How are governments impacting EV uptake? EY shares insight

Whitehall Street, with Big Ben in the background. Credit | EY
The UK Government’s support package is unlikely to solve all challenges facing automotive businesses, says David Borland, UK&I Automotive Leader at EY

Whilst China is still currently the driving force for growth in EV development, the US and European markets continue to grow, and Western Europe is still the largest user of renewable energy in the world.

Eyes in the industry are on the UK as Nissan’s £1bn flagship EV36Zero plant is used as the Japanese company’s blueprint sustainable EV base ahead of expansion into Japan, China and the US, whilst pressure is put on governments globally to develop impactful legislation and provide necessary support towards electrification. 

Leading consultancy EY provides expert insight on support for the automotive sector announced in the recent Autumn Statement delivered by Chancellor Jeremy Hunt.

Financial support shows confidence in the EV sector

David Borland joined EY in 2018, and is now a Global Client Service Partner and UK&I Automotive Leader. Previously, Borland was Groupe PSA’s UK CIO, UK board member and European IT Director for Opel and Vauxhall brands. He has a background in engineering, having gained his degree in Electronic Engineering from Coventry University and started his career as a Manufacturing Engineer at Jaguar Land Rover, as well as Siemens and General Motors. 

“Amongst the 110 measures announced in the Chancellor’s Autumn Statement were several key initiatives that will provide direct support to the automotive industry. A £2bn support package to bolster zero emission vehicles, as well as their batteries and supply chains, is a sign of confidence in the sector. Additional measures included full expensing for capital expenditure, an increase in the number of engineering apprenticeships and a study on how autonomous vehicles and mobility can deliver growth,” he comments.

“Following a period of sustained growth for the UK’s auto sector, with 15 consecutive months of growth in new car registrations, a transition towards cleaner and greener transport is a priority that is now growing in importance for automotive businesses. Despite this ambition, the market share of Battery Electric Vehicles (BEVs) has plateaued, with EY’s latest Mobility Consumer Index highlighting that upfront purchase costs, a lack of charging stations and expensive charging/running costs are deterring consumers from making the EV switch. These challenges should be prioritised within public and private investment.

“Although it is likely to be gratefully received by the UK’s auto sector, the Government’s support package is unlikely to solve all of the  challenges facing automotive businesses in the UK. The sector is navigating regulatory changes linked to the Zero Emissions Vehicle (ZEV) Mandate and Rules of Origin requirements, as well as ongoing economic headwinds. Indeed, the USA’s Inflation Reduction Act is a much larger support package by comparison, highlighting the magnitude of the UK’s continuing challenge to be a world automotive leader on a consistent basis. While today’s announcement is a much-needed step towards that, it needs to be part of a broader industrial strategy if the nation’s auto sector is to continue competing among the key players on the global stage.”

Funding is key, but doesn’t solve the disconnect between policies

Expert consultant Maria Bengtsson, EY’s UK Electric Vehicle Lead, has been with the consultancy for nearly a decade. Previously, she held directorial roles at FTI Consulting, KPMG and also worked for General Motors. 

“While a support package pledging significant funding into zero emissions automotive investment is a step in the right direction, it appears unlikely to address a key dilemma currently facing Original Equipment Manufacturers (OEMs). Specifically, the Internal Combustion Engine (ICE) vehicle sales ban was pushed back to 2035 recently, but the Zero Emissions Vehicle (ZEV) Mandate is still set to begin penalising OEMs if they don’t meet EV targets from 2024,” she says.

“There are currently no public plans for this to change, leaving OEMs in a position where many of their customers have been de-incentivised to switch to a ZEV sooner rather than later, while their objectives for selling ZEVs are being ramped up at pace.

“Therefore, while this announcement will undoubtedly go some way towards helping support the UK’s transition towards cleaner and greener transport, it’s unlikely to provide an immediate and comprehensive fix.

“With EV charging infrastructure continuing to pose difficulties for the UK’s progress towards wide-scale EV uptake, the Government’s plan to speed up access to the national grid as part of their 110 growth measures is a welcome announcement. Electrical grid capacity is a critical piece of the puzzle as the UK looks to roll out more accessible and reliable chargers.”

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