UK drivers reveal £20,000 and under as price ‘sweet spot’ for electric vehicle switch has been saved
UK drivers reveal £20,000 and under as price ‘sweet spot’ for electric vehicle switch
18 January 2021
- 42% of drivers budget £20,000 or less when considering electric vehicle switch;
- One in five drivers delayed planned vehicle purchase as a direct result of COVID-19 pandemic;
- Younger drivers more than twice as likely as older generations to have deferred car financing repayments in 2020; and
- One in ten drivers are still interested in making their next vehicle purchase battery electric, but pandemic uncertainty drives up interest in traditional petrol and diesel engines.
42% of UK drivers seeking to switch to a fully electric vehicle look for a purchase price of £20,000 or below, according to Deloitte’s latest Global Automotive Consumer Survey. The research, based on responses from more than 1,500 driving-age consumers in the UK, reveals price point remains a key consideration in the switch to electric, opening up an opportunity for the used car market to accelerate electric vehicle adoption in the UK.
Jamie Hamilton, Head of Electric Vehicles at Deloitte, said: “The structure of most car financing products means that the lifecycle of a brand new car entering the used car market is typically around three years. With many UK drivers poised to switch to electric but remaining cost conscious, it’s likely we’ll see the secondary market for EVs mature over the next few years to attract these consumers.”
Whilst lower fuel costs ranked the highest decision-making factor for drivers wanting to move to electric, current upfront costs remain a sticking point.
Hamilton continued, “Realising the longer-term financial benefits that electric vehicles can provide would certainly encourage more drivers to switch; many of whom could otherwise be deterred by upfront costs, overlooking the total cost over a vehicle’s lifetime.”
Lingering concerns over infrastructure
Whilst Deloitte’s research found that around one in ten drivers are still interested in making their next vehicle purchase battery electric, it also reveals some lingering doubt with a quarter of drivers stating a lack of charging infrastructure as a top concern.
Hamilton said, “Electric vehicles are an increasingly viable option for consumers, many of whom are influenced by financial incentives as well as climate and emissions concerns. However, for EVs to integrate further into everyday life, greater accessibility to charging points is still required. Ensuring a joined-up approach and continued investment in the infrastructure is key to support growing demand.”
Whilst battery electric vehicles grew their market share to 6.6% in 2020, the survey found that consumer interest in petrol and diesel crept up, with 54% indicating they would prefer a traditional engine compared to 48% last year.
Hamilton continued, “Uncertainty brought about by 2020’s pandemic has, understandably, seen some consumers revert to what they know. Whether this is a short-term, reactive change remains to be seen but the trend appears to be at the expense of hybrids, which have bridged the gap between combustion engines and fully electric to date.”
Pandemic divides generations of drivers
The survey reveals that 27% of drivers aged 18-34 have requested a payment deferral on car financing in 2020, indicating that younger drivers have been harder hit by the financial implications of the COVID-19 pandemic. This compares to 13% of drivers aged 35-54, and just 1% of those aged 55 and above.
Nathan Thompson, automotive director at Deloitte said: “The pandemic has had a diverging effect on different generations of drivers, and the same can be said of car financing. Our study shows that the youngest drivers are at least twice as likely to have deferred on car repayments as older generations. With the UK’s youngest workers also impacted most by COVID-19 job disruption, recovery of the jobs market could be key for the ability of younger drivers to meet payments in future.”
The pandemic has also had a knock-on effect on purchasing plans, with one in five drivers having delayed their next vehicle purchase as a direct result of COVID-19. Reasons for purchase has similarly shifted in this period, with social distancing cited as a requirement for 18% of potential vehicle buyers.
Hamilton concluded: “2020’s car sales were down by 29% compared to the previous year. With lockdown measures in place and planned purchases pushed back, the industry has started 2021 in challenging circumstances. However, there is optimism for the rest of the year, when consumers can, once again, return to dealerships.”
About the research
The Global Automotive Consumer Study is an annual survey exploring consumer attitudes towards new automotive technology. The study, of driving-age consumers, is fielded in 23 countries and designed to be nationally representative of the overall population in each market.
The 2021 study includes more than 24,000 consumer responses across 23 global markets. The UK sample size was 1,521.
In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.
Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.
Deloitte LLP is a subsidiary of Deloitte NSE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.
The information contained in this press release is correct at the time of going to press.
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