In part 1 of this series, Andrew Marsh, FIMI, Engineering Director, discussed some of the background to the UK vehicle market, especially the policies which are shaping it now. There can be little doubt the effects are profound. In part 2, he delves a little deeper.
As of 2020, there are 38.6 million vehicles registered for road use, of which 31.8 million are cars, and 3.8 million are LCVs.
Scenario 1 – Mass adoption of pure electric vehicles
Those who get the public to pay for everything they undertake (members of the House of Commons and House of Lords, for example), think they will dictate what is to be done, and thanks to the superior intellect, the masses will ‘jolly well do what they are told’. To this end, the ‘independent’ Environment and Climate Change Committee chaired by Lord Deben (formerly John Selwyn Gummer MP) produced a report in October 2022 called “In our hands: behaviour change for climate and environmental goals”.
The dream is to get everyone into pure electric vehicles and to use a series of taxation and other measures to ‘encourage’ adoption. Several issues emerge:
- The rate of change of the parc runs at between 1.5 and 2.5 million units per year. If pure electric vehicles – the politician’s choice – were the same price as all other powertrains with the same type of range, and if there was enough battery power to support that volume of vehicles, no further Government intervention would be required – it would take up to 15 years (2038) to completely change the parc, assuming every single new vehicle sale from now on is pure electric.
- However, the ‘ban’ of new cars and light vans powered by an internal combustion engine after 2030 in the UK or, 2035 in the EU and UK when equipped with MHEV, HEV or PHEV powertrains, means a much higher change rate than even 2.5 million units per year.
- The cost of pure electric vehicles is typically 40 per cent more than an internal combustion engine MHEV, HEV or PHEV. Further, due to battery supply constraints, supply is rather limited using existing lithium-ion battery technology, for example.
- The transition requires users to alter their usage, to plan ahead and thus avoid ‘range anxiety’. The main battleground is charging – not at home or work, but when the vehicle is out and about. The only public charger network that has proven reliability and availability with near-national coverage, so far, is from Tesla.
- This all ignores the main issue – the UK does not have enough electricity generation capacity to meet existing demands without an additional 2.5 million-plus cars per year, every year until 2030.
The reality is better battery systems and improved charging systems, including base load electricity generation, will not be in place much before 2035, assuming politicians actually make any decisions from now on. This will mean a half-baked policy, delivered in a half-hearted way once the politicians see this is a whole lot more difficult than adding a green strip to the number plate.
Scenario 2 – U-turn
There is a huge amount of finance tied up in the vehicle market, so meddling with this is not on the same level as buying a new phone. The political elite will get this message during 2023, as the global recession, which has been underway since 2021, bites deep into consumer spending. Most of the vehicles financed do not have a hybrid drive system, let alone a pure electric drive system, yet…..
Every single customer who owns a vehicle regards this as their own space. In the modern way, and frankly, a huge tragedy in its own right, many people under 40 years old without the right breaks don’t get to buy a home, meaning the vehicle really is their world. In effect, whilst Westminster has been excitedly talking to itself about how to get the public to follow its dream, there has been little output apart from discussions of bans and ever-increasing taxation.
Could the public simply disobey those who are elected to serve the public? The taxes would fly around, but the gross inefficiency of Big State would mean fines just pile up, unpaid. For those unfortunate enough to live in the latest local government thinking ghettos called ’15-minute communities’ – where residents will be discouraged from using their vehicles in the town or city for more than one-third of the year, will this encourage compliance or lip service?
Nothing the local or national government does delivers believable change, especially when the changes are around property the policymakers do not own or have paid for.
Scenario 3 – rejection
It is likely the events which saw oil traded in Yuan (backed by gold) instead of the US dollar along in 2022 with an alliance of India, Iran, much of Africa, much of South America, Russia and China will deepen the financial crisis facing the USA, Europe and many other ‘developed’ nations. Such is the pace of events the ‘developed’ economies are now starting to behave like ‘emerging’ economies.
Imagine the unimaginable. The pound becomes, in effect, worthless, and our major trading partners, including the EU27, are in the very same boat. What then?
The UK parc is a very real asset, with each vehicle owned. Setting aside what could happen to the price of petrol and diesel, the UK could keep its economy moving by freezing the move to battery electric vehicles. For those who want to buy or already have a pure electric vehicle, we are still a capitalist economy, therefore, consumer choice should be respected.
The main casualty will be the work outlined by Lord Deben.
What is in all of this for the automotive aftermarket?
From the first two parts of this series, you can see quite a lot of pitfalls, roadblocks and potential disasters – but there are quite a few opportunities as well. That’s what will be explored in the final part of this series.
