Net Zero, electric vehicles and the power of a publicly stated target

On Tuesday the government launched a consultation on bringing forward the ban of petrol, diesel as well as hybrid vehicle sales forward from 2040 to 2035. The idea is likely to be welcomed by environmental organisations as a welcome and necessary next step. At the same time, Tesla recently became the second most valuable automotive company, with a trading value of over £76.7bn. Does this suggest that the market also sees EVs dominating domestic vehicle innovation and consumption in the next 10 years?

There are some who feel that the government’s shifting the target is simply virtue-signalling: on its own this is not powerful enough a mechanism to deliver the required up-take in demand for electric vehicles that would help contribute to the UK’s goal to be carbon neutral by 2050.

The current size and growth trend of the electric vehicle market provides a bit of a reality check for the government target. While the demand for hybrid and electric vehicles has risen considerably over the past few years, the market share of electric vehicles is still only 1.6% in the UK. To reach the target of 100% electric vehicle sales in 2033 or even 2040, our analysis suggests that seriously accelerated growth (see graph) is required.

The reality is that significant logistical and demand-side barriers still stand in the way of such growth. Despite technical innovations increasing EV driving range and lowering costs, the government and industry leaders must tackle the lack of charging infrastructure to give consumers confidence that they won’t be left high and dry when they need to re-charge. Emotive consumer barriers that relate to the familiarity and attachment to the driving experience of petrol vehicles need to be addressed as well.

It’s worth noting auto manufacturers have also cried foul claiming the government has “moved the goalposts” and have accused the PM of setting a “date without a plan” but we’ll save their particular objections for another time.

The paradox is that this transition should be win-win for all. The Committee on Climate Change published a remarkable chart in their recent Net Zero report, which shows huge net benefits are quickly realised from making this switch to EVs.

Progress to realising these benefits is currently too slow. Targets are often derided but can also have the effect of focusing the mind. It remains to be seen whether this will drive the more concerted and integrated action is required from industry and government to develop the charging infrastructure and better understand public acceptability barriers for a ban on the sales of petrol, diesel and hybrid cars to be workable by 2035.