[Technology] Electric Car advice

[chickens]

If a manufacturer sells too few electric cars then he is fined £15,000 per vehicle. He has to sell electric cars no matter what. If he sells too few electric cars relative to petrol cars, he has to discount the electric ones as a loss leader to avoid swingeing penalties.

For example, if his target is 20 electric cars out of 100 total car sales. To make the same profit on each, perhaps the electric one would be £35k and the petrol £25k. Total income £2.7m.

But electric sales aren't going well, and he is going to finish 10 cars short. His income will be down at £2.6m but his costs will also be down, so his gross profit hasn't changed much. Except for this penalty - he should have sold 22 electric cars for his 90 petrol cars, so he is fined 12 x £15k which is £180k. It's a big hit to his profit.

Far better to discount the electric cars to say £30k, and perhaps sneak the petrol cars up to £26k, so his total income for the 20/80 sales is now £2,680, down a little, but no fine.

Firms still forced to sell more electric cars despite petrol ban delay

Car makers will still have to ensure over a fifth of cars sold are electric from 2024.

www.bbc.co.uk

It’s worth mentioning that there’s a carbon credit scheme so manufacturers can avoid the fines by buying credits off companies who are doing very well selling EVs (at present Renault, MG, Kia, Hyundai and Tesla)

All of the above still have combustion engine vehicles available, but have excellent EV ranges which are selling.

Other manufacturers appear absolutely schizophrenic, doing the financial equivalent of a bather dipping their toes in the water and undecided as to whether to fully get in.

They’re making their own lives worse, as they don’t have any consistent message. On one hand they’re still developing combustion engine vehicles, and if you go to their showrooms that’s what they have visible, on the other hand they claim they’re seeking clarity, when the phase out has already been set in stone, and a majority of manufacturers are begging the government not to make any last minute changes, as planning new models takes a decade from initial planning to market.

My suspicion is there will be tweaks to the level of transition expected on a year by year basis, but the end destination will remain the same, largely because it has to. There’s no meaningful alternative to decarbonising the economy.

 

[Greg Bobkin]

The rules surrounding the ZEV mandate are probably going to change very soon. Manufacturers are having a tough time trying to reach the quotas required, for numerous reasons...

 

[Audax]

I'm sure there are various reasons for the second hand market collapsing.

1. If new electric car prices are forced down by government policy, then second hand prices drop as well. It's universal that when new prices of any product drop, the second version becomes less attractive unless its price drops too.

2. Technology is improving. Possibly the second hand price drops faster because they reach obsolescence faster than petrol cars.

3. Many people on here have quoted that they would only buy an electric car on lease or because their company is buying it for them. Second hand cars are not as often bought on lease and very rarely bought as company cars, so a lot of the market for new electric cars isn't buying second hand ones.

4. Think of your own. There must be plenty.

1. Won't be having an impact on the second hand market yet. The second hand prices were already struggling to match ICE equivalents well before the rules started, and at the moment the rules are relatively benign compared to what they will be.

2. More likely; but possibly more on the angle that early-adopters of EV aren't interested in second hand due to the tech movement. I'm a prime example. Just grabbed a 3 year salary-sacrifice deal despite considering dipping into 2nd hand for exactly that reason - I want the EV that I buy to own long term to be supported by new tech that I know is just around the corner (eg solid state batteries etc). Add to that there's some horror stories of first-gen EVs appearing on the second hand market with severe battery deg and tiny ranges as a result; a lot of people will have heard those stories and assume they're still true today and thus won't consider a second hand EV, even though a 4-5 year old second hand EV offers exceptional value for money (as a result of the massive depreciation) without any of the first-gen issues. I recently handed back a 4 year old top-of-the-range Zoe that'll sell for less than £10k, and while the battery had degraded a little was still easily capable of hitting 225+ miles range from a full battery.

IMO the big reasons for EV depreciation being so much higher than ICE are a mix of these:

1. Immature technology that's still improving rapidly. Early-adopter types (like me) are therefore playing it safe and cycling through leases on new cars rather than committing to 2nd hand.

2. Early horror stories about battery degradation and replacement costs that live on in memory despite long being obsolete.

3. Higher initial purchase costs (the new tech premium) don't translate to second hand - you write those off immediately the car comes off the forecourt.

4. Continuing paranoia about accessibility of charging infrastructure. It's not perfect yet, but it's also not what it was 5 years ago. 5 years ago there was zero public chargers in Uckfield; we now have 4 locations I can think of off the top of my head, the Electroverse app found 2 more sites I didn't know about, and IIRC there's planning permission for a solar farm + EV charging forecourt on the A22. Beyond that, as an EV owner my eye tends to get captured by charge points even when I'm driving the Prius - so I know that many of the places that are assumed to be no-go for EVs are actually fine (eg Cornwall has been mentioned here). Just need to do a small amount of advance planning.