Cash floods back into Britain’s EV sector
New grants and lots of private investment. But will it help?
Hello, I’m Tom Riley, and welcome back to The Fast Charge, a British EV newsletter.
Top story today… I recap the past week’s huge EV announcements and break down what it means for industry, drivers, and the government.
Elsewhere… New cars at Goodwood, first look at the electric Range Rover, and are these shopping centres choosing the wrong chargers?
Finally, next week the edition will be out on Friday. As ever, if you have any comments or feedback, please reply to this email or message me on LinkedIn.
EV sector turbocharged with fresh capital, but will it work?
Headline: This week, the UK government has made hundreds of millions of pounds available to charge up demand for EVs.
What’s been announced? The big news is that the Electric Car Grant has returned to address concerns about upfront cost. And it’s hefty. A subsidy of up to £3,750 will be available at the point of sale for new eligible EVs priced at or under £37,000. That means cars from companies like JLR, Mercedes, or Tesla will not be eligible. There’s £650 million allocated to this policy, and it’s available to 2028/29. Albeit, one suspects, as the money may only equate to 173,000 EVs, it will likely get taken up much sooner than that.
Not for everyone? The grant eligibility isn’t only restricted by the headline price, but also by where the vehicle has come from (as part of a sustainability test). The Department for Transport has said the greenest vehicles in band one will receive up to £3,750 and band two vehicles will receive up to £1,500. The full details of this test have only been shared with manufacturers before today. However, DfT has this morning published more details (see here). While there was talk that ‘Made in China’ cars may get nothing, based on a quick scan of the grant requirements, perhaps they may get the lower grant (£1,500) if they can prove their production is green. It looks likely that British vehicles will get the max amount. Read the press release.
What about for EV charging? Fear not, we also saw positive announcements for this over the weekend. Labour has made £63 million available to boost access, especially for those without home charging. Specifically, £25 million will be provided to local councils to support the rollout of pavement charging solutions, such as installing gullies - this will be a boon for several companies in this space, such as the Deborah Meaden-backed Kerbo Charge. Elsewhere, £30 million will be available for fleet depots to install infrastructure. As of yet, full details on this charging spend is unclear. The final aspect of this news was around charge point signage, which will now be installed across major roads. Great news. Read more.
Ignoring the government for a second… Also this week, both Osprey and Gridserve have separately announced large fundraises. Firstly, Osprey has been provided £110 million as part of a debt raise to push forward its growth. This money came from three banks (Novuna Business Finance, Société Générale, and Aldermore) and the National Wealth Fund, which have lent £25 million. Ian Johnston, CEO of Osprey Charging, said: “We’re delighted that financial institutions are supporting the work our fantastic, dedicated team are doing. At Osprey, we build the charging hubs customers want – clean and secure, super-fast, easy to use and easy to pay for. In short, where I would choose to stop and re-charge with my family.” The Chancellor Rachel Reeves commented: “We’re investing in Britain’s renewal, bringing our infrastructure into the 21st century, improving people’s day to day lives, and putting more money into their pockets through economic growth.” Read more.
Secondly, at Gridserve… This week, the forecourt CPO announced a new equity raise of £100 million from existing investors. The money will be used to support its long-term growth. This announcement comes at a critical time for Gridserve who, according to several industry sources, are said to be limping, having had to make large redundancies very recently. It’s also said they’ve pulled out of bids. Gridserve didn’t comment on this; instead, I was pointed to their latest funding news. On the new investment, Roy Williamson, Gridserve’s Chair, said: “This equity raise places GRIDSERVE in a robust position to sustain its network growth and signifies a strong vote of confidence in the company’s future growth prospects.” See more.
In total… This week, the EV sector has secured upwards of £920 million. And it’s only Wednesday!
But… What does this mean in reality? My analysis…
🏭 For the industry…
Positives: Hearing the news of this support is no doubt very welcome, especially if you’re a manufacturer trying to compete against cheap imports. The scale of the money going into stimulate demand is not so much a line in the sand as a mortar bomb. And that’s good not just for those who might get to use the money directly, like the dealers, but it’s significantly beneficial for the wider sector. The £650m Electric Car Grant in particular will no doubt send many consumers down to the dealerships, and the knock-on effect of those conversions will benefit those working in related businesses, like charging networks, battery makers, and installers. Importantly, investors who may have parked interest in EV businesses may now feel confident about taking risks again. It is an exceptionally strong signal of support.
Negatives: If you’re not a carmaker, arguably, all this fresh cash is neither here nor there. Yes, you’ll get the benefit of a fresh sector glow-up. However, there continue to be so many other areas where sums like this could have arguably been better spent. The used market, where many leasing firms are carrying debt, for example. Why has the government not invested in a proper battery degradation test (I hear it’s a policy sitting on a desk in OZEV while they wait for the EU to move first)? Or even allocated some of these grants to shifting used models. Likewise, backing pavement solutions is superb, but it’s still a policy at the whim of councils. Some will be better than others. And many won’t bother. Finally, given that communication has been a major challenge for this industry, why couldn’t a smidge of these sums go towards an OZEV-led marketing budget? By not doing so, all the ‘comms power’ will stay in the hands of carmakers, who no doubt will come back for more in Autumn when the ZEV mandate is due for a review.
🚙 For British drivers
Positives: Every survey of drivers always suggests that affordability is a major barrier. This has been proved right by the surging popularity of cheap Chinese EVs, such as those from BYD. The government is right, therefore, to provide support to get more affordable vehicles into the system. According to Carwow, there are some 52 models that could benefit from the new EV grant (aka, priced under £37,000), and it’s a category that, ideally, many other manufacturers will now aim to grow into. That’s also got a double benefit of getting more affordable-looking cars in front of those drivers with FUD (Fear, Uncertainty, and Doubt). At present, whenever I flick on the TV, you can’t move for adverts for EV model that looks more like perfume adverts (see this Audi one). Maybe now drivers will get to see more ads for models that look like their current car. And, in the long run, see them parked on their streets. Less Porsche, more Peugeot.
Negatives: £650 million is a lot of fuel, though, will it go far enough? As above, arguably it could only help between 173,000 to 430,000 households, depending on the grant band. Will it move the dial? And, importantly for the people Labour claims it was set up to help. I’ve already heard people talk about using the grant “to get the runabout”. Likewise, who the hell buys a new car? Don’t most normal folk get used? Clearly, I don’t begrudge anyone two cars or the ability to consider a ‘new’ car in any instance, but I’m not persuaded this grant will benefit the consumer Labour thinks it will. When I interviewed James May last year, I asked for his thoughts on a grant return, but didn’t publish the comment at the time. Today, I am, as May’s view reflects my own.👇