How can UK car retail combine with COP27 to drive the EV shift? Opinion

In the latest in a series of guest opinion posts for AM, Volkswagen Financial Services UK chief executive Mike Todd considers how putting green travel under the microscope at COP27 will affect UK car retail.

The world’s biggest climate summit is currently underway in Egypt as leaders from across the globe come together in a bid to tackle climate change.

In theory, COP27 should be a major catalyst for reducing global carbon emissions and limiting global temperature rises – and the automotive industry has a huge part to play in affecting this change.

That is why I want to use this month’s column to assess the UK’s progress towards mass adoption of electric vehicles, bringing clarity on longer-term trends, and the real and perceived factors influencing EV adoption levels.

We all know that it is vitally important for zero carbon emitting vehicles to dominate the next generation of transport and clearly electric cars are central to this being a success.

According to the UK’s Climate Change Committee (CCC), the switch from combustion engine vehicles to achieve 2050’s net zero ambition necessitates that 55% of all light duty vehicles – cars, vans, motorbikes, and mopeds – are battery powered by 2032. This equates to over 23 million vehicles in ten years’ time.

Figures from Volkswagen Financial Services UK’s latest EV Tracker Report highlight that, pleasingly, the figure is 150,000 ahead of the required adoption curve to meet the 2032 target.

These figures are particularly impressive given ongoing issues in the supply chain, which are creating shortages of new vehicles, but our research shows that demand for electric cars is only heading in one direction.

However, current challenges around rising fuel, food and energy prices, as well as overall economic confidence, may all contribute to a planned EV purchase becoming less of a priority, even for those aware of – and keen to exploit – the economic and environmental benefits they offer.

Again, data from our most recent EV Tracker Report shows that price has become an increasing barrier to an EV purchase.

The latest figures put this as comfortably the largest obstacle, with 51% of respondents citing this as a factor, compared with 42% in the previous quarter.

Looking ahead, we know that economic conditions remain challenging and are likely to mean many opt to delay a proposed EV purchase until their individual finances, and confidence in the future, are more favourable.

Lots of people are evidently keen to do more to be ‘greener’ but it’s not unreasonable or unexpected that they delay this in order to focus on more pressing financial considerations.

As a finance provider, it’s imperative that we continue to develop propositions to assist customers make the transition to electric cars and practical tools like our EV-4-Me quiz are great ways of showcasing the savings that can be made by embracing greener and sustainable travel.

Another major talking point that feels relevant given COP27 is that many misconceptions and gaps in knowledge remain among consumers regarding the switch to electromobility.

For example, our data insights team has reported that nearly one-third of the population (32%) are still unaware that from 2030, they will be unable to order a new petrol or diesel car.

Meanwhile, some 65% of respondents believe that EVs are likely to lose value as a result of a degrading battery.

Clearly, misperceptions around EV quality, reliability and range are something which all interested parties must take rapid steps to address if the upward curve of adoption is to progress towards our collective net zero target.

On a more positive note, a recent study from Volkswagen Financial Services UK found that the rising cost of petrol and diesel has prompted 31% of consumers to seriously consider an EV for the first time.

The same percentage of people also report their dream car has changed from a petrol or diesel model to an EV since the pandemic.

To harness this appetite for green transport and put consumers in the driving seat of their transition to electric, we at Volkswagen Financial Services UK are soon to be launching a new online affordability tool.

Our digital Total Cost of Ownership tool will allow users to identify whether an electric car is affordable and fits in to their lifestyle, using real-time finance offers to give users an accurate prediction of costs based on how most drivers purchase their car.

The simple online journey lets users choose a prospective EV model, annual mileage, fuel costs, servicing costs, preferred deposit and other finance parameters to highlight and compare suitable options.

The beauty of this tool is that it will offer simplicity and consumer convenience in the pursuit of affordable green transport solutions and I truly believe it will unlock the air of mystery around electric vehicles, showing people that electromobility is more affordable and accessible than they realise.

Together we can achieve a sustainable future and, as COP27 ramps up global efforts to tackle climate change, the UK’s automotive industry must continue innovating and educating to ensure electric cars achieve mass adoption.