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UK plans EV recovery

Sam Holland Sam Holland Analyst
15th July 2020

As the UK plans its recovery from the COVID-19 pandemic, the energy and electric mobility sectors are set to play a key role in delivering economic rehabilitation centred on net zero. Here we discuss the outlook for the electric vehicles alongside recent policy actions made specifically to aid the sector post COVID-19 .

In the wake of the COVID-19 pandemic Counterpoint expects that the global passenger car market will contract by 15% this year. However, a new International Energy Agency (IEA) analysis states that EV sales are likely to remain steady and account for 3% of global vehicle sales this year, up from 2.6% in 2019. Energy UK has highlighted that a boost in EV uptake across public, private and commercial fleets will be a key aspect of the recovery. In Europe, expectations have already been buoyed by stimulus packages. Across the customs union, the EU commission revealed a €1 trillion budget and recovery plan which highlights “increasing EV investment on recharging infrastructure”. At the national scale, increased grant funding for EV buyers has been announced in both France and Germany as part of their respective COVID-19 stimulus measures. In contrast, the UK scaled back its own plug-in vehicle grant scheme from £3,500 to £3,000 and reduced its workplace charging point scheme grant from £500 to £350 per chargepoint before the COVID-19 pandemic, and has introduced two funding competitions as part of the recovery package. This represents a different approach to those in France and Germany, where purchase incentives for electric and hybrid cars can reach up to €7,000 per household. So, while the government’s view is that the reduced subsidies will allow more to benefit from the schemes, other countries have opted to bolster their EV incentivisation measures with more aggressive subsidies after COVID-19.

It is worth noting that other forms of support have been made available in the UK recently: £500mn was announced to support public charging in March 2020 and £250mn to support clean and active travel schemes in May 2020. At the time of writing, two schemes have been announced post COVID-19 aimed at increasing support for low emissions vehicles. The first package includes £12mn of government funding for research into the zero-emission vehicle market, including £10mn of funding for a new Zero Emission Vehicle Innovation Competition. The remaining £2mn will support research by small and medium business on areas such as battery technology. The larger support package includes £73.5mn to support the automotive industry, aiming specifically at cutting carbon emissions and protecting over 14,000 research and manufacturing jobs. The funding will be received by ten projects selected by the Advanced Propulsion Centre to enable the manufacture of a greater volume of low emissions cars, commercial vehicles and components in the UK. Companies set to benefit include, Ford Technologies, BMW Motorsport, Jaguar Land Rover and the London Electric Vehicle Company. Business Minister Nadhim Zahawi said the funding will “ensure automotive companies can play their part in keeping us on the path to net zero emissions by 2050” and “support thousands of jobs and be a welcome step towards the industry’s economic recovery”.

The Committee on Climate Change’s recommendations to the Department for Transport highlight the urgent need for clear and consistent direction on EV policy. The first steps towards this were taken with the first Net Zero Transport Board meeting last week and the consultation on the next stage of the Transport Decarbonisation Plan. But, in order for the UK to succeed in the widespread rollout of EVs we will need a clearer view of how EV policies will interact out to the net zero goal in 2050.

For more information on the EV sector we are running a training course on “Understanding the EV sector” across the 28, 29 and 30 July. We also hold an 'Electric vehicles and infrastructure forum' and produce an 'Energy retail and electric vehicles report'. For further details please contact Sam Holland at s.holland@cornwall-insight.com.