Car Makers Slash EV Prices

Context and Motivation

• Car manufacturers are reducing prices on new electric vehicles (EVs) by up to 36% to meet the Zero Emission Vehicle (ZEV) mandate requirements.
• The ZEV mandate requires manufacturers to increase their share of EV sales with fines imposed for non-compliance.
• Fines of £15,000 per vehicle below the required quota are driving the price cuts.
• The mandate aims to boost EV sales from now until 2030.

Market Analysis

• According to Auto Trader, many car companies are reducing prices to avoid financial penalties.
• Cap Hpi analysis shows petrol and diesel vehicle prices have increased faster than EVs over the past year.

Key Discounts and Savings

• DS3 Crossback E-Tense:
  • Usual Price: £37,862
  • Discount: 36%
  • Discounted Price: £23,345
  • Savings: £14,517
• Jaguar I-Pace:
  • Usual Price: £78,331
  • Discount: 21%
  • Discounted Price: £62,038
  • Savings: £16,300

Other Significant Discounts

• MG5 EV: 34.2% discount
• MG ZS EV: 30.1% discount
• Peugeot e-2008: 26.5% discount
• Citroen e-C4 X: 23.6% discount
• Vauxhall Mokka-e: 19.8% discount
• A total of 70% of EVs had discounts, with higher average discounts than petrol/diesel models.

ZEV Mandate and Future Roadmap

• Introduced in January with increasing targets:
  • 2024: 22% EV sales
  • 2025: 28% EV sales
  • 2030: 80% EV sales, with bans on new petrol and diesel vehicles
  • 2035: 100% EV sales, extending to hybrids
• Uses a credit-based system where excess performance allows credit trading or banking for future needs.
• Conglomerates can balance credits across brands (e.g., Volkswagen Group, Stellantis).

Market Dynamics and Consumer Trends

• October EV sales accounted for 20.7% of all registrations, driven by discounts and limited availability of petrol/diesel models.
• EV market share for 2024 stands at 18.1%, below the 22% target.

Economic Implications and Future Prospects

• Manufacturers are employing price reductions and launching affordable EVs to meet targets and market demands.
• New affordable models include:
  • Dacia Spring EV (£14,995)
  • Leapmotor T03 (£16,000)
  • Citroen e-C3 (£21,990)
  • Hyundai Inster (coming January)
• Slower price acceleration for EVs compared to petrol/diesel vehicles in 2024.
• Expanding consumer options are making EVs more accessible.

Conclusion and Industry Commentary

• Significant financial incentives are being used to drive EV adoption.
• Manufacturers may face financial challenges from selling EVs at a loss.
• Strategies include reducing prices and introducing cheaper EV models to remain competitive and comply with regulations.
• Future outlook suggests continued discounting and emergence of budget-friendly EVs.