The UK is ranked the 5th best-prepared nation for the EV transition out of the world’s top 20 markets, in line with last year’s ranking, according to EY’s latest EV Country Readiness Index
UK’s ranking for EV supply falls from 7th to 8th year-on-year, while regulatory ranking slips from 3rd to 4th
UK ranked 6th for EV demand – consistent with 2022 ranking
UK EV sales expected to increase by 36% year-on-year, up from 22.7% last year but still lagging behind the average rate across the world’s top 20 markets (64%)
EY’s EV Country Readiness Index assesses 20 key markets from around the world based on factors related to supply, demand and regulation. The index analyses initiatives, targets and strategies focused around facilitating a smooth and efficient EV transition. EVs are defined as Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs) combined
The UK has been ranked the 5th best-prepared market in the world for the Electric Vehicle (EV) transition despite intensifying challenges around supply and regulation, according to EY’s latest EV Country Readiness Index.
China is still ranked number one, while Norway remains second. The US has climbed four places to third, and Sweden has slipped one place into fourth.
The UK’s rankings for supply (7th to 8th) and regulation (3rd to 4th) both fell by one place year-on-year, but the nation’s overall ranking remains unchanged from last year thanks to significant demand for new EVs and the impending 2030 ban on the sale of new Internal Combustion Engine (ICE) vehicles encouraging an increasing number of consumers and businesses to go electric.
Despite the UK’s rankings falling in two of the three key criteria, the nation’s EV penetration – BEV and PHEV sales as a percentage of total light vehicle sales – is expected to rise to 26% in 2023, up from 21% last year and well above the average across all 20 markets (19%). However, this figure remains a long way behind the frontrunners Norway, who are forecast to see 81% EV penetration this year, with Sweden (53%) ranked second and Netherlands (35%) third.
Seventy-one per cent of new vehicles launched between 2023 and 2027 in the UK are expected to be EVs, up from 60% in 2022.
Maria Bengtsson, EY’s UK Electric Vehicle Lead, said: “It’s encouraging that the UK remains one of the frontrunners in pursuit of an effective transition towards EV adoption, but there is still scope for significant improvement. As the clear global leader according to the Index, China has demonstrated the impact that appropriate regulation along with a localised supply chain and robust infrastructure implementation can have. There are lessons to be learned from that for the UK market, and the onus will continue to be on Original Equipment Manufacturers (OEMs) and the Government to collaborate on this challenge going forward.
“Potential delays to and a lack of clarity on the Zero Emissions Vehicle (ZEV) Mandate, along with uncertainty around plans and progress on the supply side are particular challenges the UK continues to navigate, while regulatory incentives have room for improvement, particularly when compared with legislation brought about in other competing markets. In the US, for example, the Inflation Reduction Act has contributed to the country climbing four places into third within the Index’s rankings. However, there are positives to take into account, including recent encouraging sales growth, particularly for new EVs, driven by increasing popularity among consumers and businesses.”
Supply and infrastructure remain key UK challenges as top markets extend their dominance
Fifty-five per cent of global EV production is expected to come from China in 2023, making it the global leader by far. The US is ranked second with an expected 11%, with Germany (10%) third. Meanwhile, the UK is expected to account for less than 1% of global EV production this year.
Positively, the UK is aiming to increase its battery production capacity to 41 gigawatt hours (GWh) by 2027, up significantly from 2GWh in 2022, enabling the nation to compete more meaningfully on a global scale. Among other infrastructure improvements, as of August 2023, it has been reported that there were 48,450 public charge points in the UK, up 42% year-on-year.
Despite these bright spots, a marked challenge for the UK’s EV transition prospects is a lack of fast charging infrastructure. Although the sizes of the two markets are vastly different, the fact that China accounted for nearly 90% of global fast-charging stock in 2022, with the UK only accounting for 0.8%, highlights the magnitude of the challenge.
David Borland, EY UK & Ireland Automotive Leader, said: “The resilient growth the UK has seen in new car registrations in recent months has been supported significantly by increasing EV sales. Indeed, the growing demand from consumers has played a key role in the UK retaining its status as a world leader for EV readiness, but challenges persist.
“Given the declining residual values of EVs and the difference between fleet and retail sales along with the ongoing infrastructure hurdles highlighted by this report, such as the UK trailing Europe for the number of charge points per EV, the longevity of strong demand and the positive impact it is having on the UK’s EV transition prospects appears uncertain. Going forward, it will be critical for not only the number of EV chargers in the UK, but the location and speed of charging infrastructure, to be prioritised. While there are positives, there is a long way to go for the UK to compete with the world’s leading EV markets, particularly in relation to supply and regulation. Specifically, regulatory incentives and support have room for improvement if the UK is to be seen as a top destination for attracting Foreign Direct Investment in the EV space.”
Demand ranking holds firm for the UK market despite projected EV sales for 2023 below the average across top 20 markets
The UK is still ranked 6th among the world’s leading markets for the EV transition in terms of demand, with thirteen consecutive months of growth in new car registrations strongly supported by the increasing popularity of Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs).
The second-most significant factor dissuading UK respondents from making the EV transition, according to EY’s latest Mobility Consumer Index, was the substantial upfront cost of EVs, with 36% of respondents deeming cost a key concern. However, the significance of this issue appears to be receding to an extent: based on the five top best-selling BEVs compared to their equivalent ICE models, BEVs are only around 10% more expensive than ICE vehicles in the UK market, providing another support to future demand. This price parity is the second-best across the world’s top 20 markets, with the UK tied with Italy. China leads the way with BEVs only around 8% more expensive than equivalent ICE vehicles based on the same criteria.
High fuel prices and penalties on ICE vehicles have emerged as the key motivators for potential EV buyers in the UK. However, high charging costs and inadequate public charging infrastructure are among the top concerns deterring consumers from going electric.
UK EV sales are expected to grow by 36% year-on-year in 2023, which lags behind the average projected growth rate of 64% across the top 20 markets. This is however an increase from the UK’s 2022 EV sales growth (22.7%).
Regulatory ranking slips but remains high, as measures ramp up
Although the UK’s regulatory ranking fell from 3rd in 2022, the nation still ranked higher (4th) on regulation than both supply and demand according to EY’s latest EV Country Readiness Index, behind Norway (1st), China (2nd) and the US (3rd).
The UK is ramping up government and regulatory support, with plans to invest £1.6bn into the development of EV charging infrastructure. This will include £950m towards the Rapid Charging Fund (RCF) for the installation of Direct Current (DC) chargers.
The UK does however lag behind China, Germany and the US in terms of investment for EV and battery manufacturing. In pursuit of closing that gap, the Government has earmarked £800m for investment in EV battery production, along with £211m of funding for battery research focused on cost reduction, energy enhancement and recyclability. The UK Government has also set out ambitions to achieve Net Zero emissions by 2050 as part of a 10-point plan for a green industrial revolution designed to create 250,000 jobs, backed by a £12bn investment package. This highlights the intention to drive forward an electric future, but as presented by the Index, continuous progress across all three variables of demand, supply and regulation will be required for the UK to achieve its objectives around decarbonising transport.
