EV Index from Sophus3

Latest issue: 2022 Q3

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

The EV Index registered small positive increases across all of the European Big 5 during Q3 of 2022. However, it is clear that the majority of European consumers remain sceptical as to whether an electric vehicle is the right choice for them in the current market. In every country — with the exception of Norway — ‘consumer interest’ continued to provide the lowest contribution to each market’s overall score of its EV readiness.

This is partly explained by the imbalance in the number of vehicles on offer: there are simply far more ICE vehicles for buyers to consider. Therefore the web traffic we measure to different model pages to  assess interest is inevitably higher in total to those more prevalent ICE model pages. However, the more telling measure  — whether consumer curiosity translates into vehicle purchase, which currently it does not — also explains the continuing low score in this area.

Here it is clear we are seeing some circularity in our measurement of the different factors at play, with the affordability of these vehicles having an obvious impact on the outcome of consumer consideration of EV purchase. The reality is that despite slight improvements during the quarter, the price differential between EV and ICE remains enormous. An EV buyer in the Big 5 markets continues to pay, on average, 66% more than the buyer of a petrol or diesel car.

We can see how very differently the relative pricing of the two fuel types plays out in Norway, the sixth market for which we compile the EV Index. Here taxation has tipped vehicle pricing in favour of the choice of electric. This, plus the fact that manufacturers select Norway as the launch market for new electric models which results in a far greater range of choice, means that consumer interest in EVs now decisively outstrips interest in ICE models which are increasingly perceived as obsolete.

Looking at the third component we measure to compile the index, the provision of public charging infrastructure, the North/South divide between countries remains marked, with Italy and Spain lagging behind the rest of the  Big 5 and recording no significant improvements over the last quarter. The UK saw the biggest growth in its charging network with a 5 point jump in its indexing in this area. Our colleagues at Zap Map have calculated that the UK public charging network has increased in size by 35% in the year up to October.  Rollouts of public charging networks by both a major supermarket chain and a bank provided a major boost to the count.

As we approach the year end, what factors are likely to shape the EV marketplace in the coming months? Sales growth of pure battery electric vehicles (BEVs) continues to outstrip that for ICE. The latest registration figures for Europe show that whilst sales  of petrol cars in Europe have fallen -17% year-to-date, registrations of BEVs are up +26% (figures include EU+EFTA+UK).

However, we see no immediate resolution to the barrier the high price of these vehicles creates. The shortage of semiconductors is forecast to last into the coming year, choking off vehicle manufacture and allowing automotive OEMs to continue to charge a premium for their products whether EV or ICE.

This situation is compounded in the case of EVs because of the complexity of their electronic componentry and also due to the soaring increase in the cost of materials specific to EV battery construction. The price of some of  the metals used has nearly tripled since the beginning of 2022.  The problem is not just about the primary extraction of materials but also bottlenecks in the processing and manufacturing chain.

Another negative that may well discourage consumers from choosing an EV in the year ahead is the increase in domestic electricity tariffs that are a direct result of the conflict in Ukraine.  In October, Heycar published figures that showed the cost of charging the best-selling Tesla Model 3 in the UK had increased by 85% in just two months. It is the same story across Europe, with national governments struggling to hold down domestic energy prices.

However, the next year could see downward pressure on the price of EVs due to a number of factors. The economic downturn that now looks certain, coupled with interest rate increases from central banks, will hasten the demise of the ‘seller’s market’.  The entry of Chinese manufacturers into the European market will also challenge the pricing levels set by the incumbent brands. BYD and Great Wall Motor both used the Paris Motor Show to launch attractively priced BEVs which will become more widely available in the New Year.


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

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