Aggressive financial incentives of £8,000 on volume-selling EVs could signal the start of brutal discounting as UK car brands try to accelerate the switch to electric, according to one automotive industry veteran.
Tony Whitehorn, former UK CEO and president of South Korean manufacturer Hyundai, said carmakers were facing a number of pressures in the electrification of the UK vehicle parc – and that as a result, there were bargains available to buyers.
Addressing delegates during a recent e-learning webinar, Whitehorn explained that car manufacturers operating in the UK face hefty fines under the Government’s ZEV mandate if they fail to hit certain targets in respect of electric vehicle sales, so need to encourage more people to buy them.
Customers, on the other hand, are put off by the higher prices of EVs so are reluctant to make the switch.
This, in turn, means that manufacturers need to offer substantial discounts to boost demand – even if that leads to margin erosion as EVs are more expensive to produce than conventionally-powered alternatives.
Whitehorn said: ‘Car manufacturers are not making as much money out of EVs as they are out of vehicles with internal combustion engines. But they’ve got to sell a whole load more battery electric vehicles to avoid paying hefty fines.
‘Therefore, there are going to be big discounts and a lot of incentives to tempt people to purchase them. Already I’m seeing a large number of 0% finance offers, with huge financial deposit allowances – up to £8,000 on one volume-selling vehicle, which surprised me.’
He added that the best way for manufacturers to sell larger numbers of discounted cars would be to make the most of digital retailing, ‘That’s how you can change someone from being a tyre-kicker to a contracted customer – and quickly.’
He went on to mention that there are some 50,000 EV charging points in the UK, and referenced South Korea, where there are 200,000 charge points. Turning again to the UK, he added: ‘By the end of 2024, we will have 80-100,000 chargers, so we are getting there.’