The recent government announcement sets a clear direction of travel, which is very welcome as far as we are concerned. It confirms what we have said for a while, which is electrification is inevitable.
The three barriers preventing mass adoption of EVs are range, cost and infrastructure in terms of charging points. Arguably, the most important of these is cost. We have made everyone pay a ‘premium’ to drive an electric vehicle so far, which is somewhere in the region of £10,000 to £15,000 over an internal combustion car.
What we would like to see is price parity between the two and ultimately, we would like to see electric vehicles being the cheaper of the two. There is good news on that front as we are seeing the collapse in the price of batteries, which we didn’t expect to happen quite so quickly. In 2010, they cost about $1,000 per kilowatt hour of stored capacity. There was an announcement recently that Audi is looking at purchasing theirs at $114 for their upcoming electric vehicle. We might be at price parity within two or three years. We have one market in the world, where we have seen what happens when you get that price parity and that’s Norway. Norway has an unusually high sales tax on new petrol and diesel vehicles, and they have essentially waived it for electric vehicles. In the UK, 1.8% of all new car sales are electric, whereas in Norway it is 42%. That really shows that cost drives adoption.
We are reliant on OEM’s (original equipment manufacturers) committing to produce these vehicles, but we are seeing that. The government’s 2040 announcement [banning the sale of new petrol and diesel cars] puts the writing on the wall. Where are you going to commit your research and development budget now? Are you going to get diesels ultra-efficient over the next 15 years or are you going to recognise there is no value in producing diesel in 15 years’ time, and maybe put all your research and development into electrification. I think this will force OEMS even quicker down this path. One of the main drivers that will make OEMS produce really good EVs is how good they are in terms of a consumer experience. The ability to completely fuel your own vehicle at night from your own home is a huge success in terms of convenience. We will get to a point when consumers would far rather buy an electric vehicle because they are a much better consumer product.
The infrastructure does need to improve. We need to have a lot more destination charge points out there. If we take the example of someone who commutes to work in 10 years’ time, we would expect 60% of their charging to happen at home, while another 30% of charging will take place at the workplace. The remaining 10% will be at the shops, the gym and anywhere you would leave the car for an hour or more.
The most obvious idea is to flood the streets with charging infrastructure. It is a very expensive way of getting charging points out there and it is also a real problem for local authorities, because having a reliable charging point means you can you know you can park at it a lot of the time. So councils are not that keen on putting hundreds of charging points throughout their public estate. We see people putting low-rate charging points into streetlights at the moment. You could only use that in a situation where the streetlight is near the curb. What I think is the more likely solution is you start to allocate parking resources more intelligently. If you think of car park operators, they sell parking spaces to people who live out of town and travel in during the day. At night, there is virtually no one using those spaces, so why not offer people who live in the town charging in that car park overnight?
Including charging points in local planning documents is vital and something local authorities can do, which is cash neutral. There is funding available from OLEV to put in charging infrastructure. I would also recommend people look at the way charging points have been put in Exeter and Plymouth, particularly Exeter. They have done it very intelligently and their public charging points have been really well used. I don’t for one minute to think it is the public sector’s responsibility to fund the mass rollout of charging infrastructure, but they can encourage it. They can put infrastructure in place to get people using them, which can act as a signpost to local areas that it is viable and drives uptake. I think Exeter is a fabulous example of this.