There is no doubt that electric vehicles (EVs) are high on the agenda for the UK Government. As far back as 2010 it highlighted the potential business opportunities created by the increase in demand for EVs, as well as the benefits provided by a reduction in the reliance on oil and, of course, the positive environmental benefits of reduced carbon emissions.

The Government is bound by the Climate Change Act 2008 to reduce greenhouse gas emissions by 80% by 2050. An increase in EV usage is one way to achieve this. Although the current, high price tag of an EV is a deterrent for some consumers, prices should start to decrease as the technology improves thus helping to stimulate increased customer demand.

Desire to own an EV is high but sales remain low

Many commentators certainly believe that consumer demand is starting to shift up a gear and the desire to own and drive an electric vehicle is increasing.  Other forecasters agree that demand is high, but the reality is the actual sales of electric cars will remain low for the foreseeable future.  Currently, electric vehicles account for just 1% of new car sales.

As with any new technology, there are early adopters: the EV market is no different. The first followers are no doubt excited to wrap their driving gloves around the steering wheel of the latest advance in EV technology, the new Tesla Model 3, which currently has a waiting list of 400,000, thus demonstrating the considerable consumer appetite that exists.

The new Model 3 has met all its regulatory requirements so production is due to get underway this month. Some potential owners will be able to take delivery of their Tesla Model 3 by the end of July 2017, but the majority will have to wait until 2018.

What does this mean for the manufacturers?

For the manufacturers of electric vehicles, there is a delicate balance between consumer excitement and genuine demand, as car buyers weigh up the cost of driving the latest vehicle technology.

The Government recognised that the high price of electric vehicles was a major barrier to sale and have introduced a series of grants available to both manufacturers and car dealerships enabling them to offer consumers new hybrid and electric vehicles at a reduced rate. In total there are six categories of vehicle in the grant scheme, some paying up to 35% (to a maximum of £4,500) of the vehicle cost. The grants are based on the CO2 emissions of individual vehicles.

We have already seen General Motors’ cautious approach to the UK market. In 2016 they launched the Chevrolet Bolt, a fully electric crossover which was hailed as an "EV game changer, just not for the UK".  This follows their previous launch of the “Volt” which although technically impressive had a very low take up, particularly by customers in Europe. The Chevrolet brand is no longer available in the EU because General Motors believe they can meet the demands of European customers through the Vauxhall and Opel brands, neither of which currently offer a fully electric vehicle. 

Other car manufacturers are far more confident that consumer demand in the UK for EVs will increase. Volvo has announced they will only be producing cars powered by electric engines from 2019. They have stated they intend to produce five fully electric vehicles between 2019 and 2021 although they will continue to offer hybrid engines (which use a traditional combustion engine alongside an electric one).

The EV market is certainly one to watch, both from the point of view of manufacturers and consumers. It will be interesting to see which car manufacturers have predicted the demand correctly.

About the author

Rhys Jarman Partner

Rhys is a lawyer specialising in intellectual property rights, technology disputes and commercial contract disputes.