Supplementary evidence from Marc Palmer (ELV0127)

September 6 - Session 1, Panel 1: Marc Palmer, AutoTrader

Could you expand on the meaning of ‘getting the second-hand market to work’ for EVs. Is that around reducing the cost of second-hand cars, increasing the availability of second-hand cars, or addressing barriers to people’s trust in second hand vehicles?

• The answer is all three as below:
• Reducing the cost: this is the number one barrier for rejectors with 56% of people saying it’s a reason they wouldn’t buy an electric car (Auto Trader, May 2023). If electric cars were to become more affordable, it’s clear that interest would increase – since September 2022 the prices of electric cars has fallen by 22% on a like-for-like basis, with demand now 105% ahead of last year. However, they remain too expensive for too many people with the profile of considerers much more likely to live in affluent areas and be categorised as social grade A/B
• Increasing the availability: rather than more of the same and at the same prices, this is more about more electric cars being available in more budget levels. As the used market matures and more (and older) cars return to the market since being bought new, this is improving. However, as at June 2023 only 29% of used electric vehicle stock was priced under £20k, putting the majority of electric cars available well out of the reach of most buyers
• Addressing trust: just 16% of people selected the word ‘Reliable’ when describing electric cars and just 13% selected ‘Durable’, evidence of a fundamental issue in product trust. In order to consider buying an electric car, the key piece of information needed is that the battery will last (61%). Resolving this concern will remove one of the major barriers to consideration; OZEV is working on solutions to the problem, but we would like to see a) a single, market-wide approved battery testing standard b) open access to battery performance data and c) a single measure of health and performance for display online and physically (we are working with partners to create this)

Could you reflect further on whether the current drop in used EV prices is a positive or a negative development in your view? Would you (Auto Trader) like to see a reduction in the differential between new and second hand EVs or not?

• 2023’s drop in used EV prices has stimulated demand among those who can afford electric cars but not yet shifted to the mainstream. In this respect there is a positive – we know that price can trigger interest when electric cars are at a similar level to their ICE counterparts.
• However, the fall in prices has also damaged future values. The implications of this are important, with 90% of new cars bought on finance and that finance structured around funding the car’s depreciation – the greater the depreciation, the higher the amount to fund and therefore the higher the monthly payment. If EV prices continue to fall, we can expect future values to be further negatively impacted.
• A drop in residual values also impact the fleet and leasing sectors, where many cars are returned to the provider / lender. Since EV prices and values have fallen, many leasing companies have seen their returning stock cost them due to greater than expected depreciation. In addition, retailers have seen the stock they hold drop in value and in order to protect themselves are offering lower part exchange values for electric cars, or in some cases not accepting part exchanges / bidding for electric cars at auctions.
• The balance in pricing between new and used EVs is important to maintain as with ICE cars. The challenge is not to reduce the gap between new and used EVs, but between EVs and ICE

On the subject of European EV targets. Are there benefits to the UK aligning with Europe’s more flexible targets? Does it cause any problems with the UK going early or is sticking to any targets set more important?  

• Auto Trader echoes the view of manufacturers – certainty is crucial to success and the 2030 date has seen great progress made by the private sector in a fairly short space of time. Going early was ambitious but in itself not an issue, with all but a few carmakers investing and preparing to achieve the targets set and the chargepoint community resolving the infrastructure challenge.
• Leadership attracts investment, demonstrated by the Tata and BMW announcements, as well as boosting the UK’s rich heritage of innovation in technology.
• Pushing the date back to 2035 has three impacts:
• Manufacturers have lost the certainty they need to invest, produce, sell and support - you have plenty of responses to pick from on this one!
• Chargepoint operators have committed billions in a plan to meet the number of cars on the road, which may now be fewer. I know that ChargeUK is also vehemently opposed to the change.

Consumers unsure about the switch have more reason to put it off, keeping more petrol and diesel cars on the road for longer. Ironically, pushing the date back also means that there will be fewer used electric cars available to buy in the coming years, so those families the Government has sought to protect from expense will now have less access to affordable, green motoring and the benefits of the fuel savings that electric cars can provide.