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The Car Industry Misjudges Consumer Demand for Electric Vehicles

  • Tumbling private demand for electric vehicles has dominated media headlines throughout this year.
  • Alongside salary sacrifice, private leasing or flexible car financing options can end up being categorised as company kept vehicles.
  • The decline has prompted calls for the government to introduce taxpayer-funded incentives for buyers.

Tumbling private demand for electric vehicles (EVs) has dominated media headlines throughout this year, fuelling car owners’ concerns over the high cost of making the transition.

Car industry data, provided by the sector’s trade body the Society of Motor Manufacturers and Traders (SMMT), showed sales to private buyers had fallen 7.7 per cent in April.

This week’s SMMT data revealed a similar trend, with EV sales to the general public slipping another 2 per cent in May.

The decline has prompted calls for the government to introduce taxpayer-funded incentives for buyers and driven a narrative in the Telegraph and Daily Mail that British car owners’ interest in purchasing EVs is waning.

It has also brought into question British automaker’s ability to meet looming targets under the government’s zero emission vehicle (ZEV) mandate, which will fine operators who don’t meet certain EV sales targets.

But experts say the SMMT’s private sales data, which is the most widely used metric in the UK automotive industry, is “flawed” and “inaccurate.”

They argue consumers are increasingly buying EVs using salary sacrifice schemes, which allow employees to deduct a monthly sum from their pay to lease EVs at far lower cost. Related: Canadian Oil Executives Slam Proposed Emissions Cap on Oil and Gas Production

Salary sacrifice has become a key driver of sales in the UK, but the SMMT’s data categorises them under fleet, or business, purchases and does not include them in private demand figures.

“How individuals purchase EVs is often overlooked, due to the way data is represented, especially in the figures from the SMMT,” Fiona Howarth, chief executive of Octopus’s electric vehicle leasing business, told City A.M.

“Let’s be clear, salary sacrifice cars are on the driveways of typical drivers – they’re used for the school run, weekly shop and family trips, so why should they be counted as fleet cars?” she said.

Octopus Electric Vehicles delivers around a thousand cars every month and says order numbers have risen 40 per cent on last year, with over 5,000 companies signed up. Other major UK providers include SalSac, Fleet Alliance, the Electric Car Scheme and Pink Salary Exchange.

And whether private retail demand for EVs is in trouble is hotly debated within the industry. The boss of the UK’s third largest car dealer Vertu Motors, Robert Forrester, has said the government’s ZEV mandate risks putting manufacturers “underwater” due to a lack of consumer demand.

But Ben Nelmes, chief executive of the NGO New AutoMotive, said falling private demand for electric vehicles is a “myth based on flawed data.”

Alongside salary sacrifice, private leasing or flexible car financing options can end up being categorised as company kept vehicles, he explained. Ex-fleet, used cars which are now in the hands of private indivudals also aren’t acknowledged.

“If current trends continue, no new petrol or diesel cars will be on UK roads by 2029. EV sales are at record highs. Consumers are buying EVs because not only are they good for the planet, but they’re good for their wallets,” Nelmes said.

It is impossible to tell the significance of salary sacrifice in the overall data as neither the relevant government bodies, the DVLA and HMRC, nor scheme operators, track the data.

Quentin Wilson, the motoring journalist and founder of the campaign group FairchargeUK, said: “We need to capture accurate end user data to get a clearer picture of the split between private and fleet. The anti-EV narrative claiming that private buyer interest in EVs has waned is being supported by inaccurate data.”

In a statementSMMT chief executive Mike Hawes told City A.M. “Salary sacrifice registrations are not listed separately as there is currently no official way to measure them as neither HMRC, DVLA or scheme operators provide this data.”


Hawes said the body was engaging with HMRC and the DVLA, which provides new vehicle data, to try and “address this gap as it is an increasingly important part of the market.”

He added: “It is worth remembering, however, that while this fiscal incentive is helping accelerate EV uptake, it is not available to all consumers as it depends on an employer offering this benefit to their employees.”

“The market for EVs is increasing but needs further measures, especially for private consumers denied fiscal incentives, if our shared net zero ambitions are to be met.”

By CityAM

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Leave a comment
  • Mamdouh Salameh on June 09 2024 said:
    Car manufacturers around the world have been conned by media reports about record sales of EVs. They accepted these reports as factual and made plans years ago to expand EV production accordingly.

    They should have realized much earlier that media reports are never an accurate data source as they fluctuate with the amount of payment the media receives from the vested interests.

    Now the EV manufacturers may have to scale down their EV production capacity and future investments. EVs are a fad and fads by definition don't last long.

    Another organization the IEA will have to reconsider its projection that peak oil demand will be reached before 2030. This erroneous projection was based on the flawed assumption that rising numbers of EVs will lead to a steep decline in global oil demand . It is obviously clear that the assumption was wrong and therefore the projection is wrong.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert
  • George Doolittle on June 10 2024 said:
    Aptera is doomed no doubt. Who would ever want to buy a car with almost unlimited range? I know I prefer some big fat fucking gas pig of a thing! Plus I support the Gaylord trannie war effort insodoing!

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