How the energy crisis ran electric cars off the road

Steep charging costs, coupled with range anxiety, make it more difficult to persuade motorists to switch to an EV,

After five years of use, Bethan Vincent has been looking to trade in her blue, 999cc Skoda Fabia for a newer model. Like many drivers, she had expected her next car would be electric given her concern for the planet.

But the cost of living crisis and soaring energy prices have made her think twice. “The rise in domestic energy has definitely changed my thinking from last year,” says the 32-year-old.

The marketing executive’s gas costs have “skyrocketed”, squeezing her budget. The lack of charging points in rural Yorkshire has also made it difficult to justify buying a battery-powered car.

Vincent is not alone. Across the country, many drivers are rethinking whether to go electric. Last month Auto Trader reported that fewer than one in five car buyers were hunting for an electric vehicle in November, down from 27pc in June. Demand for electric cars was falling for the first time since the pandemic, declining 12.6pc over the last 12 months.

Interest is waning because of the energy crisis. Higher wholesale gas prices have driven up electricity prices, making it dearer to charge an EV. Higher household energy bills are also contributing to soaring inflation, triggering a cost of living squeeze that makes the up-front cost of an electric car unaffordable for many. And higher interest rates, triggered by the energyfuelled inflation spike, have cut off the supply of cheap money that had helped to propel the growth of the EV industry.

Yesterday there were fresh questions for the sector after Britishvolt, an EV battery maker, announced its intention to appoint administrators. The start-up company had failed to raise cash to fund a battery plant in the North East. As one of Britain’s flagship gigafactory projects falters, ambitions are being downgraded. The state-backed Advanced Propulsion Centre predicts the UK will build about 280,000 electric cars and vans in 2025, down from earlier hopes of about 360,000.

While recent figures for registrations from the Society of Motor Manufacturers and Traders suggested that a third of new UK car registrations were electric in December, Marc Palmer, brand director of Auto Trader, says the boost could be temporary.

“Those vehicles in December were often ordered by consumers in the summer, who waited six to nine months for them to arrive,” he says.

Flagging demand across Europe prompted electric car makers to cut prices in a bid to boost sales. Tesla has knocked about £7,000 off the UK price tag of its entry level Model Y.

As recently as 2021, the auto industry believed it was on the cusp of a great EV revolution. Manufacturers were ramping up electrification in anticipation of a boom in demand from drivers, motivated by cheaper running costs and a desire to go green.

However, the cost of living crisis meant car sales did not take off in 2022 as many had hoped. Many people pay for their new cars on financing deals, Palmer says, and surging interest rates have made these offers less attractive.

Electric cars are more expensive upfront than a petrol car, with Auto Trader estimating that the average electric vehicle is 36pc more expensive than a petrol equivalent.

While more environmentally conscious, affluent buyers have made the switch, rising living expenses are expected to put off middle-income households from investing in an EV.

“Sales haven’t increased as quickly as expected in the last six months,” says Prof David Bailey, of Birmingham Business School. He says supply constraints because of the chip crisis have weighed on sales and he expects sales will ultimately recover “even with the increase in electricity prices”. But the “up-front cost puts people off ”.

Electric cars are supposed to be cheaper to run than their fossil fuel-dependent counterparts. For many EV drivers, it has come as a shock that their running costs are currently rising. Many switch to electric as a way to avoid the price of filling up a petrol or diesel vehicle.

“For the past two or three years, I’ve always firmly thought my next vehicle would be electric,” says Connor Jewiss, who reviews cars and works at jobhunting app Phavour. “That opinion has started to change.”

His recent experience of charging an EV at a public point was one “I would not like to suffer again”, he says, after waiting an hour for a charger to become free. He estimated the cost worked out to be about the same per mile as a petrol car when charging at a public point.

According to data from motoring body the RAC, the price of charging an electric car at a public point has surged almost 60pc in the last eight months.

Rapid charging points, often used by motorists who do not want to wait around for a battery top-up, are as much as £10 more expensive than filling up a car with petrol.

The RAC found it cost an average of 70.32p per kilowatt hour to rapidcharge an EV, up 58pc from May. Charging an average car on a public network worked out at £92.69, more expensive than filling a 55-litre petrol car, at £83.03. The RAC says this is in part because public chargers include VAT, at 20pc, compared with a 5pc VAT charge on domestic use. Charging an electric car at home is cheaper than at the pumps, but is not practical for people without private parking.

As the cost of charging electric cars is rising, the price of petrol is falling. Petrol has dropped from a high of around £2 per litre last summer to around £1.50, further challenging the economic logic of going electric.

Palmer says: “The principle saving of an electric vehicle is falling.”

Concerns over charging costs add to existing worries about range anxiety and infrastructure for filling up.

The Government’s recent announcement that it would make electric cars subject to road taxes from 2025 has raised eyebrows in the industry. The change chafes with the Government’s plans to ban new petrol car sales by 2030, threatening a crunch point for adoption as drivers stick with petrol for as long as possible.

‘The rise in domestic energy has definitely changed my thinking’

‘Sales haven’t increased as quickly as expected in the last six months’