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In Confidence: Falling demand for electric cars
3 years ago
Orders for EVs such as the Volkswagen ID.3 have slumped
Worse still, making EVs profitably remains a challenge. As a rough rule of thumb, the most lucrative cars to sell today are the least efficient. They are bigger, often less aerodynamic, heavier, powerful, gas guzzling, emissions belching and more. To sell these cars and enjoy the profits they bring while simultaneously meeting average emissions regulations across the fleet, car makers offset them by selling EVs. That’s right folks: while you’re having a ball in your AMG, M or RS, don’t go scoffing at anyone in a zero emissions vehicle, as they are literally carbon subsidising your fuel-burning habit. It’s a conflict that’s fast turning into a crisis.
Take the UK as an example. So far car makers have swerved fines based on average emissions, but there have been some near misses; another rumour suggests that some manufacturers still have fields of EVs to sell that were registered in a rush last December to allow them to duck under annual targets. Next year comes the ZEV mandate, which is currently being finalised but which will likely demand, with caveats, that 24 per cent of all new vehicles registered are EVs.
"There are rumours some manufacturers still have fields of EVs to sell that were registered in a rush last December to allow them to duck under annual targets"
As a result, while the number of EVs registered this year is soaring, to date a record-breaking 121,268 and up 31 per cent year-on-year, the fact it is happening in a market that’s expanding as the chip crisis eases means EV market share is still just 15.7 per cent, which is not vast step forward from 14 per cent at the same point last year. Right now, the soon to be mandatory 24 per cent feels a very long way away indeed, and far from the hockey stick growth curve that’s required. Auto Trader research data further backs up the point suggesting that just nine per cent of all new car enquiries are for fully electric models; this time last year it was 27 per cent.
Change is painful, of course, and the climate crisis isn’t going to bend to economic realities. But we are – and may well be for some time – in the eye of a storm that has no comfortable answer, and which may need big thinking and long-term, interventionist planning on a scale that humankind hasn’t encountered before if we are to reach net zero in time to protect the planet and preserve personal mobility and all the advantages it brings.
Human ingenuity has been enough to win out so far, but in this nascent period the cost, in every sense of the word, of going green is proving to be a significant, muddling hurdle over which many are struggling to find a route.
“Auto Trader research data further backs up the point suggesting that just nine per cent of all new car enquiries are for fully electric models; this time last year it was 27 per cent"
The UK’s ‘insanely stupid’ position on e-fuels
On which note…if you want a straight answer, talk to Andy Palmer, former boss at Aston Martin and high-up at Nissan, and now a prolific figure in and around the industry as a free-thinking non-executive leader, investor and commentator.
He’s the sort of bloke you could speak to all day, if only he had the time, but in a wide-ranging interview that set off on the premise of finding out more about his Hilo One e-scooter project yet covered so much more, we strayed onto the UK’s decision not to follow the EU and embrace the potential of e-fuels as a potential source of decarbonisation.
‘The worry is that quite often policy makers feed off of short-term public opinion rather than listening to experts,’ he shot back. ‘When the EU recently legislated that synthetic fuels would be a viable alternative to other net zero solutions, some of the haters who don’t understand the technology hit out. Then, in the UK, we had a Secretary of State making a statement that we’re not going to adopt e-fuels.
Mazda is now running its heritage press cars on e-fuel
‘That’s utterly stupid; those lobbying for e-fuels were Ferrari, Lamborghini, Porsche and so on…and all their competitors are based in the UK. So if we ban e-fuels in the UK, and create no incentive to even test them here, what do you think will happen? Either our own, boutique industry will be bankrupted, or it’ll move to Europe. It is insanely stupid.’
Bentley’s soaring profits
Bentley sold just four per cent more cars in 2022 than the year before – but its profits jumped 82 per cent.
That’s a staggering testament to the company’s (modestly handled) swagger under the leadership of CEO Adrian Hallmark, and while the reasons behind it are many and varied, at the heart lies an explosion of interest from customers in personalising their vehicles through its bespoke Mulliner arm.
Last year 15,174 Bentleys were sold – with an average trim spend of £30-35,000 per car. To put that in context, and underline Mulliner’s importance to the company, Hallmark estimates that the price differential between a V8 and W12 is around 15 per cent of the value of incremental trim and paint options. Maybe this is one way to make electrification profitable…
For the recent opening of its new knockout facility in Hatfield, owned and operated by HR Owen, it produced a quartet of cars paying tribute to the de Havilland aircraft factory that used to sit at the same location. One Continental GT S, GTC S, Flying Spur S and Bentayga S were made, with neat touches including red accents in homage to the red paint of the de Havilland Comet Racer, winner of the 1934 England-Australia air race.
Sat on display together, the quartet looked rather beguiling. A pity, I opined to the dealership manager, that they would be sold and split up. I should have known better. ‘Plenty of customers have two cars in matching colours – selling all four together is certainly not impossible,’ he smiled.
Ford’s endless racing exploits
Formula 1, rallying, Le Mans, now Dakar…there’s barely an area of motorsport that Ford isn’t involved in or getting involved in under the leadership of undisputed car guy and all-round racing fan Jim Farley. But I can’t be alone in hoping that his marketeers – and let’s not lose sight of the fact that motorsport is always, ultimately a small part of a marketing budget – have got their sums right.
Ford is cutting tens of thousands of jobs around the world in order to make itself match fit for the electric era. I’m elated that they see such value in motorsports, but partaking in such conflicted times will always risk accusations of profligacy.
