Cost of living crisis dampens demand for EVs

The cost of living crisis has significantly reduced buyer interest in electric cars, data from What Car? Insight has revealed.

Between March and July 2022, more buyers signalled their intent to buy an EV than they did a pure petrol or diesel model. 

The proportion of buyers who planned to go electric peaked at 41.8% in July, when petrol prices hit a record 186.2p per litre.

But as pump prices fell, the cost of rapid-charging an electric car rose. In September, charger operator Osprey announced a price hike to £1 per kWh – 50% more than the previous rate of 66p per kWh. Osprey CEO Ian Johnston called the increase “unavoidable” in a video to customers, citing the inflated cost of wholesale electricity.

That month, What Car? asked 943 car buyers not in the market for an EV whether the rise in electricity prices put them off making the switch, and one in three responded in the affirmative.

Meanwhile, interest in petrol and diesel cars overtook that in electric cars, at 42.0% for petrol/diesel and 25.9% for EVs.

This was the most dramatic swing recorded in favour of ICE cars, as the October announcement of the energy price cap coincided with a slight rebound in demand for EVs, to 27.8%.

Following the announcement, more than 500 prospective EV buyers were asked whether they would have been in the market for one without the price cap. One in five said it helped them to make the switch, demonstrating the importance of government incentives in maintaining the momentum of EV sales.

When the two-year price cap was then scrapped, more than 900 non-EV buyers were asked whether the U-turn influenced their decision not to go electric. Although 75.6% of respondents said they never planned to buy an EV, the remaining 24.4% said the cap’s cancellation had influenced their decision. 

“Government support for the industry and consumers has a clear impact on people’s vehicle choice,” said What Car? editor Steve Huntingford.

"Schemes such as the energy price cap provided reassurance for buyers, which was reflected in greater interest for EVs.”

How long were buyers willing to wait?

What Car? has tracked new-car waiting times since January 2021, when global Covid lockdowns forced factory closures and created supply shortages.