Carmakers put brakes on EV production as costs soar

Manufacturers poised to slash number of electric vehicles they roll out to focus on budget models

CARMAKERS plan to slash the number of electric vehicles they manufacture as the spiralling cost of battery-powered models makes them increasingly unaffordable for drivers, an industry body has warned.

The Advanced Propulsion Centre (APC), a green energy group that sits between government and manufacturers, has slashed its estimate for UK EV production in 2025 by a quarter after just three months.

The APC now expects the UK to make 280,000 electric vehicles in 2025, down from a recent estimate of 360,000.

The organisation blamed the downgrade on “an uncertain economy [that] is expected to drive buyers towards cheaper models”. Manufacturers are therefore likely to opt to build budget cars instead.

Electric cars are about £10,000 more expensive than petrol equivalents, but with lower running costs, including servicing since there are fewer moving parts. If enough miles are driven over the life of the car they can be cheaper.

However, drivers are beginning to turn away from EVS as electricity prices remain elevated and fuel costs fall back from the highs of last summer.

Petrol prices are now at their lowest level since Russia’s invasion of Ukraine last February.

Average pump prices fell to 149.7p per litre yesterday, according to the AA, down from a high of 191.5p in the summer. The drop squeezes the advantage electric cars have over petrol cars when it comes to cost per mile.

The APC said other factors behind its forecast downgrade include delayed investments and lingering supply problems for some components, such as computer chips. The UK automotive industry is preparing for a ban on petrol and diesel-only car sales in 2030 and a ban on hybrids five years later, but so far the transition for many manufacturers has been slow.

While Nissan has its own “gigafactory” in Sunderland, and is building a second battery plant with China’s Envision nearby, rivals such as Jaguar Land Rover, Toyota and Mini are yet to build their own battery plants in the UK.

Mini has announced plans to shift production of its electric models from its Oxford plant to China in a blow to the UK’S auto industry.

Yesterday, BMW, which owns brands including Mini and Rolls-royce, said its production of battery-powered cars doubled to 215,755 last year, or about 9pc of the 2.4m cars it made.

The all-electric Mini Cooper SE was the most popular Mini model, with 43,744 sales.

Rival Mercedes, which made 2m cars last year, said 117,800 of them were purely electric, an increase of 124pc. However, these plug-in models are still just 5.8pc of total production.

While the Advanced Propulsion Centre downgraded forecasts for the UK, it left European production for battery cars and vans unchanged. The Continent will make 4.8m of these vehicles in 2025, it estimates.

The APC forecasts that 12m battery cars will be made in Europe in 2030, while the UK will make 1.17m EVS.

Pricey lithium, as well as the darkening economic outlook, mean carmakers could be drawn towards green alternatives to battery-powered cars such as hydrogen vehicles, the report said.

British engineering giant Johnson Matthey ditched battery development just over a year ago and decided to focus on hydrogen technology as it struggled to keep up with developments made by incumbent firms in Japan and Korea such as Panasonic and LG.

Hadi Moztarzadeh, head of technology trends at the APC, said: “We must work hard now to apply innovations to real-world scenarios, build and invest in the UK supply chain to support the electric vehicle manufacturing industry.”

Pieter Nota, a BMW executive, said: “We are confident we can build on this success in 2023, as we continue to see particularly high order intake for our fully electric models.”