How the rise in living costs is impacting the adoption of electric vehicles – a data-driven guide
Electric vehicles (EVs) have been widely touted as the future of transport for some time. The environmentally friendly approach to driving, coupled with an energy source which is renewable and sustainable, has made EVs a very attractive option to a growing number of road users.
But those thinking about making the switch to this greener form of transport have no doubt also considered what higher energy bills and the cost of living might mean for their chances of going electric anytime soon.
In this short guide, we’ll look at what impact these recent changes to everyday life have had on the adoption of EVs in the UK. We’ll also assess other factors which could hold back a switch to electric, as well as what the future of the sector is predicted to look like.
How the cost of living is impacting the adoption of EVs
A variety of factors influence the strength of any market. But it’s impossible to ignore how rising household bills and energy prices have played a part in a slight stalling for the EV market. Here’s a statistical look at how the sector is being affected.
Cost of living and rising energy bills
Very few of us could have predicted the extreme hikes which hit domestic energy prices in the second quarter of 2022. In April of that year, household bills rose by an average of 54%, with a further 27% increase in October.
Typical annual consumptions are expected to stay around £3,000 per household, with the estimation being that they’ll remain at this level until around March of 2024.
These unforeseen changes to the amount which the average person pays for monthly bills has had a wider impact. With electric vehicles expected to be the only new cars manufactured by 2030, drivers are growing increasingly concerned about how much they might have to pay to charge their vehicle.
What’s more, aside from just a hike in energy bills, Brits are experiencing a cost-of-living crisis. Between March of 2022 and February of 2023, the price of food and nonalcoholic drinks rose at a faster rate than it had in any of the 45 years prior.
Annual inflation remained at 9.2% in February of 2023. And while that was a dip on highs of 9.6%, it still represented the highest range it had been in for 30 years.
The immediate hit on the EV market
Understandably then, adoption of EVs hasn’t continued at the same rate in which some may have predicted a few years prior.
One recent report found that 42% of UK drivers would not consider an EV or hybrid when making their next automotive purchase, while plug-in vehicles experienced their first dip in market share since May of 2021.
In October of 2022, battery electric vehicles (BEV) registrations accounted for 21.5% of the entire market, which represented a 5.6% dip on where they had been the previous year. And while many still see owning an EV as the eventual goal, as many as 57% said they consider it a future ambition, rather than an immediate priority.
Other factors which could impact EV sales
Of course, the cost of living is far from the only hurdle which the EV market has had to overcome. There are a series of barriers to adoption which have made it tougher for electric cars, vans, and lorries to become the go-to option of the average motorist.
Some of the most pressing include things like:
High upfront costs. Arguably the biggest concern associated with an EV is the steep upfront costs. At their cheapest, the vehicle itself can set you back £17,000 (rising to £80,000 in more luxury models). That’s before you factor in additional costs like at-home chargers and insurance.
Mileage range anxiety. While more is being done to reduce this concern, drivers remain anxious that their vehicles are going to run out of charge before they get the chance to top-up their batteries again. One study of 2,000 drivers found that 30% were worried an EV wouldn’t have the capacity to complete daily driving routes.
National charging infrastructure. Going hand-in-hand with the previous point, some are concerned that the UK lacks the charging infrastructure to support widespread EV adoption. In reality, this is something which becomes less of a factor with every passing year. Zap-map reports there are now 38,982 chargers across 23,066 locations in the UK alone.
The current EV market
So, it sounds as though its all doom and gloom for the EV market, right? Well, not quite. Despite the clear hurdles faced in the industry, sales for this environmentally-friendly form of transport haven’t totally stalled. While they have certainly struggled as a result of the energy and cost of living crisis, there’s plenty to give encouragement to fans of electric.
The rate of adoption may have dipped somewhat, but the number of battery-electric cars in the UK continues to grow year-on-year. Figures from 2016 to the first quarter of 2023 show just how far the sector has come in a limited amount of time.
- 2016 – 30,669 (BEV cars on UK roads)
- 2017 – 44,266
- 2018 – 59,740
- 2019 – 97,565
- 2020 – 205,770
- 2021 – 396,497
- 2022 – 663,700
- 2023 (as of February) – 693,307
That represents a staggering 2260.1% increase in the number of battery powered cars in the UK in just a seven-year period. The trend is replicated across the board, with battery electric vans also continuing to grow in popularity. Just 5,266 were registered in 2020, while that number now sits at 36,728.
And when it came to how EVs compared to their internal combustion engine rivals, the outlook was also very good. By the close of 2022, EVs owned a 16.6% share of newly registered vehicles in the UK. That may have been a dip on previous years, but it was also the first time that they had ever shared a higher market percentage than diesel engines.
And this appetite for electricity is far from exclusive to us Brits alone. As many as 1.8 million new battery-powered cars are expected to be registered in 2023 alone across the globe.
Sales for EVs across the UK showed the following models to be the most popular in 2022:
- Tesla Model Y – 10,664 (models sold in 2022)
- Tesla Model 3 – 5,704
- Nissan Qashqai – 3,506
- MINI – 3,319
- Volkswagen T-Roc – 2,325
Meanwhile, on a world scale, the most popular cars being bought were:
- Nissan Qashqai – 42,704 (models sold in 2022)
- Vauxhall Corsa – 35,910
- Tesla Model Y – 35,551
- Ford Puma – 35,088
- MINI – 32,387
Given the hurdles faced throughout the course of 2022, the continued growth and popularity of EVs should serve as real encouragement for those hoping this greener form of travel becomes the norm in the near future.
The future outlook of the EV market
Ultimately, despite the recent issues the market has been facing, the projection for EV adoption hasn’t been derailed too much.
There’s still an expectation that EV sales will make up as much as 45% of the total market share by 2035. And as soon as 2025, it’s predicted that UK charging points will increase on an annual basis by 19,000 units to account for this surge in popularity.
In the more immediate future, some projections suggest that the variety of models available is going to more than double by the close of 2024. Figures from the US show that there will be as many as 134 models on the market by the end of next year, with some of the most highly anticipated being:
- The BMW i4 (BMW’s first electric car since the 2014 i8)
- The Cadillac Lyriq (the brand’s first ever EV)
- The Chevrolet Silverado EV (Chevrolet's first attempt at an electric powered car)
Perhaps most telling of all are projections which suggested continued healthy growth in three of the core EV markets across the world. Market share for light EV sales is expected to rise to each of the following by 2030:
- China – 49%
- The US – 47%
- Europe – 70%
While the current cost of living crisis has definitely slowed the adoption of EVs, it would be hasty to suggest that it will have a long-term impact. Nobody can predict with any certainty what the future looks like, but there’s a strong chance it’s still going to be primarily electric.