Electric car discounts now ‘unsustainable’ amid record price cuts
By Paul Homewood
h/t Philip Bratby
Manufacturers have warned that high levels of discounting for electric cars cannot continue “indefinitely” amid a downturn in household sales.
Electric vehicle sales rose overall by around 6pc in May, compared to a year earlier, taking their share of the market from 16.9pc to 17.6pc.
That represented a faster rate of growth than the entire car market but the Society of Motor Manufacturers and Traders (SMMT) warned that the majority of the sales are still to businesses and are being boosted by aggressive price-cutting.
Discounting has reached record highs this year, with the average price cut on a new electric vehicle reaching 10.6pc in April, according to online dealer Auto Trader.
Despite this, the share of EVs sold to private consumers fell from 20.2pc to 18.6pc in May – continuing a trend seen in previous months.
Mike Hawes, chief executive of the SMMT, said the latest sales figures underlined the case for introducing financial support for consumers, such as subsidies or tax cuts.
He said: “Consumers enjoy a plethora of new electric models and some very attractive offers, but manufacturers can’t sustain this scale of support on their own indefinitely.
“Their success so far should be a signpost for the next government that a faster and fairer transition requires carrots, not just sticks.”
Carmakers are racing to sell more EVs to meet net zero targets brought in by the Government in January.
Under the so-called zero emissions vehicle (ZEV) mandate, 22pc of all the cars sold in the UK this year must be electric.
The target then rises annually until it reaches 80pc in 2030, before a total ban on new petrol car sales in 2035.
However, manufacturers including Vauxhall owner Stellantis have complained that the targets are outpacing consumer demand.
That has prompted Stellantis and rival Ford to warn they could be forced to restrict sales of petrol cars in Britain in order to artificially boost their EV sales figures.
Bosses are also warning that they are not prepared to cut EV prices to unprofitable levels in a bid to boost take-up.
On Wednesday, the SMMT – which represents the car industry – echoed those concerns, arguing that discounting ultimately “undermines the ability of companies to invest in next-generation technologies”.
It added: “The market performance underlines the need for the next government to provide private consumers with meaningful purchase incentives.”
It came as overall sales in the car market grew for the 22nd month in a row, with registrations rising by 1.7pc.
Jamie Hamilton, automotive partner and head of electric vehicles at Deloitte, said: “The overall market share of electric vehicles is also well below the required 22pc, as set out in the ZEV mandate.
This is the key sentence:
Despite this, the share of EVs sold to private consumers fell from 20.2pc to 18.6pc in May – continuing a trend seen in previous months.
Generous govt subsidies are keeping fleet sales going, but EV sales will never get anywhere near target unless private buyers switch.
Extrapolating back from the SMMT figures, only 8% of EV sales in May went to private buyers.
Despite the unaffordable discounting, EV registrations are still only at 16.1% YTD, barely higher than a year ago.
https://www.smmt.co.uk/vehicle-data/car-registrations/
Motor manufacturers are now between a rock and a hard place. If they cut prices to boost EV sales, they lose money. If they cur petrol car sales, they lose money. And if they don’t meet the ZEV target, they also lose money.
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NOT A LOT OF PEOPLE KNOW THAT 
Government meddling in markets ALWAYS ends in tears!
And just wait until those subsidised mostly leased vehicles come onto the second hand market, and those stock-piled BEVs that nobody wants get dumped onto the market, and prices for new BEVs reach rock-bottom. Assuming of course that private buyers want a BEV at any price.
If someone were to devise a plan to destroy an industry, they could do no better than the self-inflicted destruction of the auto-industry.
It seems self-evident that you can’t make money making EVs. The market won’t bear the cost. Telling car companies they have to make EVs is a death warrant.
Well, “Duh.” The ZEV mandate literally says the auto industry is ending in UK. Stellantis and Ford hope the alligator eats them last, but you know they are having executive level discussions of how they end their presence in UK.
And it’s not the sort of thing that can be turned around. The government has done immense damage. Small actions from future governments will change nothing; the capriciousness of the state has been established.
“When they shut down the steel industry, I said nothing . . . .”
What governments seem yo have relied on is 2 stupid assumptions. First, that the reduction in costs forecast by consultants would happen and second that we could all pay more for our cars without that affecting the rest of the economy.
Excellent points, Phoenix. But I question the assumption that government cares what consequences befall the people.
Gallup conducted a poll some years ago, asking if there was too much ignorance and too much apathy.
The majority of the respondents said they didn’t know and they didn’t care.
some very attractive offers
Wut? Show us one.
EVs are luxury goods. The article is all about how government should subsidize luxury goods. Saying it is to help meet “goals” makes it no less obscene. You are one or two bad harvests away from revolution.
A post (Eric Peters Auto views: June 2, Another Hurdle) has compared EVs to devices, such as a cell phone, lap top, or gaming console. A 3-year old one has no intrinsic value, so becomes scrap.
Cell-phones-waste-1280×720.webp (1280×720) (gnnhd.tv)
Details? {Answers not expected.}
How many of the private buyers are new to EVs?
Are owners of EVs trading old ones in on a new one?
Corollary: What happens to trade-ins?
If/when car companies restrict sales of petrol cars, the unintended consequence will be a contraction in the business that will trickle down through many activities – an anti-multiplier effect.
What is the benefit to a business of EV purchases (thinking of Hertz)?
Tesla are offering 0% discount although they have reduced the APR on some PCP deals from 5.9% to 1.8%.
The farcical situation motor manufacturers are now in is a direct result of unelected officials with no understanding of how the world is different once you move away from the Westminster bubble, they are damned if the don’t and damned if the do. The simple solution is too just cease manufacturing in the UK- choose a date, say July 3rd 2024 and advise the Government that unless they withdraw the ZEV mandate immediately, on July 4th 2024 every manufacturing plant would close, every employee would be sacked, every subcontractor would have no orders to supply. Each and every manufacturer has plants on many parts of the world they can retreat too and continue to manufacture products customers want to buy, they do not need the UK market, yes, the staff, sub contractors etc need them, but they are now facing an existential issue- you cannot make losses continuously and the current ZEV will create this scenario.
This leaves the existing/in-coming Government with a problem, face at least 1million extra on the dole and no motor manufacturers existing costing the UK £77billion in foreign trade, or accept that the situation has no option but to change, and change quick.
When faced with bully thugs, you either kick them where it hurts or you accept their bullying.
There are many people who do not understand what is going on . But the real plan by the ruling classes is to destroy the economy of Western countries so that the Marxist / Socialist rulers can take over .https://www.forbes.com/sites/larrybell/2013/01/22/the-u-n-s-global-warming-war-on-capitalism-an-important-history-lesson-2/
Removing the steel industry , the car industry , putting up costs for everybody is all part of the plan .
Exactly right. A couple of weeks ago I posted a comment to the Daily Telegraph site, pointing out the almost complete lack of economically stimulating Conservative polices.
No tax cuts, no revised IR35, no incentives, no rewards. Promoting maths at school alongside smoking and vaping bans are Christmas stocking filler policies, not a main offering.
They’ve wrecked our steel, aluminium, mining, energy and chemical industries. Large scale automotive manufacturing is next and as everyone on this site knows, UK energy independence has been utterly ruined.
I called it deliberately managed economic decline. There was nothing offensive or rude but you know what – the comment was deleted by DT mod’s. There was no reason to remove it unless it hit too close to home.
Their main policy is Net Zero – a diversion policy which is their big story to talk about but it isn’t delivering anything like the benefits promised and at a cost which they won’t reveal. Economic growth used to be a Conservative essential, today it’s an endangered species in the Tory manifesto. Why is that?
What they are doing is overwhelming the public with orders, with everything either a coercion or an outright ban. Jabs, lockdown, EV’s, heat pumps, 15 minute cities, Ulez, low traffic neighbourhoods, refusing to fix potholes, airport delays and so on. When was the last time they loosened controls, abolished unnecessary rules or increased allowances? I can’t remember anything worthwhile.
Incentivising growth or business is nowhere to be seen. It’s Missing in Action. It’s a vanished policy, unseen, unheard and unwanted. Managed economic decline is here right now as they worship at the alter of the disastrous Net Zero. The fake Conservatives deserve the biggest political kicking in a generation.
That’s what the manufacturers should threaten to do, but it’s not going to happen since stupidly, the SMMT is all for EVs
Not that simple. Closing businesses is hugely costly. 5,000 employees at an average salary of £40k and 3 months pay out is £50m. There will be buildings , equipment, land that is leased to be paid out, remedial work, supply chain orders going out perhaps 12 months.
A bit of creative accountancy will soon get around that, like Tata did in Port Talbot.
They got a UK govenment subsity for sacking UK workers & moving basic steel production offshore.
BREAKING: The First Domino Falls on EV Mandates in Virginia
Governor Glenn Youngkin and Attorney General Jason Miyares: Virginia Will Exit California Electric Vehicle Mandate at End of Year
……“Once again, Virginia is declaring independence – this time from a misguided electric vehicle mandate imposed by unelected leaders nearly 3,000 miles away from the Commonwealth,” said Governor Glenn Youngkin. “The idea that government should tell people what kind of car they can or can’t purchase is fundamentally wrong. Virginians deserve the freedom to choose which vehicles best fit the needs of their families and businesses. The law is clear, and I am proud to announce Virginians will no longer be forced to live under this out-of-touch policy.” ….
https://wattsupwiththat.com/2024/06/05/breaking-the-first-domino-falls-on-ev-mandates-in-virginia/
“…3,000 miles away…”
I guess that would be Davos.
OTT
Since today is an anniversary of D-Day, we are reminded how “unprecedented” the weather was during the operation. 1944 was a solar minimum year. The next was 1954 which was shortly after the great North Sea Floods. Then there was 1964 which came just after the incredible winter of early 1963. 1976’s minimum was associated with a little local warmth in Summer, if I remember correctly. In 1986 I remember arriving into Gatwick to find it was -18 C. 1996 minimum was followed in short order by a terrific El Nino spike and a lot of hurricane activity. 2008 had extraordinary wildfires in California. The most recent minimum in 2019 saw at the end of the year the start of Covid-19, an airborne disease which struck first and hardest in Europe in Lombardy, which was having an awful winter of stagnant foggy weather. The association of the year or two that solar minimums last with noteworthy weather events is striking to say the least. I am cherry-picking but …
Fancy a used, three year old Jaguar iPace BEV? Yours for £25k. Less prestigious models such as MGs are going for less than £200/month. The second hand values are plummeting which tells you what private buyers think. Insurance costs? The iPace is group 50, right at the top of the scale.
This a great scheme to destroy the largest job and wealth creator in Europe. as the article ends with: The legacy brands are stuck between the rock and a hard place. They either sell EV to punters are huge discounts and loose money, or don’t sell as many ICE vehicles as they want by limiting demand and loose money or cary on an pay £11K fine per ICE car sold and loose money. Whoever came up with this should be forced to drive a Sinclair C5 of the rest of their life.
I love my 3 year old company Tesla but could never buy it as consumer. Who can afford £50K for a car in the UK?
Most private purchases are via leases, which have to include a liability for the difference between the predicted residual value at the end of the lease and the actually realised residual value. With EV depreciation outpacing conventional cars this liability can be substantial.
If the liability accrues to the finance company (most often connected to the manufacturer) then there’s a business loss to contend with, if to the customer, there’s a nasty surprise coming down the track. Either way there’s a massive destruction in value compared to petrol cars.
There’s another potential financial pitfall approaching too. At present, recycling old EV batteries is proving problematic, with warehouses filling up. If that problem isn’t solved will it mean that end-of-life EVs can’t be scrapped economically resulting in users being charged for disposal? If that comes about, watch out for old EVs being torched in rural back lanes……
They should offset the costs of the fines against their corporation tax bill and challenge the government to take them to court over it.
Perhaps but that only defrays 28% of the cost.
I don’t want to give my taxes to an idiot who wants to buy an EV
nobody asked for or wanted EVs
When they decided to ban fossil fuel cars, they were asked, “How will people get around?”
“They can drive EVs.”
Rhymes with “Let them eat cake.”
From the sales table the huge success story that is being ignored are PHEVs with a 31.5% increase in sales.
Cleaner than ICE alone, without the major problems of BEVs and do not impact the Grid like BEVs.
What’s not to like?
What are servicing costs like though? It seems like a more complicated arrangement.
Yes I expect it is, but the fual savings should offset that easily enough. especially if you do a lot of short journeys.
BEV are 16.1% ytd and need to achieve 22% by end of year so they are going to need boost sales even more if manufacturers are to avoid fines. Oh and it goes upto a mere 28% next year. Going to be interesting to see what the fallout is going to be here but Reeves stuck record on growth growth growth will be holed below the waterline if car manufacturing goes to the wall.
The masses won’t take up battery cars, they are a regression from ICE vehicles – it’s like replacing the round wheel, with a square one – as with all things, consumer choice should drive technology, not globalist WEF shills looking to regress the living standards of the masses
My bet is, government waives any files this year but on condition manufacturers redouble efforts next year and probably with some reintroduction of subsidies. In a couple of years, there will be no ICE cars to buy and this transition period will be irrelevant.
If I don’t want to buy something, I don’t buy it. The price is irrelevant.
EVs featured on TalkTV this am. Interesting how many drive or drove EVs because of the tax benefits. This is supported by a neighbour’s comment about his firm swapping his company Vauxhall Astra for a Tesla!
It will be interesting to see how second-hand values play into that though. I suspect many corporate buyers are assuming much higher values than they will get. Saving £2-3,000 in tax but losing £10,000 on resale isn’t much of bargain. Businesses won’t put up with that for long.
I MAY be persuaded to help move the numbers along, when Im offered the thick end of the otherwise £15k fine as a personal discount on the small car that I need.
Just bought a used Qashqai on a 19 plate. 15000 miles, 1.5 petrol engine. Delighted. Never even considered an EV. Why spend more to buy something worse?