EV Model Choice Remains Limited

During the first quarter of the year, three new electric car models were introduced to the UK market. These include the Jeep Avenger, an SUV priced at a recommended retail price of £35,000, the BYD Atto 3, starting at just over £36,000, and the Rolls Royce Spectre, a luxurious coupe with a starting price exceeding £320,000. With the introduction of these models, the total number of electric car options available for purchase in the UK has now reached 77.

Although the gap between electric vehicles (EVs) and petrol/diesel models has narrowed, there are still significantly fewer EV models available in the UK. In fact, the number of EV models is currently only a quarter of the number of traditional combustion engine vehicles. However, throughout 2023, this gap is expected to decrease as more electric models enter the market.

Affordability remains an issue, with only 11 models available for purchase under £30,000 Despite the launch of three new electric models in the UK during the first quarter of 2023, including one with a price tag exceeding £320,000, the availability of affordable EVs has not improved.

In fact, the number of new electric models priced under £30,000 has decreased from 12 at the end of 2022 to 11 by the end of March. As a result, the gap between affordable electric cars and internal combustion engine (ICE) cars has widened. Currently, there are 98 ICE cars available for under £30,000, making the ratio of available options 9:1.

This lack of affordable choices further reinforces the belief held by many consumers that EVs are predominantly for the wealthy. However, there are encouraging indications that established players in the automotive industry, such as Volkswagen with the ID.1 and Tesla with the Model 2, are aiming to enter the lower-priced EV market segments.

Despite the upfront cost remaining one of the major obstacles to adopting electric cars, new EVs are still approximately 37% more expensive than equivalent ICE vehicles. This price gap has remained relatively stable over the past six months.

Reports suggest that the increase in prices can be attributed to higher lithium-ion battery pack costs, which experienced a 7% rise in 2022—the first increase in over a decade [1].

Based on recent trends, it appears that achieving price parity between EVs and ICE vehicles will likely occur after the middle of the decade. However, there are indications that lithium prices are now starting to decline from their record highs, which should result in lower upfront prices for electric cars.