Supplementary evidence from Tim Schwanen (ELV0133)

Electric Vehicles – Uptake in the UK 

House of Lords Environment and Climate Change Committee Inquiry

Response by Prof Tim Schwanen to further questions based on the Oral Evidence session, Wednesday 6 September 2023, 11 am

Experience from Norway

Norway has incentivised battery electric vehicle (BEV) adoption since the 1990s through such measures as exemptions from vehicle registration tax, toll road charges and the annual vehicles license fee. Nationwide introduction of access to bus lanes was added to these measures in 2005, after initial piloting in the Oslo region.[1] In recent years, with the Norwegian BEV market reaching maturity, there has been extensive public debate about the scaling down or wholesale retraction of some of these incentives. Examples include access to bus lanes and exemption from toll payments: if there are so many BEVs on the road that bus lanes become congested at peak times and the revenue from tolls falls to unsustainable levels, then the original incentive has become counterproductive and there is a reasonable case for downscaling or abandoning it. Multiple concerns have nonetheless been raised.

One set of concerns relates to equity and fairness: as early adopters are generally better off than the wider vehicle using and owning population, the incentives have disproportionally benefitted well-off households and individuals. It could be argued that the actions of early adopters have indirect benefits for those shifting at a later stage to a BEV, but these arguments are rather difficult to explain to the general public and, perhaps more importantly, difficult to back up with robust evidence. A second set of concerns revolves around electoral risk. An administration that is seen to retract what many BEV users may have come to understand as entitlements rather than privileges may lose popularity at the next election. This risk to some extent reflects the widely cited observation from behavioural economics that ‘losses loom larger than gains’[2] – i.e., people are much more sensitive to the prospect of having to giving up a good or a privilege than to acquiring it in the first place.

A key lesson from the Norwegian experience is that the creation of policy incentives to encourage BEV uptake should not only be motivated by short-term thinking. Objectives should instead be seen from an evolutionary perspective and in the context of the broader system changes towards vehicle electrification that unfold over multiple decades. Rather than creating privileges, such as access to bus lanes, that rapidly become seen and framed as entitlements and therefore difficult to change or scrap altogether, it is important to embed an exit strategy into policy interventions from the start. In practical terms, this can be done by foregrounding the temporary nature of incentives and commit by the time of introduction to time-scales over which the incentive will be scaled down and/or scrapped. These timescales may later be revised if circumstances change (e.g., when markets develop more sowly than originally anticipated), but the temporariness of measures should always be at the heart of public communication. 

Getting the second-hand market to work for EVs

With this phrase I was referring during the oral session to multiple processes that should ideally all take place. The first concerns improving the availability of second-hand battery electric vehicles (BEVs) across all market segments, including small and cheap vehicles. More second-hand BEVs will become available in the coming years, but primarily in the vehicle segments that are currently popular in the lease market. Those vehicles may not map entirely onto the preferences of prospective buyers of second-hand vehicles in terms of size, capability and price. Related to the previous point, it will be critically important that second-hand BEVs are affordable to prospective buyers with limited financial means; wide diversity of second-hand BEVs on offer will help to enable those buyers to obtain a BEV within financial constraints. A third process that is required relates to trust in second-hand vehicles and the batteries they contain. A standardised system of certification of such batteries can help to cultivate the required levels of trust.

There are also indirect ways in which the second-hand market for BEVs can be stimulated. One way in which demand for such vehicles can be increased is by making sure that opportunities for charging are widely available. This means that emphasis should not only be placed on enabling individuals with access to off-street, private parking to charge their BEVs. Policy can and should also encourage and support the creation of charging infrastructures in public spaces and on residential streets across all kinds of neighbourhoods, including those where median incomes are lower. Leaving the creation of public charging infrastructure to the private sector entails the risk that lower-income areas remain underserviced. 

Current drop in used EV prices and difference with new BEVs

Given my answer to the previous question, I consider the drop in used BEV price levels beneficial, as it will make BEVs available and affordable to a wide range of individuals, households and businesses. The biggest challenge the transport sector currently faces is to accelerate the reduction of CO2 emissions, and accelerating the diffusion and uptake of BEVs among all segments of vehicle users is a relatively easy way to accelerate the transition towards net-zero in transport. 

In light of this challenge, it is important that the price levels of both new and second-hand BEVs rapidly become as low as possible. However, a differentiation in prices for a new BEV and the equivalent second-hand EV would still be desirable. BEVs will on average remain longer in use than conventional fossil fuel powered vehicles, and CO2 emissions from transport can be reduced not only be lowering emissions from vehicles in use but also by minimising embodied emissions. The latter tend to be higher for BEVs than the equivalent conventional vehicles. Ultimately, the most effective way of reducing embodied emissions is to shrink the overall size of the UK’s vehicle parc. If individual vehicles remain longer in use with electrification, the obvious way to reduce embodied emissions is to ensure that fewer new (electric) vehicles are sold. This line of argumentation reflects that a comprehensive response to the climate crisis will ultimately require a reduction in the ‘consumption’ of new vehicles and longer use of those that are being driven.

Alignment with European EV targets

The setting of targets is in general desirable and will offer the vehicle manufacturing some muchneeded clarity about what vehicles they can sell during a given year in the period until 2035. In principle, alignment with EU targets for the transition to zero-carbon vehicles (at tailpipe) should be encouraged, because the UK is a rather small vehicle market when seen in the global perspective that informs the strategic decision making of larger vehicle manufacturers. At the same time, there remains uncertainty about the EU’s position and decision-making with regard to e-fuels, both before and after 2035. There are significant risks that some countries within the EU are able to move the EU into a direction where unrealistic expectations about future use of e-fuels become enshrined in EU policy. If this were to happen, then the concomitant risk is that EU targets for BEV adoption may be set too low.

In light of these considerations, the Zero Emission Vehicle (ZEV) Mandate[3] announced on 28 September 2023 is a reasonable but not the optimal outcome. A commitment to 100% ZEV by 2030 would have been preferable, because the transport sector needs to be decarbonised as soon as possible. To minimise further climate breakdown, it is important that total emissions from transport and other sectors are minimised instead of emission levels by a specific date such as 2035 or 2050. It is therefore imperative that both the UK and the EU reach zero tailpipe – and lifecycle – emissions in surface transport sooner rather than later.