EV sales fall after Sunak's announcement - what does this mean for the vehicle dismantling sector?
With the automotive industry beginning a second year of growth, recovery in August 2023 was well underway with EVs energising the market. However, Prime Minister Rishi Sunak's announcement in September delaying the ban on new petrol and diesel car sales, runs the risk of derailing all the progress made post-pandemic. The early signs are that the new car market is already showing signs of uncertainty brought about by the government's latest decision. Car manufacturers may be split on whether or not this is good news as a whole, but the five year postponement appears to have fuelled renewed uncertainty that appears to be impacting private EV purchases.
Full Electric Vehicle sale volumes increased in September, but a closer look at the data shows that those sales haven been driven entirely by fleet purchases, made by organisations who benefit from the tax incentives offered. In contrast, EV car registrations for private purchases fell in September, with less than one in 10 private new car buyers opting for electric during the month. This is even more alarming when you consider that private new car sales are traditionally very strong in the month of September, coinciding with the new vehicle registration dates.
It would appear Mike Hawes, chief executive of the SMMT, was right when he said that the PMs announcement would send an "incredibly confusing" message, and that the delay could cause consumers to postpone their investment in EVs. What should also be taken into account is that the vast majority of the fleets sales recorded in September would have been budgeted and agreed upon months prior to Sunak's announcement. Would fleet sales look as positive as they do for September if fleet purchasers had been forewarned about a five year delay on the phaseout of petrol and diesel powered vehicles?
So what does this mean for the vehicle dismantling industry, now that the UK has aligned itself with the softer European deadline? Well, the sector has been handed a five year extension on the transition time away from diesel and petrol combustion engines. And the vehicle manufacturing industry now have additional time to explore alternative technologies to support electric and our zero-carbon target.
Vehicle manufacturers like Toyota are now looking to offer multiple technologies to address carbon neutrality and to support widely varying customer needs and market environments around the world. The Japanese car manufacturer firmly believes it is too early to focus on a single zero-emission solution and is therefore concurrently developing hydrogen fuel cell and hydrogen combustion technology alongside electric battery technology. For the vehicle dismantling industry such an approach would suggest that the future of decommissioning is likely to be more complex than currently thought, requiring end-of-life vehicle depollution to encompass multiple technologies and ultimately changing the vehicle dismantling landscape considerably - demanding different equipment, procedures and training from our ATFs. Consider also the fact that Hydrogen cannot be treated alongside high voltage electric, just like EVs cannot be depolluted alongside ICE vehicles.
What may seem like a simple postponement and widely celebrated as positive news for our industry, could in fact be masking the real challenges that the sector is imminently facing. The fact is, there are already over 17 million cars and vans at least 10 years old on UK roads, and they will still find their way to a scrapyard within the next five years, regardless of the shift in the government's deadlines. Furthermore, with vehicle manufacturers now developing numerous technologies alongside electric, there is a risk that the future may not follow a single dominant technology, like it has in the past with petrol or diesel. Treatment facilities may find themselves having to invest in numerous technologies or specialise and lose market share.