Correcting the PR – The True State of EV Sales.
There has been a flurry of headlines suggesting that electric car sales are plummeting or faltering. However, these don't align with the actual trajectory of the EV market. Contrary to these sensational headlines, EV sales in the UK continued to grow robustly in 2023, marking an 18% increase to a historic high of 315,000 vehicles, and still continue to do so. In fact, as recently as July the BEV market was up 18.8% compared to the overall new car market’s rise of 2.5%. The numbers don't lie – electric vehicles are gaining traction, and the market is evolving. So, where does the narrative of a decline stem from?
One key factor contributing to the misconceptions is the apparent stall in electric car's market share growth in the UK. For the first time since the surge in EV sales began in earnest around 2018, the market share of electric vehicles remained at 16.5%, a marginal dip from the 16.6% recorded in 2022. While this might be portrayed as a stagnation, it doesn't tell the whole story.
Unpacking Private Buyer Dynamics
Influencing the narrative is the observed slowdown in private buyer demand for electric vehicles. Typically constituting nearly half of new car sales in the UK, private retail buyers only accounted for one in five new electric car sales in 2023. While we do not know for sure what has caused this, the end of the Plug-in Car Grant scheme in June 2022 could be a contributing factor. However, this slow down hasn’t just affected electric vehicles, we have seen a decline in registrations across the board. In 2022, private sales accounted for 50.7% of all vehicle registrations, but in 2023, private sales dropped to 43% of all registrations. As of July this chasm has increased even further, with private sales now accounting 37.8% of all registrations 2024-to-date.
This decline reflects broader economic challenges, with cost-of-living pressures and high-interest rates constraining growth. With consumers facing financial uncertainties, private buyers are being economically rational and exploring alternative avenues such as leasing, car-sharing services, or opting for company cars or salary sacrifice schemes, particularly when it comes to electric cars. In fact, Fleet and Business made up over 77% of battery electric vehicle (BEV) registrations in 2023, compared to 57% of total car registrations.
The Complex Reality Beneath the Surface
So why do we keep seeing these headlines? We can only guess but it's essential to acknowledge the more complex reality beneath the surface. Established players with significant influence in the market might not be adapting as swiftly to the changing landscape of electric mobility. This has led to a skewed portrayal of the market, overshadowing the remarkable growth and innovation within the EV segment.
These days almost 7% of all global car sales come from electric-only automakers, with industry leaders like Tesla and BYD driving this significant segment, particularly in China, a gigantic market that saw over 4.4 million BEVs sold in 2022. These companies have sparked a price war that is disrupting traditional manufacturers and reshaping the competitive landscape. Tesla's aggressive pricing strategy in China, coupled with BYD's relentless push to lure customers away from conventional automakers, has triggered a paradigm shift in the world's largest car market. With discounts of up to 50% on some models, Tesla and BYD are challenging the dominance of established players like Toyota, Volkswagen, and GM. This aggressive pricing strategy has not only supercharged sales but has also propelled electric vehicles to the forefront of consumer preferences. With the continued growth of the EV market, and the introduction of more cheaper entry-level models, we are likely to see even more disrupters emerging and established automakers will need to fight for their space.
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