The Evolving Landscape
The electric vehicle (EV) market is at a crucial juncture, facing challenges that demand strategic solutions. Despite government interventions and the growing momentum towards electrification, obstacles such as high prices, delayed production deadlines, and surging insurance premiums are causing potential buyers to reconsider their stance. In this blog post, we explore discuss potential avenues to boost confidence in the EV market.
James Tew, CEO at iVendi, has emphasised that the EV market must adapt swiftly, even with the recent postponement of the electrification production deadline to 2035. He highlighted the confusion arising from this delay, causing some private buyers to rethink their plans. Additionally, rising insurance premiums have become a deterrent, leading existing EV owners to sell their vehicles due to prohibitive costs. Tew stressed the urgency for manufacturers and lenders to address these concerns and foster a positive outlook on electric cars.
Building Confidence Through Strategic Measures
Discounting, while an apparent route, may not be the optimal solution, according to Tew. Dumping new technology onto the market might create a negative perception. Instead, he proposed supporting the future residual value (RV) to reduce Personal Contract Purchase (PCP) costs. This approach allows for longer-term, downward price adjustments as manufacturing costs decline, ensuring a sustainable market growth without compromising value.
Another avenue suggested by Tew is to promote leasing products, where pricing details are not publicly disclosed. Despite consumer preferences for PCP, Personal Contract Hire (PCH) could gain traction if made more financially appealing. Tew highlighted the importance of making leasing deals comparatively cheaper than PCP, a move that could win over consumers by offering a cost-effective and flexible alternative.
Insurance emerged as a critical factor influencing EV adoption. Tew proposed exploring captive insurers to offer fixed-cost coverage for the initial two years of a lease. This measure would not only be cost-effective but also eliminate a significant objection among potential EV buyers. By proactively addressing insurance concerns, manufacturers and lenders can contribute to building a more secure and attractive market for electric vehicles.
Tew underscored the impact of government EV mandates, setting ambitious targets for the proportion of EVs that car makers can sell in the UK. With penalties in place for non-compliance, the shift toward EVs is expected to accelerate. Tew predicted a rapid electrification of the new car market by the late 2020s, emphasising the need for confidence-building measures in the interim.
As the automotive industry steers towards an electric future, manufacturers and lenders play a pivotal role in overcoming buyer objections and instilling confidence in the EV market. By strategically addressing pricing, leasing options, and insurance concerns, stakeholders can ensure a smoother transition to widespread EV adoption. The imperative is clear – collaboration and proactive measures are essential to make electrification work and pave the way for a sustainable and thriving electric vehicle market.