What’s going wrong with UK EV prices?

Last week we attempted to debunk the idea that ‘new cars are too expensive’. We showed that when accounting for inflation average new car prices weren’t nearly as bad as people perceived.

Despite this our LinkedIn poll showed we hadn’t changed anyone’s mind. An overwhelming 75% still felt new cars are too pricey. Where did we go wrong? Was it that most new cars advertised are electric, meaning people’s perceptions of car prices are all based around EVs? I think we might be on to something…

So, are they right? If we look at just EVs in the UK are prices too high?

My opinion of EVs in the UK is they’re treated almost like a trim level, sitting at the top of the range. Like a price walk going from ICE (Internal Combustion Engine) to Hybrid (Mild/Full/Plug-In) and then at the top of the pile BEV (Battery Electric Vehicle). So why are brands treating electrification like this when it’s being driven by legislation and not status.

When Toyota Motor Corporation & Nissan Motor Corporation started to electrify the world, their cars weren’t perceived as status symbols. More as quirky statements for individuals who thought differently. Only when Tesla arrived did ‘status’ start to become associated with EVs. I wondered have brands capitalised on this?

I then came across a post on Linked In from the amazing JATO Dynamics promoting their May 2022 report ‘Electric Vehicles: A Pricing Challenge 2021’. The report compares European, US & Chinese EV markets and the findings are fascinating.

China is well known for leading the way with EV adoption. As far back as 2010 the Chinese government were pumping significant incentives into EVs as part of a ‘war on air pollution’ and it’s left the country in a strong position as a world leader in the tech.

Unlike the US & Europe where EV prices are increasing, in China they’re dropping with an amazing 47% decrease in average EV prices over the last 10 years according to JATO. Why? Well in the US & Europe the focus is all about premium EV models, in China it’s popular cars with affordable pricing. It’s made them more accessible and grown sales.

So that takes us right back to the UK. Our fixation with premium means EVs were 52% more expensive than the average ICE car, according to JATO. That’s €17,200 extra! It’s the 2nd biggest price jump among the top 5 EV markets in Europe. So do we want or need this? And what’s driving it?

Positioning EVs this way is creating an ongoing problem. People, quite rightly it would now seem, perceive these new cars as too expensive. As JATO says ‘There is an urgent need for the industry to focus on affordable EV models that reflect consumer demand.’ But change is on its way with new EV brands from China as highlighted in our blog last week. And just last week the All-New MG Motor Europe MG4 EV arrived to great applaud from a very reasonable £25,995.

Maybe the dawn of the affordable EV is on its way?

If you work within automotive, be it a retailer or at brand level, we’d love to understand your view and talk to you about the future of auto retailing. Why not schedule a FREE 30-minute assessment today here? It will be well worth your time.

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