The slowing market has led the Office for Budget Responsibility to decrease its electric vehicle (EV) uptake prediction for 2027 by 44%.
According to the new forecast, EVs will now only account for 38% new car sales by 2027, rather than the previously forecast 67%. That is a decrease of 29 percentage points, or 44%.
Predictions for this year have also declined, compared to the March 2023 forecast from 25% to 18%.
In previous years, the share of new EV sales had “repeatedly exceeded” the OBR’s forecasts, jumping from a 0.5% increase in new EV sales in 2017-18 to 13.6% in 2021-22. This led the statutory body to make an upward revision to its assumption on the pace of the EV uptake in the UK to a 59.6% rise by 2026-27 within its March 2022 forecast.
However, the OBR has revealed that EV uptake has slowed in 2022-23, accounting for 16.5% of new cars sales, over 1% lower than its 17.7% March 2023 forecast.
The OBR cited a number of factors causing the slowing take-up of EVs including:
- Expense – the EV price gap at point of purchase relative to internal combustion engine (ICE) cars, has slowed – falling 15% between 2021-22 but only 6% since March 2022. The high upfront cost of EV’s and their still relatively limited presence in the second hand market is disincentivising potential EV drivers, said the OBR, “especially purchasers using car finance as interest rates are significantly higher than we had anticipated in 2022.”
- Public charging anxiety – Charging an EV at home has beneficial cost benefits, due to the availability of cheaper tariffed electricity, however drivers relying on public chargepoints have a significantly lowered cost advantage, exposed to higher electricity prices. The comparison with ICE vehicles is made tougher for EVs as petrol and diesel prices have both declined from the 2022 spike.
As the main policy driver for the EV uptake, the OBR also cited the Zero Emission Vehicle (ZEV) Mandate as a contributor to the decrease in it’s EV forecast, due to the 5-year delay on the sale ban of ICE vehicles. Therefore, the OBR revised its EV uptake forecast to “match the path of the mandate.”
