A report by Auto Trader has found that the used-vehicle market in the United Kingdom has a shortage of affordable electric cars. According to Auto Trader, just 10,000 of the second-hand EVs on its online marketplace are currently trading at under £15,000 ($19,000), compared to a whopping 350,000 used fossil-fuel cars within the same price range.
For the average consumer, the lack of affordable used electric vehicles is a nigh-immovable roadblock to EV ownership. New electric-vehicle prices are still too high for regular drivers and high interest rates coupled with rising living costs have made it even more costly to buy a battery electric car. The second-hand market is the only way a majority of consumers can afford to buy an EV without bankrupting themselves.
Unfortunately, rising prices in the used electric-vehicle market are steadily limiting EV ownership to top earners. According to Auto Trader commercial director Ian Plummer, automakers will have to produce electric cars in a “variety of budgets” to ensure the transition to electric cars is fair and equitable. Furthermore, Plummer noted that retail demand growth would be contingent on continued efforts to make electric cars more affordable.
With the UK general election drawing nearer, Plummer said that the secondhand EV market would need financial aid from the government to support an equitable and fair transition to electric cars, likely in the form of subsidies, tax and vehicle excise-duty exemptions. Encouraging electric vehicle demand among private drivers will be especially critical to replacing the gas and diesel-powered vehicles on the UK’s roads with zero-emissions electric cars.
Businesses and fleets are largely responsible for the 10.6% increase in new EV imports seen in Q1 2024 compared to Q1 2023, but the market share of electric vehicles has dropped to 15.4% from 15.7%, largely due to declining EV purchases among private drivers. As EV purchase costs have increased amid a rise in living costs and benchmark interest rates, a growing number of consumers are avoiding electric cars for cheaper alternatives.
Government subsidies and exemptions will be key to making electric vehicles more affordable in the short- and near-term. EVs are much more expensive compared to internal combustion engine cars (ICE) because their raw materials are rare and costly, forcing automakers to pass the high production costs to their customers. Subsidies could encourage EV adoption by helping automakers lower their production costs and allowing them to price their EVs at lower price points and provide buyers with discounts at the point of purchase.
The efforts by companies such as QuantumScape Corp. (NYSE: QS) to develop superior battery chemistries that are also more affordable could further drive EV prices downwards.
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