A tale of the UK market

Andrew provocatively considers whether current car market trends will continue, and what the other options might be

Published:  02 March, 2023

part two

As of 2020, there were 40.35 million vehicles registered for road use, of which 35.08 million were cars, and 4.60 million were LCVs. There is a growing electric segment, but EVs are still far from making up the majority of passenger vehicles. What might happen over the next few years?

Scenario 1 – Mass adoption of pure electric vehicles
Those who get the public to pay for everything they undertake, members of the House of Commons and House of Lords, for example, think they will dictate what is to be done, and thanks to the superior intellect, the masses will “jolly well do what they are told” To this end, the ‘independent’ Environment and Climate Change Committee chaired by Lord Deben, formerly John Selywn Gummer MP, (it’s that man again) produced a report in October 2022 called ‘In our hands: Behaviour change for climate and environmental goals’.
The dream is to get everyone into pure electric vehicles and to use a series of taxation and other measures to encourage adoption. Several issues emerge. Firstly, there is the rate of change of the parc. This runs at between 1.5 and 2.5 million units per year. On this basis, if pure electric vehicles – the politician’s choice – were the same price as all other powertrains with the same type of range, and if there were enough battery power to support that volume of vehicles, no further government intervention would be required. It would take up to 15 years (2038), assuming every single new vehicle sale from now on is pure electric.
However, the ban of new cars and light vans powered by an internal combustion engine after 2030 in the UK or 2035 in the EU and UK when equipped with MHEV, HEV or PHEV powertrains means a much higher change rate than even 2.5 million units per year.
The cost of pure electric vehicles is still typically 40% more than even an internal combustion engine MHEV, HEV or PHEV. Further, due to battery supply constraints, supply is rather limited. The transition also requires users to alter their usage, to plan ahead and thus avoid ‘range anxiety’. The main battleground is charging – not at the usual parking place, but when the vehicle is out and about. The only public charger network that has proven reliability and availability with near-national coverage so far is from Tesla. This all ignores the main issue – the UK does not have enough electricity generation capacity to meet existing demands without an additional 2.5 million-plus cars per year, every year until 2030.
The reality is better battery systems and improved charging systems, including base load electricity generation, will not be in place much before 2035, assuming politicians actually make any decisions from now on. This will mean a half-baked policy, delivered half-heartedly once the politicians see this is a whole lot more difficult than adding a green strip to the number plate.

Scenario 2 – U-turn
There is a huge amount of finance tied up in the vehicle market, so meddling with this is not on the same level as persuading someone to upgrade to a new phone. The political elite will get this message during 2023, as the global recession, which has been underway since 2021, bites deep into consumer spending. Most of the vehicles financed do not have any hybrid drive system, let alone have pure electric powertrains, and yet…
Every single customer who owns a vehicle regards this as their own space. In a modern way, and frankly a huge tragedy in its own right, many people under 40 years old without the right breaks do not get to buy a home, meaning the vehicle really is their world. In effect, whilst Westminster has been excitedly talking to itself about how to get the public to follow its dream, there has been little apart from discussions of bans and ever-increasing taxation.
Could the public simply disobey those who are elected to serve the public? The taxes would fly around, but the gross inefficiency of Big State would mean fines just pile up, unpaid. For those unfortunate enough to live in the physical manifestation of the latest local government thinking – ghettos called ’15 minute communities’ – where residents will be discouraged from using their vehicles in the town or city for more than one-third of the year – will this encourage compliance or lip service?
Nothing the local or national government does delivers believable change, especially when the changes are around the property the policymakers do not own or have paid for.

Scenario 3 - rejection
It is likely the events which saw oil traded in Yuan (backed by gold) instead of the U.S Dollar in 2022 with the alliance of India, Iran, much of Africa, much of South America, Russia and China, will deepen the financial crisis facing the USA, Europe and many other ‘developed’ nations. Such is the pace of events the ‘developed’ economies are now starting to behave like ‘emerging’ economies.
Imagine the unimaginable. The pound becomes, in effect, worthless, and our major trading partners, including the EU27 are in the very same boat. What then? The UK car parc is very real, with each vehicle owned. Setting aside what could happen to the price of petrol and diesel, the UK could keep its economy moving by freezing the move to battery electric vehicles. For those who have pure electric vehicles or who want to buy one, we still have a capitalist economy, and so consumer choice should be respected. The main casualty will be the work outlined by Lord Deben.

What is in all of this for the automotive aftermarket?
From the first two parts of this series, you can see quite a lot of pitfalls, roadblocks and potential disasters – but there are quite a few opportunities as well. That’s what will be explored in the final part of this article.


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