Improving consumer confidence in the used electric vehicle market could influence 17 million motorists to transition to electrified transport.
The Green Finance Institute’s recently published report – Used EV Market: The Key to Unlocking Net Zero – suggests that the UK’s EV transition could be accelerated by ten years if the second-hand electric vehicle market is improved.
However, the report outlines that key barriers are preventing prospective buyers from purchasing used electric vehicles, such as concerns regarding affordability, battery health, and charging infrastructure.
The report surveyed over 2,000 UK drivers and included expert insights from 35 leading car dealerships, motor finance lenders, and lease companies.
The potential of the used electric vehicle market
To help decarbonise the transport sector, the UK Government has banned the sale of all new petrol and diesel cars from 2030.
The second-hand vehicle market is not impacted by this ban and represented 82% of all car sales in the UK in 2021, estimated to be worth £182bn in 2027.
With such a booming second-hand vehicle market in the UK, it’s easy to see how climate targets and decarbonisation goals can be achieved if EVs penetrate the market.
However, despite 61% of drivers stating they would buy an EV, more than a quarter of them would not buy a used electric vehicle for a range of issues.
Without the used market, the EV transition is destined to stall
Lauren Pamma, Programme Director at the Green Finance Institute, explained: “82% of car sales in 2021 were second-hand in the UK.
“So, if we’re serious about driving EV adoption en masse, we need to channel this appetite for second-hand cars towards EVs.
“Our research makes clear that the demand for EVs is already there, but to unlock the used market, we need to boost consumer confidence in battery health, charging infrastructure, and affordability.
What is stopping drivers from switching lanes to electric?
The report identified that 62% of the drivers who said they wouldn’t buy a used electric vehicle cited battery health concerns – making it the largest barrier to EV uptake.
This was further reinforced by industry experts, with nearly three-quarters of the 21 dealerships involved stating that battery lifespan is one of the main concerns surrounding second-hand EVs.
Perceived costs of owning EVs were also identified as a significant barrier to adoption, with 27% citing running and maintenance costs as a concern.
However, research actually shows that the running costs of an EV over its lifetime are usually lower than petrol and diesel cars. Moreover, research from Auto Trader found that some used electric vehicles are cheaper than their combustion engine counterparts.
The final major barrier to adoption was charging infrastructure. Despite the number of UK public charge points increasing by 523% over the last six years, motorists said more information about the costs and locations of charge points would encourage them to buy an EV.
Marc Palmer, Brand & Insights Director at Auto Trader, said: “The vast majority of drivers buy a second-hand vehicle, so the used market is fundamental to the EV transition – it’s where mainstream electrification becomes affordable and opens up sustainable motoring to the millions we need to make the switch to meet our targets.
“But the themes and barriers highlighted in the Green Finance Institute’s report echo what we’re seeing – battery and charging confidence are vital to mainstream adoption, so support for the used EV market is critical.”
How to improve consumer confidence
The report details various measures that, if implemented, could help optimise the used electric vehicle market, ultimately assisting the UK to meet climate goals. These include:
- Battery Health Certificates (a standardised battery health certification scheme for used vehicles) and Battery Value Guarantees (a mechanism for EV batteries to have a guaranteed end-of-life value) were most commonly identified by drivers as solutions that would encourage them to make the switch to electric, at 31% and 30% respectively;
- Battery Passports, which provide second-hand buyers accurate knowledge of a battery’s life to date, would also help ease concerns;
- Agreed definitions and standardisation of metrics for Total Cost of Ownership Calculators would help paint a clear picture of the total lifetime costs of EVs compared to ICE cars;
- Addressing information gaps, particularly surrounding topics such as the cost and location of public charge points and energy tariffs to keep at-home charging costs low;
- Reduction in the rate of VAT on public charging (20%) to match that of home charging (5%).
The Green Finance Institute is collaborating closely with financial, policy, and automotive partners to advance and pilot these solutions.
