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UK’s triple-digit sales growth in BEVs – stick or twist?

  • 3 years ago (2020-11-20)
  • Junior Isles
Electric vehicles EVs 4
Mark Richards

By Mark Richards , Partner and EMEA Co-Leader – Energy, Environmental & Infrastructure at Bryan Cave Leighton Paisner LLP

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The world remains gripped by the COVID-19 pandemic as the UK inches closer to a post-transition, post-BREXIT world, fundamentally changing the basis on which it trades with its closest neighbours.  It is difficult not to place the pursuit of net zero and the accompanying energy transition down the list of challenges to be faced down by the UK.

However, whilst the COVID-19 pandemic has created numerous challenges, it will also leave a lasting impact on traditional business models – allowing many office works greater flexibility to work from home, reduce their commuting and potentially significantly reduce international business travel. All of these change ways of working and consuming which could arguably benefit carbon emissions.

Until it is clear that there is an effective vaccine, there will be a continued need to socially-distance placing pressure on those who have to commute to do so by private cars, especially those keyworkers who are unable to undertake their jobs remotely.

Lockdowns and continued homeworking have significantly reduced traffic volumes in our towns and cities, leading to improvements in air quality and noise reduction. It is likely that citizens enjoying the benefits of clean air will want this maintained and indeed accelerated through the adoption of zero emission vehicles.

The pandemic has disrupted the global economy leading to significant reduction in growth. However, in some of the worst-case sales figures published this century, there was a beacon of hope for car manufacturers and those promoting green low carbon growth.

Whilst no surprise to our clients involved in the e-mobility sector, news reports in the UK heralded the sales success of battery electric vehicles (BEV) in 2020. BEV sales in the UK are 168.7 per cent higher than at the same point in 2019, according to new statistics from the Society of Motor Manufacturers and Traders (SMMT).  The statistics showed (in Nov 2020) that 75,946 BEVs have been sold so far this year, compared to 28,259 at the same point last year, increasing the BEV market share from 1.4 per cent in 2019 to 5.5 per cent in 2020.

Triple-digit growth in any sector is a cause for celebration and astonishment, but this is also laudable as it is green growth – “building back better” – replacing old polluting vehicles with new vehicles with significantly lower greenhouse gas emissions.

The UK is committed to be net zero by 2050 and has committed to a total ban on the sale of new petrol and diesel vehicles by 2035.

Is there more that can be done to accelerate the transition to BEVs, especially if investment can help the recovery from economic headwinds caused by the COVID-19 pandemic?

Simply put, yes. First, the UK government could commit to a total ban of new petrol and diesel vehicles by 2030 – accelerating the ban would arguably accelerate adoption.

Whilst the UK government’s “benefit-in-kind” company car tax incentives are some of the most generous in the world, more could be done whether it is car scrappage schemes, parking incentives and fast-lanes (through the green number plates), further fleet capital allowances, plug-in grants and incentives around the location and building of charge points.

The ecosystem for mass adoption of BEVs needs to capture consumer demand and the conditions for business owned fleets who will see massive benefits in total cost of ownership, plus ancillary revenues from being able to smart charge using vehicle-to-grid technologies.

Legislation will also play its part through promotion of the e-mobility transition in the Autonomous and Electric Vehicles Act 2018 and Alternative Fuels Directive/The Alternative Fuels Infrastructure Regulations 2017 – focusing on the conditions for creating electric vehicle charge points.

In addition to charge points, the supply of BEVs in the UK is extremely important to consumer adoption.  As we approach a post-transition world on 1 January 2021, without a last-minute change of direction by the UK Government, the UK’s car consumers would have faced a real risk of reduced supply of BEVs from the EU.  Fortunately, a recent UK Government announcement (on 13 October 2020) confirmed that new UK rules through Statutory Instrument will come into force which mirror specific CO2 emissions targets set out in Regulation (EU) 2019/631 so that EU manufacturers will be equally incentivised to supply and sell low emission vehicles in the UK, as in the EU single market.

So, where are we? I believe the ecosystem for the greater adoption of BEVs is there, but the UK government and industry can do more. Whitehall can pass powers to cities to encourage further ultra-low emission zones and clean air zones across the UK – benefitting citizens’ health and wellbeing.

Bloomberg NEF’s Electric Vehicle Outlook 2020 highlighted that EVs will hit 10 per cent of global passenger vehicle sales by 2025, rising to 28 per cent in 2030 and 58 per cent by 2040, with true “sticker price” parity between BEVs and fossil fuel vehicles by mid-2020.

These BEVs will need to be charged at home, office and en-route. Our approach to re-fuelling will be fundamentally different to fuelling at a petrol station. This will create a world of opportunities for investors, operators and retailers.

Within this, there is a complex regulatory and legal landscape to navigate, spanning different areas, from finance to real estate and planning. A case in point was our work with charging infrastructure provider Osprey, on their ground-breaking London rapid charging hub in partnership with Transport for London (TfL) and High Speed 1 at Stratford, East London . This was the first EV rapid charging hub in London and was a big step towards Osprey’s goal of making zero emission transport a reality. The client was confronted by several electricity regulatory, planning and property issues. There was a balance to achieve between value, protecting land-holders’ rights and the electricity regulation. This is a complex arena which can result in liability for those who do not get it right.

The market, government (national / local), manufactures and investors all have a part to play in the energy transition. The market in BEVs in the UK is buoyant – enabling opportunities for retailers, charging infrastructure providers, landowners, battery manufacturers, software engineers, utility companies and technology providers.

Mobility as a service will converge and bundle these into a seamless product for consumers too. The future seems that bit cleaner, greener, quieter and more exciting!

Mark Richards, Partner and EMEA Co-Leader – Energy, Environmental & Infrastructure at Bryan Cave Leighton Paisner LLP (BCLP) –