Will EV sales hit UK’s required 22% target for 2024?

DriveElectric, one of the UK’s leading electric vehicle leasing companies, makes its predictions about what we can expect in 2024…

As we enter 2024 there are a number of changes happening in the electric vehicle (EV) industry. But what will be the result of these changes in terms of electric car sales?

The UK was due to end the sale of new petrol and diesel cars and vans in 2030, but in September 2023 Prime Minister Rishi Sunak put this date back by five years to 2035. As a result, many UK motorists who might have been considering switching to an EV in the next few years may now be delaying this change.

However while there has been a delay to the phase-out date for the sale of ICE (Internal Combustion Engine) vehicles, the ZEV (Zero Emission Vehicle) Mandate came into force this month, which mandates car manufacturers to ensure that 22% of their new car sales in 2024 are zero emission (and 10% of van sales have to be zero emission).

Furthermore, an increasing percentage of EV sales is required each year up to 100% in 2035. So on the one hand the Government is saying there’s no need to buy an EV yet, but on the other hand it’s saying that 22% of new car sales have to be EVs in 2024. How will this translate to EV registrations?

EV business incentives

Although a small number of manufacturers may hit or exceed the 22% target (Tesla, a company that only sells EVs, being an obvious winner), many manufacturers are likely to fall short of the target because they currently don’t have enough EVs in their model ranges. There are steep fines of £15,000 for each vehicle within that 22% allocation that isn’t zero emission, but there are also a number of ways that car manufacturers can work around a shortfall in EV sales.

Another issue is the contrast between sales of EVs to private car buyers and those sales to businesses and fleets. For example are significant incentives for company employees to switch to EVs, such as very low benefit in kind (BIK) tax rates (2% until April 2025, then rising by 1% each year to 5% in April 2028). These low BIK rates have fuelled the increasing popularity of salary sacrifice, which can reduce the monthly cost of driving an EV by up to 40% for the employees of an organisation. And EVs are made even more attractive by having much lower running costs than petrol and diesel vehicles.

However, there aren’t any financial incentives for private car buyers to switch to an EV. So unless the government changes its policy on consumer purchase incentives or reduces taxes in the run-up to a general election (or there’s a new government with a more pro-EV policy) sales of new EVs are likely to continue to be mainly to businesses and fleets.

Affordable Chinese EVs?

Clearly, increasing numbers of businesses are committed to reducing their carbon emissions, and moving to electric vehicles is an effective way to help achieve corporate net zero goals. One result of this is that many new EV sales are likely to continue to be of ‘executive’ cars that appeal to businesses rather than, for example, small family cars – even though a number of new ‘affordable’ EVs are due to hit the market in 2024.

Compared to the period during the COVID pandemic and post-pandemic, there is now a considerable increase in the production volumes of EVs, including an ever-widening choice of makes, models and body styles. In particular we are seeing a notable appearance of several new brands from China. 

Combined with battery costs reducing, an overall improvement in the supply of electric cars means that prices of new EVs are forecast to reach price parity with petrol cars in the forthcoming years.

There will also be continued expansion of the public charging network in 2024, particularly rapid and ultra-rapid chargers, providing more reassurance for drivers to adopt EVs.

Upward sales growth

So against this background, what will happen to EV sales in 2024? DriveElectric sees that the combination of factors such as the ZEV Mandate and the cost savings for businesses switching to EVs will result in continued upward sales growth, with the company forecasting 380,000 registrations of battery electric cars in 2024.

Based on two million new car registrations in total, this equates to a market share of 19% for battery electric cars (compared to 16.5% in 2023). This falls short of the target of 22% of new cars being zero-emission vehicles, the main reasons being a lack of consumer incentives in a period of continued cost-of-living pressures, and many car manufacturers not having enough zero-emission models on sale.

As well as the increase in electric car sales, there will also be growing numbers of battery electric vans, and heavy goods vehicles (despite predictions that this market would never develop). However, the challenge will be building a charging network for electric HGVs, as well as installing suitable chargepoints for vans.

Says Mike Potter, Managing Director, DriveElectric:

“Factors such as high interest rates and cost of living pressures had a significant impact on consumer EV sales in 2023; while there are still challenges such as the messaging around the ban on sales of new ICE vehicles being delayed from 2030 to 2035, the ZEV Mandate should help to maintain the rise in EV sales that we’ve seen over recent years. But due to an absence of consumer incentives and many manufacturers not having sufficient EVs in their model line-ups, it’s likely to be a challenge to meet the target of 22% of new cars being zero emission.”

www.drive-electric.co.uk