EV Index from Sophus3

2022 Q2

The EV Index from Sophus3 provides an objective measure of the readiness of the vehicle market to enable and encourage the mainstream adoption of electric vehicles (EVs).

The index is formed from three pillars, each measuring distinct factors that help or hinder electric vehicle acquisition. First of these is the consumer appetite to buy electric, the second is the capability of the automotive companies to supply these cars, and the third is the availability of suitable charging infrastructure.

A score of 100 represents parity in the attractiveness, availability, pricing and usability of an electric car compared with a conventionally fuelled  vehicle.

We publish the EV Index for the UK, Germany, France, Italy, Spain and Norway.

A fuller explanation of  the EV Index from Sophus3, and links to previous issues, can be found here.

Overview

Despite economic headwinds and continuing reversals in the new car marketplace, the EV Index showed gains in all of the largest EU markets in the second quarter of the year. One of the drivers of this was the levels of consumer interest in electric cars which improved in most markets. Our online data shows EV models (which have increased in number over the last 12 months) are in the consideration set of a growing number of consumers with people more ready to browse from ICE to view EV alternatives. We are also seeing that the audience looking at EVs are considering fewer ICE alternatives than previously, suggesting they have less doubts that an electric car is capable of meeting their needs.

The affordability of EVs, or lack thereof, remains the strongest negative factor that is holding back progress across all markets. Component shortages have meant that manufacturers continue to husband their limited supply of semiconductors and use them in higher-priced models and higher margin derivatives. This has further worsened the price differential between ICE (internal combustion engine) cars and their electric alternatives. During the last quarter our detailed analysis of the pricing of the top 10 selling models of each powertrain in the Big 5 shows that the EVs cost, on average, 1.7 times as much as the best selling petrol and diesel models. Despite improvements in the total cost of ownership, and the communication of this, the finance deposit alone can be a hurdle that many potential EV customers are not yet able to overcome.

By contrast, Norway, where a harsh fiscal regime has long ensured something closer to price parity, the balance in sales has shifted irreversibly towards electric power. (BEV’s accounted for 79% of all new car registrations in Norway in June.)

Even so, whilst EVs were generally more expensive, and the car market across Europe was significantly reduced in size compared to even one year ago, the share of BEVs within the total was up yet again. In Europe (EU+EFTA+UK) during the first half of the year sales of pure electric cars were up 32% compared to the same period in 2021 whilst as a whole, the car market was down 14%.

However, there are no immediate signs of the problems of supply abating. The dominant and pessimistic industry view about the semiconductor shortage is that ‘the situation is likely to persist far into 2023’ suggesting that pricing differentials will continue and most likely worsen.

This may be further exacerbated by the actions of governments. The UK Government announced in June that it was scrapping the plug-in grant for electric cars that had been in place since 2011. In Germany, the finance minister in the coalition government has also called for an end to e-car subsidies.

Whilst the relevant industry associations were predictably unhappy at these moves, the argument to end the grants is difficult to counter. With demand exceeding supply, these often quite large subsidies are, at present, producing no incremental sales of EVs and therefore failing to generate any of the environmental benefits that they were designed to encourage. In the current market a grant represents little more than a cash gift to a relatively well-off buyer who would have most likely purchased their car anyway.

Many policy makers are now saying any financial support to encourage electric vehicle uptake would be better directed at funding the expansion of the vehicle charger network. This certainly reflects the public debate where ‘range anxiety’ induced by the lack of charging points is the most cited barrier that supposedly prevents the widespread adoption of electric cars by consumers.

However, this argument needs to be looked at equally carefully. The data showing the number of charge points and the size of the EV fleets in each of the markets we produce our index for are laid out below.

Availability of Public EV Charge points

Total charge points Battery Electric Vehicle (BEV) fleet Vehicles per charge point 
Germany 81,859 867,000 10.6
Spain 18,762 98,000 5.2
France 84,311 604,000 7.2
Italy 38,336 157,000 4.1
United Kingdom 54,158 512,000 9.4
Norway 27,579 524,000 19.0

 

The data shows that there is little correlation between EV adoption and the availability of charge points. Norway, the market with the highest penetration of electric vehicles, has the poorest availability of charge points per electric vehicle, whilst Italy and Spain, where EV uptake has been relatively slow, have far better charge point availability relative to the size of the countries’ electric fleets.

It also has to be said that, at present, the growth of the charger network across these six markets is outstripping the growth in the size of the fleet of vehicles that they need to support. By the end of the last quarter the number of public charging points across the six markets had increased by 41% over the previous year whereas the number of battery electric vehicles sold had increased by only 6%.

We would be the first to admit that this analysis may oversimplify or overlook many issues — not least of which are the distribution of population and the adequacy of the networks in terms of the regional distribution of charge points. However, the data suggests, as with so many of the supposed barriers to EV adoption, that concerns about the adequacy of the charging network are as much to do with perception as with fact.

Perhaps the best use of public money at this point in time might be to support public information activity that clearly highlights the growing pragmatic arguments in favour of EV acquisition and counters directly some of these popular misconceptions.

Individual Market summaries

The EV Index for Germany increased 3 points over the previous quarter, improving its ranking to second place amongst the markets we analyse. Additions to charging infrastructure made the strongest contribution to this growth.

Spain’s index was up 2 points, again the result of additions to the charger network and a modest increase in consumer interest. However, the country sits at the bottom of our notional league table of EV readiness.

France also improved strongly with the Index for the market up 3 points despite a marked worsening in the pricing differential between EV and conventional powertrains. Again the increase was the result of improvements to charging infrastructure over the quarter.

The EV Index for Italy showed the biggest improvement increasing 5 points to what remains a relatively low overall score. Consumer interest does at last seem to be taking hold and this would appear to have been encouraged by the availability of more affordable and smaller models that appeal to Italian consumers’ tastes.

The UK was the only market to see a reversal, losing a point to score 37 and causing it to drop behind Germany and Italy in the overall ranking. Vehicle pricing appears to be the main factor in this shift, causing a knock on effect in the levels of consumer interest we recorded over the period.

Norway, as ever, remains far ahead amongst the markets we analyse. Only in the area of vehicle pricing and availability has it failed to achieve parity between EV and ICE — so that despite high taxation on petrol and diesel cars they remain, on paper, still cheaper than electric alternatives. But with the government mandated end to the sale of fossil fuel powered vehicles set for 2025, buyers are likely to be very focused on future resale values, and the cost penalty that will result from choosing a soon to be obsolete powertrain.


If you would like to discuss this latest issue of the EV Index please contact: patrick.fuller@sophus3.com

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