03/02/2025
Data published on the website of the Society of Motor Manufacturers and Traders (SMMT) shows that sales of Battery Electric Vehicles (BEVs) in the UK for 2024 hit record levels. UK sales of BEVs formed 19.6% of new care registrations in 2024, helped by a surge in December. Although the 19.6% sales figure for the year is less than the 22% headline target for sales of zero emission vehicles in 2024 set down in the UK Government’s Zero Emission Vehicle (ZEV) mandate, flexibilities in the rules governing the ZEV mandate have so far allowed car manufacturers to avoid hefty fines of £15k per vehicle sold over the ZEV mandate target.
However, a concern is that the majority of new BEV purchases in 2024 were made by businesses rather than private buyers. With the headline target for new car sales of zero emission vehicles under the ZEV mandate increasing to 28% in 2025, 80% in 2030 and 100% in 2035, sales to private buyers will need to increase to avoid car manufacturers potentially facing large fines for failing to meet the target.
What could be the reasons for the relatively slow uptake in sales of new BEVs to private buyers?
Purchase price of new BEVs:
- The higher purchase price of new BEVs compared to their Internal Combustion Engine (ICE) equivalents is a factor. Discounts offered by car manufacturers on the purchase price of new BEVs may have lessened this concern for now. Cost reductions in BEVs and their components would be expected to occur as BEV technology matures and/or due to economies of scale arising from BEVs progressively increasing their market share. It will be interesting to see whether these cost reductions can keep pace with the ZEV mandate and reduce the pressure on car manufacturers to discount new BEVs.
Costs of ownership:
- Car insurance for BEVs is often perceived to be higher than for an ICE equivalent vehicle. Insurance comparison website data from April 2024 referred to the median insurance premium cost for an electric vehicle policy being higher than the median insurance premium cost for all vehicles. However, this comparison may be unfair as the “all vehicles” data will encompass car models which do not have a BEV equivalent. A more accurate picture would be obtained by looking at insurance premiums for BEV models which also have a corresponding ICE equivalent.
- Repair costs can also be higher for BEVs. Indeed, this is one of the reasons often given for higher insurance costs. That said, the reduced number of moving parts in a BEV compared to an ICE equivalent vehicle should make it less likely for faults to occur.
What are possible reasons for the higher repair costs and how can these costs be reduced?
As the technology employed in BEVs is relatively new and the result of significant research & development expenditure, the costs of replacement parts may be set at a correspondingly high level. Also, when something does go wrong with a BEV (whether due to a fault or a road traffic accident), it may not be as simple as replacing one or more discrete mechanical components in which each component performs a single function. Instead, repair of a BEV may require replacing an electronic module containing electronics and processors controlling multiple functions of the vehicle. Repair tasks also require technicians with appropriate expertise and experience.
How might costs be reduced?
Some of the costs discussed above will naturally reduce as uptake of new BEVs increases and as the technology employed becomes more mature.
Advancements in vehicle design could also help to reduce costs. For example, by designing electronic modules for vehicles which can more easily be repaired instead of replaced.
Potential future developments in BEV design:
The world of BEV design never stands still. Innovations continue to be made on reducing charge times for vehicle batteries and increasing vehicle range.
One area of innovation is for BEVs employing Structural Batteries – essentially, where a battery pack is designed to function as a load bearing component of a BEV in addition to being a source of electric power. By way of example, research at Chalmers University of Technology in Sweden developed a battery concept using carbon fibre for the battery electrodes, with the carbon fibre providing strength and rigidity.
With thoughtful design, structural batteries have the potential to reduce the costs of ownership for a BEV as well as other advantages. For example, structural batteries may allow for the weight of a BEV to be reduced in view of the battery performing dual functions of acting as a power source and a load bearing component for the BEV. The reduced weight would have advantages of increased range for a battery of a given capacity, plus reduced tyre wear and loads on suspension components of the vehicle. Of course, care would need to be taken to ensure that the integration of the battery pack (or perhaps even multiple battery packs) as a load bearing part of the vehicle’s structure does not increase repair costs, or make repair economically or technically unviable. Care would also need to be taken to ensure that recycling at the end of vehicle life remains viable. As a general point applicable to all BEVs, with battery packs being the most costly part of a BEV, any developments which improve the recyclability of battery pack materials may also help in reducing raw material costs for manufacturing new battery packs.
It will be fascinating to see what innovations occur in the field of BEV design and to what extent they help to incentivise private buyers to make the switch to BEVs. Certainly, it remains an area ripe for innovation and the development of valuable new intellectual property (IP).
This article is for general information only. Its content is not a statement of the law on any subject and does not constitute advice. Please contact Reddie & Grose LLP for advice before taking any action in reliance on it.
