In the UK, the number of anticipated electric vehicle (EV) registrations has been cut in half by the Office for Budget Responsibility (OBR).
The OBR said in its “Economic and Fiscal Outlook,” released in conjunction with the Autumn Statement, that it has nearly halved the number of EV registrations from 67% to 38% in 2027 and now anticipates EVs to make up 18% of sales in 2023, down from 25%.
The OBR notes that the rapid sales increase of recent years, which was driven by early adopters who had typically high incomes, is anticipated to level off in the absence of affordable EVs.
It claims that for consumers who have access to home charging, EVs are less expensive to operate. The financial benefit of charging an electric vehicle away from home, however, is much smaller and may even turn negative, and many drivers appear to be concerned about the accessibility of public charging stations.
Moreover, petrol and diesel prices have declined from the spike in 2022 due to a combination of both wholesale price falls and fuel duty cuts, though they are still high relative to the past, it says.
The Zero Emission Vehicle (ZEV) mandate, which goes into effect in January 2024, is currently the primary policy impetus for the adoption of EVs.
The mandate, which calls for more than a fifth (22%) of vehicles and 10% of vans sold by manufacturers to be electric, is set to take effect in 2019. This was confirmed by the Department for Transport (DfT) in September.
According to the OBR, this led to a revision of its EV assumption to align with the mandate’s trajectory during the projected period.
It continued: “We judge sales are unlikely to materially exceed this across the forecast horizon due to flexibilities that allow trading of allowances and borrowing against future allowances in the first three years of the mandate.
“Furthermore, the Government recently announced a five-year delay on the ban of new ICE vehicle sales, from 2030 to 2035, which may result in some consumers delaying a switch to EVs.”