U.K. Prime Minister Rishi Sunak's bombshell green policy announcement has sent shockwaves through the clean tech industry this month.
While the impact of postponing the country's ban on the sale of vehicles with an internal combustion engine (ICE) to 2035 is unknown, what we do know is, despite high upfront costs, EVs are actually significantly cheaper to run than cars that run on fossil fuels.
Frustratingly, this fact is getting lost in the noise. We have the data, it's time to spread the word.
How long will EV prices stay high?
There's no denying it. The price of an EV, both new and second-hand is still way higher than an ICE equivalent and out of budget for many.
Currently, a new Volkswagen ID4 comes in at about 53,000 pounds (about $64,350), which is at least 8,000 pounds more than a comparable Volkswagen Tiguan. But this is a chicken-and-egg issue.
More demand means more supply and lower prices. So, it's really a matter of time before prices fall but it's questionable whether the extended deadline will slow demand, meaning that it takes longer for prices to reach parity.
Kerrigan Advisors recently sat down with Donnie and Denny Buckalew, co-owners of Buckalew Chevrolet, the 5th highest-volume Chevrolet dealership in Houston, Texas, to discuss their perspective on the changing auto retail industry and how challenges facing single-point dealers influenced their decision to sell their dealership.
Charging cheaper than fueling
Research by OVO revealed that 68 percent of U.K. adults who drive are hesitant to switch to an EV due to perceived high charging costs. A further 52 percent didn't know that EVs are cheaper to run than gasoline and diesel alternatives.
The cost per mile for electricity when charging at home is substantially less than gasoline or diesel, making EVs generally cheaper to run.
And what's exciting is the emergence of new “smart charging” EV plans that offer competitive price per mile rates using intelligent technology to optimize charging.
For example, OVO's Charge Anytime in the U.K. allows customers to charge up at just 10 pence per kilowatt hour versus 31 pence for the rest of their home. That's about 3 pence a mile – about 75 percent less than the price of gasoline.
Not only do EV charging plans insulate drivers from fluctuating prices, but they also reward customers when they use smart charging to dynamically capture the cheapest and greenest electricity on the market. Charge Anytime has already generated cost savings totaling roughly £350 pounds per customer annually.
Even in the midst of unprecedented market disruption, innovative EV charging options make EV charging significantly cheaper than refueling.
What more can be done?
More than 70 percent of European EV drivers and 68 percent in the U.K. charge their vehicles at home and 43 percent charge at work. These charging modes are usually the cheapest of all.
If the shift to EVs is going to truly succeed, there needs to be a greater focus on at-home charging and closer collaboration between energy companies and automakers to set up a home system that works for the customer.
We are on the cusp of a unique opportunity for automakers to position themselves as trusted energy advisors. By providing tailored charging services that fit the customers' lifestyles, offering the necessary tools and hardware installation, and integrating all aspects of charging into a single automaker-specific app, friction can be minimized.
There is a real opportunity for automakers and energy companies to collaborate on unique business models in this new era of electrification. But it's vital that these partners are given the freedom to innovate, and customers are given accurate information to inform their choice.
Transparency is key
As Rishi Sunak promises more transparent politics, we too should pledge for more transparency to customers about exactly what is -- and isn't -- expensive about EVs.
The landscape is changing rapidly. There is no doubt EV prices will come down regardless of when the ICE ban takes effect.
But it's the job of automakers and energy companies to come together and better communicate the options for customers willing to make the big decisions to reach net zero.
