The future of motoring: what will happen in the next 10 years
If there is one thing we can say for certain about technology in the 21st century, it's that it is advancing exponentially into every area of our lives - including how we drive.
With the future of our daily commute now hotly debated, electric cars appear to be a very realistic alternative to our much-love petrol vehicles which dominated the road until recently.
However, with new policies affecting the average driver as well as business, we ask car leasing experts Pike and Bambridge is now the time to make the change to electric?
The future is electric
What is not up for debate is that both the industry, the governments of the world, and the consumer marketplace agree that electric vehicles represent a hugely important part of the future of transport globally.
This may well encompass everything from shipping to logistics, from public transport to heavy goods vehicles, and of course the replacement of your current car.
Most market analysts predict electric vehicles will represent over 50% of the UK market somewhere between 2028-2032. Bearing in mind the total electric vehicle fleet across the UK was around 300,000 vehicles at the end of 2018, against a total vehicle fleet in the UK around the 37 million mark, this clearly represents an unprecedented change in the make-up of the vehicles on Britain’s roads.
Obvious benefits of this growth should include greatly reduced environmental impact of the nation’s vehicles, as well as potentially lower cost of motoring, and a much easier segway in to what is tipped to be the predominant theme of the 2030s; autonomous vehicles.
What does this mean for car owners?
This predicted growth, alongside government support to encourage this growth in the shape of grants and tax benefits, has led manufacturers to invest heavily in the research and development needed to bring high volume electric vehicles to the market.
As this R&D investment typically takes around five years to make it to the market, 2019-21 is going to see an explosion in hybrid and fully electric vehicles available to consumers.
The likes of BMW have committed to 12 fully electric cars and 13 hybrid cars in its range over the next five years, including a fully electric Mini and a fully electric SUV, BMW iX3. With Volkswagen Group, the largest car maker in the world, predicting a third of its turnover will be from electric vehicles by 2025, the consumer choice is about to increase exponentially.
With this growth should come cheaper finance. One of the barriers over recent years has been the limited finance options available on many electric cars, as the major leasing companies shied away from taking potentially risky bets on future residual values of a new technology.
This meant the fastest growing finance sector in the industry, that of personal leasing, effectively excluded electric vehicles.
This is set to change in 2019, as signaled by Lex Autolease’s recent promotion offering £1000 to the first 1000 electric vehicle customers it had in 2019.
With greater competition in the financing of electric vehicles, combined with a far wider choice for consumers, 2019-2021 should see exponential growth in the uptake of electric vehicles amongst typical consumers.
Finally, for company car drivers, the company car tax or ‘Benefit in Kind” tax charges for electric cars is about to drop significantly in 2020-2021, from 16% in 2019-20 to 2% for fully electric cars. This represents a separation in tax policy approach between hybrid vehicles (some of which will actually be taxed at a higher rate), and electric cars.
What are the barriers to entry?
Put simply, cost can be an inhibiting factor.
There remains a limited choice of fully electric vehicles in the lower end of the price brackets, and while there are now a number of Tesla competitors in the shape of the Audi e-Tron, the Mercedes EQC and the Jaguar I Pace, lower cost vehicles are few and far between.
When combined with the fact the demand is outstripping supply, there are very few offers being made available at present to the typical consumer.
The previously mentioned reluctance of leasing companies to fully commit to the electric vehicle market means that until things like ‘true range’ of the vehicles reach the 400 mile mark (a level that is predicted to be the key ‘mass-market’ range for electric vehicles), we believe we will continue to see a limited offering in terms of competitively priced vehicles.
The government has also not helped recently by abruptly cutting the grant for low emission vehicles as well as having recently increased the tax charges on hybrid and electric vehicles (albeit with the latter set to drop back down again in 2020 as previously mentioned).
Finally, there continues to be challenges around the practicality of these vehicles, particularly for clients in our largest marketplace of Scotland. If you have off street parking at both the home and the office, as well as a predictable commute of relatively low mileage, it is probably time now to look at electric vehicles, as the benefits are indeed numerous.
However, if you do not have the ability to charge at home, and/or at work, or drive over 10,000 miles per year, the chances are the poor infrastructure of ‘fast-chargers’ in the northern half of the UK will leave you making constant compromises in your daily routine to drive electric.
For some of our clients, this is an acceptable sacrifice in order to contribute to the pressing need to reduce the environmental impact we all have on the world around us.It is obviously something that is important to make a conscious choice on, rather than make a costly mistake that could have quite an impact on your lifestyle over the coming years.
Will electric cars be the norm?
We see a period of unprecedented change occurring in the world of transport over the next 10-15 years.
From the predicted withdrawal of the dealership model, to the technological advances in electric and autonomous vehicles, it is imperative that consumers make informed choices on the options that surround them.
Electric vehicles are one part of this change, and do represent a huge opportunity to save cost, embrace a new technology and make a positive impact on the environment.
For most of us, it is simply a matter of timing. As with any large financial commitment, using expert, independent advice to give you the best chance of getting the timing right would be our guidance.
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About: Pike + Bambridge
At Pike+Bambridge we are passionate about our purpose; to change the way people and small businesses buy and lease cars. We have a commitment to a better car-buying experience and our growing team of experts continue to offer a personal service, as standard.
This blog is one of a series of articles from our commercial partners.
The views expressed are those of the author and not necessarily those of ICAS.