The UK government is phasing out petrol and diesel new vehicle sales, to accelerate the transition to electric and achieve net zero by 2050. How does this impact the car manufacturers and dealerships?
The rising fear of global warming, and the devastating effect on the environment and the livelihoods of many generations to come are front and centre of the UK’s government policy. The strategic focus on environmental issues and zero emissions has prompted a seismic shift in the car industry, forsaking well-loved traditional fossil fuels in favour of electric vehicles (EVs). This radical transformation is escalating at breakneck speed in terms of switching vehicle production lines, remodelling the business roadmap and preparing the franchisees for a new tomorrow.
The rise of electric vehicles
Electric vehicles gained popularity due to their environmental benefits, reduced operating costs, and government incentives. The advancements in battery technology have significantly improved the range and charging capabilities of EVs, making them a viable option for everyday use. As a result, the demand for electric vehicles has surged, and major car manufacturers are investing heavily in their EV offerings.
Consumers are increasingly prioritising sustainability and are attracted to pure electric vehicles due to their negligible carbon emissions. The rising awareness about climate change and the need for eco-friendly transportation has prompted many drivers to switch to EVs.
Balancing the model mix
The electric revolution has been a rollercoaster ride for car manufacturers across the world, trying to keep pace with consumer demand and changing governmental priorities. Undoubtedly, the next ten years will be very challenging, as manufacturers strive to balance the model mix, so they can fulfil the mounting order bank for EVs and satisfy the die-hard fossil fuel drivers.
Many car manufacturers had already committed to the mass production of hybrid and electric-only ranges based on the government’s previous 2030 policy, ultimately driving the prices of greener vehicles down. Meanwhile, prices of petrol and diesel models are likely to rise due to their limited availability and extended lead times.
In September of 2023, the prime minister delayed the ban of new internal combustion cars until 2035, causing yet more confusion and consternation for the manufacturers and frustration for the dealer networks. Now that the pressure is off motorists to switch to electric, the surge in EV new car sales has understandably eased.
The delay in the ban brings the UK into line with the European Union, which is also prohibiting sales of new petrol and diesel cars by 2035.
The UK Government is supporting the roll-out of EVs
The government’s EV roll-out includes backing the expansion of the charging infrastructure to support the rising number of EVs on UK roads, creating robust zero-emission vehicle supply chain networks, and providing alternative sustainable transport methods to ensure greenhouse gas (GHG) emissions are reduced, as outlined in the Net Zero Strategy.
From 2035 no new conventional petrol or diesel cars will be sold in the UK, meaning that all new cars after that deadline will be zero emission.
In addition to government support, the private sector is actively participating in the expansion of the UK’s EV charging infrastructure. Key players in the market are investing in the development of innovative charging solutions such as ultra-fast charging hubs, wireless charging systems and advanced battery technologies.
New restrictions for manufacturers*
From January 2024, car manufacturers will be forced to meet strict quotas for the sales of electric cars, despite the ban on sales of new petrol and diesel vehicles being deferred. The government’s mandate requires car makers to ensure that 22% of new vehicles sold are electric, this will rise year on year and is expected to reach 80% by 2030. Failure to hit the objective will result in substantial fines (£15,000 per car and £18,000 per van) for the shortfall in EVs sold. Manufacturers selling fewer than 2,500 vehicles per year will be exempt.
There is a positive clause to this mandate which allows car makers to purchase credits from other manufacturers that exceed their EV mix. This ‘free trade’ allowance will be in place until 2026 and will make the objective far easier to achieve, at least for the next two years.
*Source: Car Dealer Magazine
The rise of electric vehicles has disrupted the traditional business model of car dealerships. Unlike internal combustion engine models, electric vehicles require less maintenance and have fewer mechanical components. This change poses a sizeable challenge for car dealerships, as they rely heavily on revenue generated from service and repairs.
Car dealerships play a crucial role in the sale and distribution of vehicles. However, with the increasing adoption of electric vehicles, their role is evolving. Dealerships now need to become knowledgeable about electric vehicle technology, charging infrastructure, and government incentives. They must invest in training their sales teams to effectively educate and assist customers in making informed decisions. Furthermore, dealers should establish a seamless customer experience by providing test drives, assisting with charge point installation and offering comprehensive after-sales support.
While the shift to electric vehicles presents challenges, it also offers numerous opportunities for car dealerships. Dealerships can embrace EVs by investing in charging infrastructure on their premises, providing customers with a convenient charging experience. They can also offer specialised services such as EV maintenance, repairs and battery replacements.
TSG leading the charge
The government’s policy toward transport decarbonisation is driving public demand for a practicable charge point network, to keep pace with the growing number of EVs. Without a robust infrastructure, the ambitious plan to hit net zero by 2050 will undoubtedly stall.
It is critical for car dealerships and vehicle manufacturing plants wishing to provide charge points on site, to partner with a reputable supplier that can effectively project manage the entire installation.
TSG is leading the way in establishing a charging infrastructure capable of safeguarding the future of EVs across the UK. With over 20 years of experience in the industry, TSG has the expertise to provide a scalable and practical solution for any size of operation, leveraging the characteristics of the site to maximise the opportunity.
TSG is now established as the UK’s first-choice engineering, procurement and construction (EPC) contractor and has the expertise to provide a complete end-to-end turnkey EV charge solution, from site survey, design, consultancy and distribution network operator (DNO) connections.