updated on 23 July 2019
QuestionWhat are the challenges to widespread adoption of electric vehicles in the UK, and what role can public policy and legislation play in facilitating such adoption?
While electric vehicles (EVs) have been around for decades, the last few years have seen a significant change in attitudes. EVs have increased in popularity as policy makers, car manufacturers and consumers alike move towards an electric future in response to growing environmental concerns. At the beginning of 2019, the number of electric cars worldwide had risen to 5.6 million – an increase of 64% compared to 2018. The UK is no different, with registered EVs increasing from just 3,500 in 2013 to more than 220,000 by the end of June 2019.
The UK government has set a 2040 target for ‘zero emissions’ vehicles in the UK (ie, to end the sale of new conventional petrol and diesel cars) and is facing considerable pressure to adjust this target further to 2030. The automotive industry is adapting to meet this shift in demand and is making major investments to expand electric fleets and improve battery efficiency. Indeed, it seems everyone is in agreement with Aston Martin Chief Executive Andy Palmer, who recently stated that the electrification of the world’s auto fleet is “as sure as death and taxes.”
However, despite increased momentum, industry efforts and environmental benefits, consumers still seem to be taking a ‘wait-and-see’ approach. There is still a long way to go, with EVs representing only 2.7% of new car sales in 2018. If the UK is to meet its 2040 zero emissions target, it cannot ignore the existing challenges to widespread adoption of electric transportation. Although the automotive industry and other private sector players will play an important role, forward-thinking legislation and policy is also required to encourage consumers to take the plunge.
Public perception of EVs is certainly becoming more positive - a recent study by Baringa Partners shows that 30% of the British public are likely to consider buying an electric car and believe that electric cars will be the most popular choice within the next 15 years. Despite this, several key consumer concerns still pose a challenge to widespread adoption of EVs.
Purchase price is the greatest concern among consumers. Over 50% of people said cost would put them off purchasing an EV. Another issue is the limited range of EV models currently on the market. Both of these concerns, however, are likely to fade in the near future as automakers embrace EVs. Prices are already decreasing rapidly, with some models roughly the same price as petrol equivalents. Deloitte estimates that the market will reach a tipping point by 2022, when the cost of ownership of EVs will be on par with conventional cars. The number of models available is also expected to increase significantly in coming years as the automotive industry aligns itself with government policy and shifting attitudes. Ford, for example, is targeting 40 electric models in its line up by 2022.
A far more significant challenge to EV uptake is the availability of charging infrastructure. Consumers worry that there are not sufficient charge points near their homes and that they cannot travel far enough on one charge to reach the next available charging point (so-called ‘range anxiety’). Even when charge points are available, consumers are also concerned about the length of time required to charge their battery (the average EV takes between two and five hours to charge at a fast charge point).
While the issue of vehicle range is reduced with the release of each new model, charging infrastructure itself remains a major sticking point. Although the UK currently has over 14,000 public charging points, five times as many as in 2011, a market-led approach means that these are not evenly distributed, with many rural areas left without chargers. Furthermore, rapid charge points (which can charge a compatible EV in just under an hour) are not widely available. A 2018 study by Emu Analytics suggests that the number of charge points will need to increase tenfold by the early 2020s to support the increased number of EVs on UK roads. Public policy and incentives will be crucial in ensuring that charging infrastructure expands to meet increasing consumer need, and that this infrastructure is available to all regardless of geographic location.
Another consideration is whether the grid itself can cope with an increased number of EVs. It is widely recognised that although the availability of charging infrastructure is an important piece of the puzzle, many EV owners would prefer to charge their EVs at home overnight. While this would solve the issue of range anxiety and charge times for the two thirds of drivers with off-street parking, it presents a challenge for the grid. Although the UK’s National Grid currently has enough energy in its system to support a nation full of EVs, this does not mean that the system can handle all EVs being charged simultaneously. This is a problem if the majority of drivers seek to charge their vehicles at home each evening. One way to manage this issue is smart charging, which can vary the time and rate at which cars charge, depending on the level of overall demand. Further still, vehicle-to-grid technology, which allows EVs to act as mobile energy storage units, could see EV owners selling electricity back to the grid during unmanageable peak consumption. These concepts are still in early stages of development, so it remains to be seen which entities will provide smart charging and V2G services to consumers, how these services will be regulated and whether smart charging mechanisms will be managed at local or national level. What is certain is that government policy will play an important role in ensuring the adoption and regulation of these solutions.
In July 2018, the UK government announced its ‘Road to Zero’ strategy, which sets the target of no sales of new petrol or diesel cars by 2040. A key focus of the strategy is aimed at alleviating consumer concerns about availability of charging infrastructure. Actions include: a requirement that all new homes have charge points available; that new street lighting includes charge points; and a consultation on amending the Building Regulations to require the provision of charge points in non-residential buildings. Aside from charging infrastructure, the strategy also involves wider incentives for industry, including £246 million of investment for research into battery technology as well as further investment in EV research and development (targeting 2.4% of GDP by 2027).
The government has also launched the £400 million Charging Infrastructure Investment Fund (£200 million of which will come from the private sector) in order to act as a catalyst for capital investment in the EV sector and enable the more rapid expansion of public EV charging networks. The fund demonstrates that although the charging infrastructure market is currently in its early stages, the government believes that it is ready for large-scale investment from the private sector. The fund is available for a wide-range of EV infrastructure including charge points, software for smart charging, grid connections and battery storage.
In addition to the Road to Zero policy and government investment, legislation also has a role to play. The UK has recently introduced two new pieces of legislation to regulate charging infrastructure. The Alternative Fuels Infrastructure Regulations 2017 implement the EU’s Deployment of Alternative Fuels Infrastructure Directive, introduce common standards for electric charging infrastructure and aim to improve user experience and accessibility.
The Automated and Electric Vehicles Act 2018 goes further and aims to overcome some of the challenges discussed above such as range anxiety and grid capacity through improvements to the UK’s charging infrastructure. The Act allows the secretary of state to pass regulations governing the access (and performance, maintenance and means of connection) to public charging points. Regulations may also require large fuel retailers and service stations to provide public charging points. The Act also allows for regulations ensuring that all charge points sold or installed are ‘smart’ in order to support smart charging and ease future strain on the National Grid.
Although the Act is not yet in force, the wide-ranging powers it provides will be instrumental in overcoming the current shortage in charging infrastructure. What is important is that the Act comes into force sooner rather than later and that this primary legislation is used by the secretary of state to pass regulations carefully designed to lay the foundations of a future-proof charging infrastructure network.
The government also has a few incentives in place for individual EV owners in order to address concerns around affordability, although recent cuts to these subsidies have led to criticism. There is currently a subsidy of £3,500 towards the cost of a brand new electric car (cut from £4,500 in October 2018) and a grant of up to £500 towards the cost of installing home charging points from the Office for Low Emission Vehicles. Although these subsidies are important in encouraging consumer uptake, it is likely that they will become unnecessary as the cost of EVs reaches par with traditional vehicles.
There is no doubt that advances in technology and environmental concerns are fuelling an ‘electric mobility revolution’ and it is encouraging to see private sector players fully committing to an electric future. Despite this, EV uptake is still small scale and the UK government has an important role to play in overcoming barriers to widespread adoption if we are going to meet the 2040 target. While the government has made the right moves in terms of policy and the Automated and Electric Vehicles Act, it is crucial that it follows through on its consultations as part of the Road to Zero strategy and implements regulations supporting EV uptake. With careful implementation of policy and legislation, there is every chance that we will all be driving EVs by 2040.
Amy Watts and Lisa Reichstein are trainee solicitors at White & Case.