One in three willing to pay more for electric cars, but it might not be enough to drive uptake
Published: 05 June, 2018
New research from Baringa Partners, published on World Environment Day (5th June), reveals that more than a third of Brits would be willing to pay more to get a 100% electric car than a similar petrol or diesel one. However, Baringa is urging the Government to ensure subsidies remain in place until the cost of electric car ownership comes down further and the public is more convinced of their value.
Baringa’s new report, Is the UK ready for electric cars?, reveals that one in three (34%) people are willing to pay a bit more for a 100% electric car compared to an equivalent petrol or diesel model. However, people are only willing to spend a little extra to get behind the electric wheel. Less than one in five (18%) say they are willing to pay up to 5% more, while just 13% say they are willing to pay up to 10% more.
This willingness to spend more on an electric car is mainly due to the environmental benefits they provide, cited by 68% of survey respondents as a motivating factor. Perceptions around total cost of ownership are also important, with half (49%) saying they would pay more upfront because a 100% electric car will be cheaper to run in the long term. In addition, more than a fifth (22%) of people say they would be willing to pay more because subsidies will allow them to recoup the extra cost.
However, even though people are willing to pay a little extra, more than a third (35%) think 100% electric cars are worse value for money than petrol or diesel cars. Baringa believes this may be due to the expense of well-known brands such as Tesla, whose available models in the UK retail from around £60,000 – much higher than the £13,715 price tag for the UK’s current best-selling conventional car, the Ford Fiesta.
These mixed opinions on value highlight a key issue for policymakers when considering electric cars. Different driving habits mean there can be a significant difference in the total cost of electric cars and petrol or diesel cars. For example, fleet buyers, who are purchasing vehicles to drive much higher mileages than a private buyer, will save more on fuel with 100% electric models. As such, electric cars are already on par with more conventional options for some fleet buyers today. In contrast, private buyers, whose vehicles are typically used much less, aren’t likely to see parity until the mid 2020s when electric car prices are expected to have fallen. Baringa is urging the Government to take these diverse needs and economies into consideration when deciding how best to support the electric vehicle market.
Oliver Rix, partner in energy and resources at Baringa Partners, comments:
“Our research demonstrates that there is appetite to move away from petrol and diesel cars given the environmental benefits on offer, even if it means wallets becoming slightly lighter. However, it also shows that financial considerations remain important, and the additional money people are willing to spend is unlikely to be enough to significantly increase uptake in the short-term. Therefore, the Government needs to ensure grants for electric cars continue to be offered until prices fall more in line with their petrol and diesel counterparts.
“Car manufacturers also have a role to play. They should highlight the wider financial benefits of owning an electric car, such as the tax and fuel savings, and promote the cheaper models available. But work is also needed to increase the range of electric cars available. We know that many people think electric cars are less stylish than their petrol or diesel peers, so stylish, high performance models need to be produced as well as more low-cost options.”
