Good morning, I’m Tom Riley and welcome back to The Fast Charge, a British EV newsletter.
Top story in today’s edition… Analysis of the Society of Motor Manufacturers and Traders’ EV conference yesterday – including that interest in EVs by private individuals has fallen to a quarter from a third.
Elsewhere… Arrival teeters on the edge of bankruptcy as a strategic financial partner pulls the plug while doing due diligence.
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Sales of EVs to private buyers fall as industry calls for new incentives
Background: Good news over the weekend after a front page story in The Times revealed that, after many months of speculation, the Prime Minister gave his backing to the 2030 ban on new petrol and diesel cars. While this is great – though expected – news for the EV industry, there will remain those on the fringes of politics (particularly on the right) who disagree. For example, only yesterday, the former PM Liz Truss joined the anti-growth coalition in calling for a delay.
Next steps: Now that the government is solidly supporting the EV transition, what the industry now requires is the publication of the Zero Emission Vehicle mandate. This came up multiple times at SMMT Electrified yesterday – with there only being a few months left until the proposed (consulted on) mandate would begin in 2024. In response, during his keynote speech at the event, the Transport Secretary told the audience that we could expect it to be announced “soon, indeed, very soon.”
However… One thing that kept coming up at the conference by carmakers was ‘affordability’. As the fact that Harper has said that the ZEV mandate will be “one of the most advanced and ambitious regulatory schemes in the world” seems to be rubbing up against manufacturers who want to see more incentives for private drivers.
New stats: To hammer this point home, at the opening of the conference, SMMT released new figures that indicated private buyers of EVs had slipped – going from more than one in three to less than one in four – following the removal of the plug-in car grant in the UK. This means that the vast majority of the recent sales – which I believe is quite openly known across the industry – relate to business and fleet transactions. This story has made quite a few headlines.
Now… it’s not clear in SMMT’s data, but one assumes that ‘business buyers’ includes company cars, which I would suggest is actually quite private driver-led – and likewise factors in a huge Benefit in Kind tax break. However, the point remains that in the UK soon we are going to have a seriously demanding mandate, yet no incentives compared to other European nations.
In response… During a press conference, Alex Smith, Managing Director of VW in the UK, suggested the demand from private buyers was “flatlining” and that there is “stagnation”. He backed the calls for new incentives to create new demand. In response to a query from the Financial Times, the Treasury responded yesterday saying: “To drive the UK’s move to electric vehicles, we have provided over £2bn to cut down purchase costs for drivers and to build the necessary infrastructure to support their usage, such as local electric vehicle infrastructure funding, targeted plug-in vehicle grants and low first-year vehicle excise duty.”
But… Despite the complaints around affordability, I was really struck by the positivity for the EV transition. Naturally, it would have been a bit weird for them to be negative at an ‘Electrified’ event, though given some of the recent press interest, you have to wonder where it’s been coming from. The morning’s panel event indicated it’s the same old sources.
Notably… Toyota’s UK president suggested “carbon is the enemy” and that means other alternatives, like hydrogen, should be explored. This was reinforced by INEOS Automotive’s CEO who also talked up their hydrogen fuel cell tech. Fortunately, also on the panel was Richard Bruce, Director of Transport Decarbonisation at DfT. He rebuffed these comments saying we “haven’t got time for ambiguity” and that debates about alternative fuel “can be used as an excuse for inaction”. Bruce also explained that there are inbuilt advantages to battery electric vehicles and that hydrogen fuel stations have already been closed in the UK. He closed this particular segment by calling out the mainstream media for engaging in “serial misinformation” of EVs. Mic drop.
Under the radar… One thing I was surprised not to hear much about at the conference – which certainly given the continuous talk about affordability seemed like an elephant in the room – was China. Only in the past week, the EU announced an anti-subsidy probe into the Chinese EV industry – as its state-backed manufacturers look to undercut European models. When asked if the UK should follow suit at the press briefing, Mike Hawes, SMMT chief executive, was factual in his answer, first correcting the reporter on what the EU announced before then saying: “The UK can only respond if there is a formal complaint”. Presumably, that means the carmakers need to do it?
Immediate concern…. Outside affordability, carmakers appears to be mainly concerned by the looming Rules of Origin deadline. Without a delay to these rules coming into effect in 2024, automotive trade between the UK and EU could be hit with tariffs which will no doubt impact consumers. During one panel discussion, Stuart Southgate from Ford said: “We were concerned. We are now even more concerned.” Before adding again: “We are worried.”
Finally… The SMMT conference wasn’t just about car production, there were plenty of comments about the need for more chargers too. SMMT has previously suggested targets for the installation, though this approach has been rebuffed by officials. One repeated challenge, which was raised by Tom Hurst of Fastned in the afternoon, is the bureaucracy of installing new chargers. Tom commented: “In the Netherlands, you can get a grid contract in 3-4 weeks. Here, I'd be amazed if we could get one in 3-4 months due to paperwork. We need to go quicker as this is a drag on ambition to invest more in infrastructure in the UK.” Exatamente!
Arrival teeters as latest financing deal collaspes
Background: Arrival seems to be teetering on the edge of oblivion. An update published on its website last Friday disclosed that the EV start-up had “received a notice of acceleration and termination” of bridge financing that had previously been made public in late August. The financing was available to Arrival so that it could undertake due diligence for a ‘strategic financial partner’.
Response: This is very bad news for Arrival, who as I’ve previously reported had seemingly put all their patents up as collateral for a new loan. According to the latest update, Arrival has said it has used $5 million of the bridge financing and now is “currently in dispute” over the exit fee of this arrangement. The company said: “Arrival intends vigorously to defend its position, including (as necessary) through litigation.” See here.
Reaction: After seeing the latest news, retail investors – who have already lost huge amounts putting their money into Arrival – have let their anger out online. One commented on Arrival’s Reddit forum: “They f***ed up. All my money is gone. Savings down 93%. Will have to sell for a loss of $50k and not working at the moment.” Another upset investor wrote: “I mean seriously what have they been doing? We've had no updates, no real plan, I'm actually shocked they can get away with such blatant neglect to shareholders.”
Next steps: Arrival is now overdue reporting to the market. It had promised an update in early September, which has now been and gone. Given the company had previously said it may run out of cash in Q3 this year without new funding, one could conclude that the business is perhaps readying to enter administration – the stock hit its lowest price ever on Monday ($1.45). If this is the case, it will be a sad end for another UK start-up and also the jobs of more than 1,000 people. Read my recent deep dive into how Arrival got to this stage 👇
Side note: I do not want to read too much into this, but rather than using their typical images of prototype vans for the most recent news story, Arrival instead published a stock picture of a metal paperweight bus. Is this all that remains? We will know for sure soon.
Top EV hits…
🥳 The London boroughs of Richmond and Wandsworth are going to add a combined 1,050 new chargers to their networks as part of a partnership with ubitricity. Read more.
👨🍳 Roadchef and Gridserve have announced plans to expand charging stations at Roadchef motorway stops, this includes building new EV super hubs at six sites. Read more.
🔌 Ionity, the ultra-rapid charging network, has partnered with the Village Hotels chain to install 380 chargers at 33 sites. The chargers will be open to the public as well as hotel guests. This partnership is quite unusual, as normally a hotel might be expected to install slower chargers for overnight rejuicing. However, this approach will at least mean amenities are available for those using the high-powered devices. Read more.
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I'm wondering if Sunak's changing the switch over date to 2035 is due to pressure from the EU, and VAG/Stellantis who are struggling to produce competitive EVs. Only today we saw prototypes of Hyundai's €20k car being tested, while VAG's €25k car is still 2025 at the earliest.
Given most EVs are still supply limited, the reduction in deliveries to private buyers is almost certainly the car industry reacting to fleet buyers unhappiness about being out bid by private buyers last year. Obviously VW has its own problems, but they are due to design issues and competition from other VAG brands