By Alex Lewis-Jones, Senior Analyst at Delta-EE
Whisper it quietly, but the electric vehicle (EV) market seems to have emerged from the COVID-19 pandemic relatively unscathed. But is it unchanged? Any discussion of the burgeoning EV revolution must account for charging locations and behaviour, and the pandemic has seen many of us alter our movement patterns due to lockdown restrictions. How has this changed the equation for the EV outlook?
No place like home
Home charging remains the most cost-effective place for EV owners to charge their vehicles, if they can. In that respect, erstwhile driver-commuters stuck working from home during the pandemic will have saved money – both because of fewer miles driven and the fact that all charging will be at home. Many would also have been helped even further by extremely low power prices seen this spring.
This sunny outlook is reflected in EV sales: so far, EV demand has proved resilient through the pandemic. In April and May, the Tesla Model 3 was the biggest selling car in the UK, causing much celebration.
The crucial caveat here is that the process of buying an EV is different: many of those buyers would have been on the waiting list for years, so their decisions can be said to predate the pandemic. The other counter argument is that drivers considering a switch to electric might hesitate if they anticipate a future of home working. EVs are typically more expensive to buy but cheaper to run – our research shows average fuel costs are 61% cheaper. If the commute is out of the equation, those attractive running costs become less significant relative to the purchase price.
That said, we expect home charging to remain a major driver of EV uptake in the future. Even if workers cut office days from five to two or three, the environmental and status attractions of an EV remain, and those buying electric models today still often tend to be higher income buyers who can afford to prioritise those aspects.
This will be supported by the steady growth of EV-specific home energy tariffs. Perhaps surprisingly, our research found that many EV owners don’t actually save money on these tariffs versus market-leading conventional tariffs, based on current usage. However, the British Gas EV tariff did prove a money saver, and we can expect this currently niche market to heat up over time, making home charging even more attractive.
Back in business?
What about workplace charging? Other than home, the place that a vehicle stays stationary the most is in the office carpark. Coupled with the growth of depot-based electric vans, workplaces have become an attractive place to put charging infrastructure. Employees can charge while they work, employers can demonstrate their green credentials, and charging providers can make lucrative long-term sales.
Has COVID rocked the boat here? My feeling is that it may have delayed some investment decisions, and probably seen some plans scaled back to be less ambitious, but that the overall direction is unchanged. If a company was set to install 20 charge points, they may still go ahead with five – we’re not all working from home, after all.
We expect workplace charge points (for employees and depot fleets) to outnumber public charge points in the next few years. They boast the advantages of convenience and a captive user-base, and their investment is not reliant upon achieving high rates of return for the network operations.
Public charge points have always been the paradox at the heart of the EV roll-out. On the one hand, we expect far more charging will actually be done using both home and work charge points. On the other, they are fundamental to wider EV uptake.
Public charge points make EVs viable for more than the commute. From the charge banks at the supermarket, to on-street charge points, to petrol-station style fast charging infrastructure, they are what will become a joined-up nationwide network.
Nor should we underestimate the psychological effect of conspicuous public charging infrastructure. Range anxiety and charging availability remain some of the greatest barriers to EV adoption. As the public gets used to seeing more and more infrastructure around them, those barriers gradually breakdown. Even better, if clusters of collocated rapid chargers can replicate something like the ‘petrol station experience’, then EVs suddenly become much more familiar and easier to choose.
Putting aside the short-term effects of the pandemic, we don’t expect the overall mileage of UK drivers to drop significantly any time soon, so really, no variables in this equation change. Yes, COVID has made life difficult for all sorts of businesses, but we should remember that the CPOs making these investments are typically pre-profit ventures running on investor money anyway. They are making long-term bets and short-term volatility is unlikely to make the difference.
Cause for optimism?
For the EV charging market, location is everything, but ultimately there is room for a variety of players and business models. Home, workplace and destination charging will dominate when it comes to units in the ground, but faster public charging infrastructure will also be vital in supporting wider adoption. It is these fast charging hubs that we expect to see the greatest energy consumption of all infrastructure. In the short-term, COVID-19 may represent a speedbump – with less enthusiasm for capital outlays at a difficult time – but it doesn’t force a change of direction.
In fact, there are new causes for optimism all the time. Highways England, for example, has just launched a scheme where diesel van drivers can ‘try an EV before they buy’ in a bid to boost commercial uptake. Bearing in mind this is the agency responsible for roads, not the environment, you see the breadth and weight behind the EV push. There may also be rich opportunities for the much vaunted ‘green jobs revolution’ in charging infrastructure and reskilling from traditional automotive industry jobs.
Ultimately, there are something like 20-30 million parking spaces in the UK across homes, business and the public realm. Behind each and every one of them there is a decisionmaker who has to decide whether to enhance that asset with electric vehicle charging. Some may never have joined the EV revolution anyway, some may decide against investment because of the pandemic and associated economic fallout, but many will press ahead with plans all the same.