered by the creation of a patchwork of different systems and policies in different places, where adjacent locations might employ entirely different charging and payment systems, and where differing user experiences lead to consumer confusion.
107.                      Government should provide funding alongside policy and technical guidance to ensure a consistency of approach and standards, providing consumers with a uniform experience. A statutory requirement on local and regional authorities and transport authorities to plan and deliver charging infrastructure will ensure that chargepoint investment will be seen as a priority within local delivery plans. But statutory requirements on these authorities must be matched by adequate resource, budget and expertise, without which chargepoints will not be delivered effectively or strategically. Local authorities will need dedicated funding and support to develop the local expertise that underpin the required planning, delivery and cooperation across boundaries.
108.                      The Go Ultra Low City schemes are some best practice examples from local authorities where charging infrastructure networks have been rolled out. These schemes have all had access to funding and demonstrate local political will to support the transition to zero emission vehicles.
109.                      Conversely, some local authorities still have little or no charging infrastructure at all. With no obligation to provide this, residents and businesses will continue to be reliant on their internal combustion engine vehicles, thus limiting the capacity for environmental improvements.
110.                      However, a statutory obligation alone may not be sufficient. Investment in the provision of chargepoints cannot and should not be done by public money alone and much will be driven by private money or through making infrastructure investable.
111.                      Following on from the success of the Charging Infrastructure Investment Fund (CIIF), government should explore options for encouraging further co-investment by the private sector, particularly in areas of low utilisation where there are potentially fewer opportunities for a swift return on investment. Contracts for Difference have been used successfully to drive green investment in other areas where swift investment is required. Such an approach could help to ensure that the deployment of a strategic chargepoint network follows the principles of a just transition by weighting funding eligibility towards low utilisation areas and ensuring that strict service levels and reliability standards are a requirement for any funding agreement. Government should also explore opportunities to bring electric charging infrastructure into the scope of the UK Infrastructure Bank and other green finance catalysts.

International perspectives

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

112.                      Across the EU, market share of BEVs expanded to 12.1% in 2022.[22] Despite significant recent progress in sales volumes of EVs in the UK and across the EU, they still make up a small fraction of the overall number of vehicles on the road today.
113.                      According to ACEA, despite the strong increase in sales seen in recent years, electrically-chargeable cars (battery electric and plug-in hybrid) still make up only 1.5% of the total EU car fleet, i.e. those vehicles currently in-use on the roads (parc).[23] Of these, only 0.8% are currently battery electric. In the EU, only three countries have a share of battery electric cars higher than 2% - Denmark, Netherlands and Sweden. This compares with 16.2% in Norway, 4.6% in Iceland and 1.3% in the UK. Diesel-powered light commercial vehicles are still dominant in the EU with 91% of the fleet running on diesel and just 0.6% of vans being battery electric. The proportion of fully electric light commercial vehicles in the UK is also 0.6% while, even in Norway, this figure is only 2.8%.
114.                      ACEA also recently published an assessment of tax benefits and purchase incentives for passenger cars[24] and commercial vehicles[25] across the 27 EU states as well as Iceland, Switzerland and the UK. Their findings demonstrate that many European countries offer fiscal support to stimulate market uptake of electric commercial vehicles, but these tax benefits and purchase incentives differ widely. In general, EU member states offer a lower number of tax benefits and purchase incentives for electric commercial vehicles compared to electric passenger cars.
115.                      As mentioned previously, the scrapping of the Plug-in Car Grant in in 2022 means the UK is now the only major European market to have zero upfront purchase incentives for EV car buyers. Recent ACEA data shows that the UK is failing to keep pace with the average rate of EU BEV growth, with a growth of 40.5% in the UK between January and August 2023 compared to 62.7% in the EU.[26]
116.                      Norway is the global leader in electric car uptake, underpinned by a range of tax incentives for EVs designed to make them cost competitive for consumers at the point of sale – i.e. reduced vehicle registration tax, reduced company car tax and zero VAT. EV drivers in Norway have also been provided with additional benefits, including the ability to use bus lanes and exemptions from road tolls. While Norway is now in the process of removing or downgrading some of these benefits, they have clearly had huge success in promoting rapid, early uptake.

Battery electric vehicles (BEV) – European Union + EFTA + UK

Source: ACEA[27]