EV Index 2024 Q3: the wait for affordable electric cars continues

Overview

It was another disappointing quarter for those looking to see an improvement in the levels of interest in — and acquisition of — electric cars. The EV Index from Sophus3, which measures the readiness of a market to transition to electric mobility, remained near static in the European big five markets, and even fell back in Italy.

EV Index 2024 Q3

Figures in brackets show change from 2024 Q2

(The Netherlands and Norway are the European ‘best in class’ performers shown for comparison purposes.)

Consumer interest recedes

The UK was the only one of the big five markets to see a positive increase in its Index score, gaining three points over the quarter. The SMMT — the UK’s vehicle registration body — reported that this increase in interest was prompted by a wave of manufacturer incentives put in place to ensure that year-end targets under the Zero Emissions Vehicle mandate are met. (Failure to meet these incur heavy financial penalties on the excess number of fossil-fuelled cars a brand sells, up to £15,000 per vehicle.)

The fact that consumer engagement worsened in Italy and remained static in France is likely a reflection of the end of an uptick in  interest seen over the previous few months that was created by government incentive schemes which proved short-lived in both markets due to budgetary restraints.

As ever, Norway and the Netherlands remain the exceptions amongst the markets the EV Index tracks.

In the case of Norway the argument for EV transition has clearly been won — 94% of new cars sold in August were EVs. (Whether that argument has been won through the application of ‘carrots’ or ‘sticks’, is another topic.)

In the Netherlands the government’s target is for all new cars to be zero emission by 2030, with incentives to encourage this, including—uniquely as far as we know—for the purchase of second-hand EVs.

The wider European picture remains gloomy with EV sales falling against a backdrop of a weakening new car market. At  the end of the third quarter year-to-date sales of electric vehicles across Europe (EU+EFTA+UK) were down nearly 3%, achieving a market share of 14.7%, compared to the 15.2% they reached over the course of the whole of 2023. However, there are arguments that the situation is not as bad as it may appear. The downturn over the quarter was largely a result of a dramatic fall in Germany where sales were down 61% in August. However, sales in August 2023 — against which the comparison is being made — were heavily inflated by the imminent removal of government subsidies which pulled forward many purchases into that month. Additionally, some brands who have reached, or will reach, the mandated target emission levels for 2024 are thought to be constricting the supply of cheaper EVs to be able to generate spikes in demand next year when those targets become more daunting.

Affordability remains the biggest challenge

Whilst the EV Index does show some improvement in the relative pricing between EVs and comparable internal combustion engine vehicles, this remains essentially an adjustment within a grouping of ‘premium’ cars. Automotive News Europe neatly summed up the realities of the European EV market: “There are not enough affordable models to move past early adopters and the wealthy.”

The Paris Motor show at the beginning of October did offer some hope of the imminence of more affordable electric cars. Renault launched the Renault 5 which is expected to have a starting price of €25,000 in Europe. The brand also showed the forthcoming Renault 4 and next generation Twingo which are expected to be similarly affordable. Volkswagen has said that its own small EV model, the ID.2, is now ready to commence production and should come to market some time in 2025 at a similar price point to the Renault 5.

Volkswagen’s ID.2 is one of a number of eagerly anticipated ‘affordable’ EVs expected in 2025.

As we commented in the last issue of the EV Index (2024 Q2), it looks unlikely that there will be a flood of truly budget EVs from the Chinese manufacturers who have entered the European market over the last two years. On 4th October the European Parliament voted as expected to impose tariffs on imported Chinese EVs that can be as high as 45% on individual cars. Whilst there is some hope that a compromise may be reached, the removal of these tariffs would likely be the result of Chinese manufacturers voluntarily agreeing to minimum pricing and accepting a cap on the volume of cars they would be able to sell.

Longer-term however that may change as Chinese brands acquire European production facilities, or go into joint ventures with European brands allowing them to avoid tariffs that imports from China would remain subject to. The T03 model built in Tychy, Poland under a partnership arrangement between Leapmotor and Stellantis, gives a glimpse of the type of affordable EV that may become available in greater numbers.

Infrastructure

Whilst ‘lack of charge points’ remains the go-to explanation in many quarters for the hesitancy of consumers to choose an EV, specialists in this area believe that the provision of public charging infrastructure is — at this point in time — fit for purpose in most European markets.

There are now over 630,000 EV charge points across the EU according to the ACEA. Whilst there are gaps in the availability of facilities in some countries, a bigger problem is that the majority of these chargers only allow slower speed charging. Fewer than 14% deliver more than 22kW of electricity to allow fast charging. These limitations may contribute more to the perception of the inadequacy of the network than either its overall size and reach.

The EV Index from Sophus3 provides an objective measure of the readiness of the vehicle market to enable and encourage the mainstream adoption of electric vehicles (EVs).

The index is formed from three pillars, each measuring distinct factors that help or hinder electric vehicle acquisition. First of these is the consumer appetite to buy electric, the second is the capability of the automotive companies to supply these cars, and the third is the availability of suitable charging infrastructure.

A score of 100 represents parity in the attractiveness, availability, pricing and usability of an electric car compared with a conventionally fuelled vehicle.

We publish the EV Index for the UK, Germany, France, Italy, Spain, The Netherlands, and Norway.

A fuller explanation of the EV Index from Sophus3 can be found here.