Are electric vehicles taking over? Rewind the clock ten years and many of us would not have imagined it. But times and mindsets are changing, as we all become more aware of the detrimental effects carbon emissions are having on our planet.
Little surprise then, that demand for electric vehicles is rising sharply. Ever increasing fuel costs, with prices at the pump at a record high, are driving this to some extent. The UK’s net zero emissions goals are gaining pace, as the government revs up plans to ban the sale of new diesel and petrol vehicles by 2030. Combined, these factors are making many motorists think long and hard about their next choice of car.
Recent data from the Society of Motor Manufacturers and Traders (SMMT) published on 6 June 2022 reveals that battery electric vehicle (BEV) uptake increased by 17.7%, representing 12.4% of the month’s (May 2022) registrations. Electric van registrations also increased, up 62.7% in the first five months of 2022.
At the same time, we learnt that UK new car registrations were declining (by -20.6%) apparently being the second weakest May in three decades. But, this comes at a time when the industry is being significantly impacted by key component shortages and supply chain disruptions around the world. On a global scale, new car registrations continue to be reasonably static.
Once the domain of Tesla, the electric car manufacturing landscape is now fast-emerging as others enter the race. With global climate change high on the agenda and strong demand for electric vehicles, many OEMs are now placing huge investment in EV production strategies. An increasing number of car manufacturers are committing to a ‘future with EV’ as they open new electric vehicle and battery production facilities around the world.
Volkswagen Group is a good example, announcing that it is expanding its global production network for electric cars. It plans to build its all-electric ID.4 in Emden, Germany, following some one million euros investment to make this the first high-tech site for electric mobility in Lower Saxony, in a move it says will be: “helping the transformation to zero-carbon mobility to meet the high demand for electric vehicles.”
This investment is not confined to Germany. Volkswagen Group is rolling out plans to open six Gigafactories across Europe; battery plants for electric mobility, with Salzgitter being its European battery hub. Over the next five years, the Group has plans to invest around €52 billion in the development and production of new electric vehicles. Some €10.6 billion is being invested by Volkswagen Group and SEAT S.A. together with partners in the ‘Future:Fast Forward’ Project to ‘electrify’ Spain with the opening of Spain’s first battery Gigafactory in 2023, supporting the production of electric vehicles at their Martorell and Pamplona plants. SEAT S.A has invested €5 billion through to 2025 to develop new models for its SEAT and Cupra brands, with plans to electrify the range.
Ford and Hyundai have also made announcements about EV production. Ford plans to build two huge battery plants in Tennessee and Kentucky in conjunction with SK Innovation committing to a total investment of over 11 billion dollars describing it as “their biggest investment ever”. Ford’s Blue Oval Electric Vehicle Center will be in Tennessee, with Blue Oval SK Battery Park (twin battery plants) in Kentucky. This is Ford’s first mega campus in more than a generation, and it’s going to be electric.
Meanwhile Hyundai has announced that it will be building its first “dedicated electric vehicle and battery manufacturing facility” in Georgia, in the US.
Luxury electric car brand, Lucid Motors, is a brand built on sustainability, having opened its first EV factory in 2020. The Lucid ‘electric dream’ is fast-evolving as it announced plans earlier this year that it would be opening its first international manufacturing plant in Saudi Arabia. The new manufacturing hub will be fully owned by Lucid and enable the company to meet the growing international demand for luxury electric vehicles.
The EV industry is certainly a fast-moving, exciting space for forward-thinking car manufacturers albeit against a backdrop of challenges within the industry. OEMs are quite literally investing billions. But, are they not concerned that such investment in EV production is a huge financial risk? What if battery electric power is not the next best thing in ‘clean’ energy? And crucially, will consumers be able to afford them? Electric cars are more expensive than their ICE counterparts and these changes come at a time with high inflation and genuine concerns about an intensifying cost of living crisis. Many households are feeling the crunch with less disposable income to spare. One of the biggest barriers to EV ownership remains the high upfront cost, with some uncertainty about relatively new electric battery technology and the lack of charging infrastructure in some areas.
Mike Hawes, SMMT Chief Executive, SMMT, said: “Success will depend on reassuring consumers that they can afford these new technologies, that they will deliver their mobility needs and critically, that they can recharge as easily as they refuel.”
So why are electric cars more expensive to buy? Well, it really boils down to the cost of technology in EVs, with batteries being a substantial part of the cost. The good news is that electric vehicles can ultimately help motorists save money. Typically, there are fewer maintenance and service costs with electric cars, zero road tax (with pure electric cars) and of course the major saving (especially given the price of petrol and diesel) is that they can be substantially cheaper to run. Savings can also be made by those who drive in Congestion Zones, or Ultra Low Emission Zones. And for company car drivers, there can be tax savings to be gained from going down the EV route.
The second-hand EV market is starting to make an impression, which is making EV ownership a more viable proposition for many consumers. And with the popularity of EVs rapidly growing, comes the need for electric car insurance. It is wise for any EV owner to take their time in getting the right policy to suit their needs because EV insurance policies can differ in levels of cover, as can the type of service offered by insurance companies. There are questions to be asked. “In the event of my car being off the road, would I get an electric replacement car?” “How comprehensive is my insurance cover and does it meet all my driving needs?” A good idea to understand what type of service you may receive, is to review feedback and customer testimonials which will hopefully serve as an unbiased barometer.
EV insurance specialists, NOVO Insurance, is fully committed to the ‘electric vehicle’ revolution, having had many years of experience in the motor insurance and the EV industry. In fact, NOVO has been at the forefront of the EV insurance industry since 2017. NOVO guarantees that if your car is stolen or involved in an accident, it will provide a like-for-like electric vehicle loan car. NOVO also provides a compassionate and helpful incident management concierge service should you be involved in an accident, assigning a dedicated Claims Manager who will co-ordinate the entire claims process from start to finish on your behalf. The knowledgeable EV insurance specialists at NOVO will also tailor an EV insurance package to suit your specific needs, understanding that every client’s needs are different. NOVO is all about delivering an exceptional customer service, and is fast becoming the ‘EV insurer of choice’ for prestige EV insurance.