The UK’s EV transition could be fast-tracked by more than a decade if steps are taken to improve consumer confidence in the second-hand EV market, finds a report from the Green Finance Institute (GFI), released today.
It highlights the opportunity for the used EV market to play a major role in the net zero transition by boosting EV uptake in the UK by as much as 17 million but warns that key barriers impacting consumer confidence must first be addressed, with battery health concerns ranking number one amongst UK drivers alongside affordability and concerns around charging infrastructure.
The sale of new petrol and diesel cars will be banned from 2030 by the UK government in a move to reduce road transport emissions. However, the used car market, which is not impacted by the ban, is by far the most dominant across the country, representing 82% of cars sold in the UK in 2021 - a market that is forecasted to be worth £182 billion by 2027. It is vital to encourage and enable second-hand car buyers to opt for affordable EVs to fast-track road transport decarbonization, hit climate targets, and ensure a just transition which enables the mass adoption of EVs.
The Green Finance Institute’s report, Used EV Market: The Key to Unlocking Net Zero, surveyed over 2,000 UK drivers and drew on contributions from 35 leading car dealerships, motor finance lenders, and lease companies, including Black Horse, Octopus EV, Vertu, EVA England, and Evolution Funding – concluded that, despite over 61% of drivers indicating they would purchase an EV, over a quarter of them would not buy a used EV unless concerns around batteries, cost, and charging infrastructure were addressed. Assurances on the health of second-hand EV batteries – the number one barrier to purchasing a used EV – were identified as the single most effective solution to encourage drivers to make the switch to electric vehicles, significantly accelerating the transition to net zero in road transport.
Lauren Pamma, Programme Director at the Green Finance Institute, said: “Without the used market, the EV transition is destined to stall. 82% of car sales in 2021 were second-hand in the UK. So, if we’re serious about driving EV adoption en masse, we need to channel this appetite for second-hand cars towards EVs. Our research makes clear that the demand for EVs is already there, but to unlock the used market, we need to boost consumer confidence on battery health, charging infrastructure, and affordability. In collaboration with the public and private sectors, the Green Finance Institute is already working to implement solutions that tackle these barriers.”
Identifying the Barriers to Used-EV Adoption
Of drivers who said they wouldn’t buy a used EV, 62% cited concerns around battery lifespan – making the fear of poor battery health the single largest barrier preventing the second-hand market from taking off, a concern echoed by industry experts. Nearly three-quarters of the 21 dealerships involved in the report recognized battery lifespan as one of the top consumer concerns in the context of used EVs.
The research also identified a clear disconnect between drivers’ perceptions of EV running costs and the reality. Of those who currently wouldn’t buy a used EV, 27% cited cost and the cost of maintenance as a major factor. However, research has shown that the overall running costs of an EV over its lifetime of ownership are typically less than that of ICE counterparts. Recent falls in used EV values reported by AutoTrader also mean there are some used EVs that are cheaper to buy than their ICE equivalent – the Renault Zoe being an example.
Despite the growing number of public charge points – which have increased by 523% in the last six years alone – drivers surveyed also said a better understanding of the cost and locations of public charging would encourage them to make the switch to an EV.
Marc Palmer, Brand & Insights Director at Auto Trader, said: “The vast majority of drivers buy a second-hand vehicle, so the used market is fundamental to the EV transition – it’s where mainstream electrification becomes affordable, and opens up sustainable motoring to the millions we need to make the switch in order to meet our targets. But the themes and barriers highlighted in the Green Finance Institute’s report echo what we’re seeing – battery and charging confidence are vital to mainstream adoption, so support for the used EV market is critical.”
Boosting Consumer Confidence in Used-EVs
The Green Finance Institute’s report puts forward a series of solutions designed to overcome the barriers to the used EV market. The GFI is working closely with financial, policy, and automotive partners to develop and pilot these solutions to demonstrate their potential for boosting used EV uptake.
Battery Health Certificates (a standardised battery health certification scheme for used vehicles) and Battery Value Guarantees (a mechanism for EV batteries to have a guaranteed end-of-life value) were most commonly identified by drivers as solutions that would encourage them to make the switch to electric, at 31% and 30% respectively.
- Battery Passports, which give second-hand buyers accurate knowledge of their prospective battery’s life to date, would also help allay concerns over batteries.
- Agreed definitions and standardisation of metrics for Total Cost of Ownership Calculators would help paint a clear picture of the total lifetime costs of EVs compared to ICE cars, including fuels and maintenance.
- Addressing information gaps, particularly surrounding topics such as the cost and location of public charge points, as well as energy tariffs to keep at-home charging costs low, will be central to giving drivers the confidence to switch to an EV.
- Reduction on the rate of VAT on public charging (20%), to match that of home charging (5%) – four times less. This, coupled with combined monthly finance packages inclusive of both vehicle and home charging, will be vital for building consumer confidence in the affordability of EVs.
For all of the barriers identified throughout the report, the research showed that dealerships have the greatest potential to address gaps in consumer education. Outside of personal research and family & friends, dealerships are the most trusted source of information on EVs (27%). However, dealerships are also in need of more information on EVs. Just two out of the 21 dealerships involved in the research felt they had enough data on battery degradation, with the remaining in need of more information.
Source: https://www.greenfinanceinstitute.co.uk/