The UK’s EV transition could be fast-tracked by more than a decade if steps are taken to improve consumer confidence in the second-hand EV market, according to a report from the Green Finance Institute (GFI), released today.
It highlights the opportunity for the used EV market to play a major role in the transition to net zero by boosting EV uptake in the UK by as much as 17 million, but it warns that key barriers impacting consumer confidence must first be addressed.
Battery health is the number one concern among UK drivers alongside affordability and concerns around charging infrastructure.
Although the sale of new petrol and diesel cars will be banned from 2030, the used car market, which is not impacted by the ban, is by far the most dominant across representing 82% of cars sold in the UK in 2021.
The report concludes it is vital to encourage and enable second-hand car buyers to opt for affordable EVs to fast-track road transport decarbonisation and hit climate targets.
The Green Finance Institute’s report, Used EV Market: The Key to Unlocking Net Zero, surveyed over 2,000 UK drivers and drew on contributions from 35 leading car dealerships, motor finance lenders, and lease companies including Black Horse, Octopus EV, Vertu, EVA England, and Evolution Funding. It found that, despite over 61% of drivers indicating they would purchase an EV, over a quarter of them would not buy a used EV unless concerns around batteries, cost, and charging infrastructure were addressed.
Assurances on the health of second-hand EV batteries – the number one barrier to purchasing a used EV – were identified as the single most effective solution to encourage drivers to make the switch to electric vehicles, significantly accelerating the transition to net zero in road transport.
Lauren Pamma, programme director at the Green Finance Institute, said: “Without the used market, the EV transition is destined to stall. Eighty two per cent of car sales in 2021 were second-hand in the UK. So, if we’re serious about driving EV adoption we need to channel this appetite for second-hand cars towards EVs. Our research makes clear that the demand for EVs is already there, but to unlock the used market, we need to boost consumer confidence on battery health, charging infrastructure, and affordability. In collaboration with the public and private sectors, the Green Finance Institute is already working to implement solutions that tackle these barriers.”
The research also identified a disconnect between drivers’ perceptions of EV running costs and the reality. Of those who currently wouldn’t buy a used EV, 27% cited cost and the cost of maintenance as a major factor. However, research has shown that the overall running costs of an EV over its lifetime of ownership are typically less than that of ICE counterparts. Recent falls in used EV values reported by AutoTrader also mean there are some used EVs which are cheaper to buy than their ICE equivalent – the Renault Zoe being an example.
Drivers surveyed also said a better understanding of the cost and locations of public charging would encourage them to make the switch to an EV.
Marc Palmer, brand & insights director at Auto Trader, said: “The vast majority of drivers buy a second-hand vehicle, so the used market is fundamental to the EV transition – it’s where mainstream electrification becomes affordable, and opens up sustainable motoring to the millions we need to make the switch in order to meet our targets.
“But the themes and barriers highlighted in the Green Finance Institute’s report echo what we’re seeing – battery and charging confidence are vital to mainstream adoption, so support for the used EV market is critical.”
The Green Finance Institute’s report puts forward a series of solutions designed to overcome the barriers to the used EV market. The GFI is working closely with financial, policy, and automotive partners to develop and pilot these solutions to demonstrate their potential for boosting used EV uptake.
- Battery Health Certificates (a standardised battery health certification scheme for used vehicles) and Battery Value Guarantees (a mechanism for EV batteries to have a guaranteed end-of-life value) were most commonly identified by drivers as solutions that would encourage them to make the switch to electric, at 31% and 30% respectively.
- Battery Passports, which give second-hand buyers accurate knowledge of their prospective battery’s life to date, would also help allay concerns over batteries.
- Agreed definitions and standardisation of metrics for Total Cost of Ownership Calculators would help paint a clear picture of the total lifetime costs of EVs compared to ICE cars, including fuels and maintenance.
- Addressing information gaps, particularly surrounding topics such as the cost and location of public charge points, as well as energy tariffs to keep at-home charging costs low, will be central to giving drivers the confidence to switch to an EV.
- Reduction on the rate of VAT on public charging (20%), to match that of home charging (5%) – four times less. This, coupled with combined monthly finance packages inclusive of both vehicle and home charging, will be vital for building consumer confidence in the affordability of EVs.
