EY insight on increased GHV & LCV sales as ZEV mandate looms

Regulatory incentives need to work with improving infrastructure to achieve targets in the EV transition, says Mark Main, UK Transport Lead at EY

Leading global consultancy EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.

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Mark Main, UK Transport Lead at EY, shares insight with EV Magazine as HGV and LCV sales growth continues, and the challenges on the horizon as the ZEV Mandate looms.

Main has been at EY for over six years, having previously spent eight years at GE Capital as the Equipment Valuations Leader, Europe. He holds a Bachelor of Engineering focused in Electrical and Electronics Engineering from Loughborough University, and in his own time, Main volunteers as an Assistant Cub Leader for the Scouts.

Sustainable freight growth

“Sales of Heavy Goods Vehicles (HGVs) continued to see encouraging growth in Q3 2023, with registrations up 14.9% year-on-year to 11,531 units, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT). These figures underline the automotive sector’s impressive and continuing resilience against a persistently complex and challenging economic backdrop,” he shares. 

“Four of the top five brands also saw their HGV market share increase year-on-year in Q3, three of which saw double-digit growth, building an increasing dominance in the market.

“However, despite this promising growth, challenges continue to persist, with new manufacturers having to navigate complex supply chain issues including component supply shortages.

“Financial issues at some Original Equipment Manufacturers (OEMs) of Electric Vehicles (EVs) have hindered the industry’s progress towards cleaner and greener HGVs, and while zero emissions truck uptake reached record levels in Q3 2023, the SMMT has reported that electric and hydrogen HGVs still only represented 0.8% of the UK’s overall market in Q3, up from 0.4% in Q2 2023. While this growth represents a step in the right direction, there remains a long and challenging road ahead.

“Progression for zero emissions HGVs is a significant distance behind the inroads made in relation to electric cars, with stubborn challenges continuing to stunt growth. For example, there is a substantial gap between the infrastructure for electric HGVs compared to electric cars, with everything from the manufacture of electric HGVs to the location and availability of suitable chargers in need of significant further investment and improvement. This underscores the scale of the task that lies ahead in relation to increasing the volume and proportion of zero emissions HGVs enough to align with the UK’s net zero goals, not least given the fact that electric and hydrogen HGVs remain significantly more expensive than diesel alternatives.”

Similar challenges for LCVs

“Similarly to the upward trajectory for HGV registrations in Q3 2023, Light Commercial Vehicle (LCV) sales also saw pleasing growth in October, with registrations up 17.7% year-on-year, according to SMMT data. However, in another setback for the UK’s EV transition, Battery Electric van registrations fell by -20.2% year-on-year. While this figure should be treated with caution in the context of last October’s especially significant fleet figures, Battery Electric vans have still only accounted for 5.5% market share this year-to-date. As is the case for consumers, businesses are being deterred from making the switch to zero emissions vehicles due to concerns around pricing, range and charger availability.

“With the Zero Emissions Vehicle (ZEV) Mandate coming into play at the start of the new year, setting LCV OEMs a target of 10% ZEV sales for 2024, progress in the growth of electric van sales will be critical to regulatory compliance. However, with infrastructure challenges persisting, and urgency among consumers and businesses to make the EV switch likely tempered by the Internal Combustion Engine (ICE) vehicle sales ban being pushed back to 2035, providing a compelling buyer proposition to drive increased demand for ZEVs will be a stern task for OEMs going forward, especially given uncertainty around range and vehicle capability for business users.

“Indeed, increased regulatory incentives will need to go hand-in-hand with improving infrastructure if auto businesses and the Government alike are to achieve their targets in relation to the EV transition.”

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