2020 in review: the start of something big?
2020 was a year of profound and extraordinary change for the UK car market. As well as the government’s announcement that sales of new petrol and diesel cars will be banned in 2030, the coronavirus pandemic severely disrupted car manufacturing and sales. But what lessons can we draw from such an extraordinary year? This is our attempt to answer that question, and here are three observations and lessons from 2020:
2020 was the year BEV sales really took off in the UK
The car market has been particularly hit by the pandemic. Sales of new vehicles are down by a third, to levels last seen in the early nineties. But look beneath that headline figure, and one discovers that electric vehicles have bucked the trend. In December 2020, there were 22,000 pure-electric vehicles (BEVs) sold in the UK, making up 16.5% of all new cars sold that month.
The UK is not alone here, or even necessarily ahead of the curve. Other European countries saw similar increases in BEV. 11% of new cars in France were BEVs, for example. In Norway, which has been a leader in electric vehicles for some years, 54% of all new cars sold in 2020 were BEVs.
Setting aside comparisons to the rest of the market, which as we said was in freefall, how do the BEV sales figures compare to previous years? In December, three times as many BEVs were sold as in December 2019. Overall in 2020, there were as many BEVs sold in the UK as were sold in all previous years. Put it that way, and it starts to look like 2020 was the start of something pretty huge.
We modelled the growth of BEV sales for our report ‘The Missing Metric’. In 2020, BEV sales were on track to grow in line with our modelling.
Pure petrol and diesel sales are in freefall
In the last 20 years, the UK car market has swung like a pendulum, away from petrol towards diesel, and then back away from diesel again. 2020 was the year the pendulum was written off. In December 2019, pure petrol and diesel cars had 85% of the market. In December 2020, it was just 56%. Sales of pure petrol and pure diesel vehicles fell by 40% and 55% respectively. If that trend continues, they will be a minority technology by the end of March.
We cannot assume that all of this decline is due to the coronavirus pandemic. Remember, the whole market is down by 30%. Petrol and diesel sales are down even further, meaning they are haemorrhaging market share to other technologies. That’s why the SMMT (the motor industry trade body), who last year resisted the government’s moves to ban sales of petrol and diesel cars in 2030, now describe electric vehicles as the future of the car industry.
Hybrids are on the rise: a cause for concern?
There is a twist to this tale. Between BEVs and petrol & diesels there is a wedge of ‘hybrids’. This is where things get a bit complicated. All forms of hybrids comprised 28% of new car sales in December 2020 (up from 12% in the previous December). But scratch at the surface, and it turns out that ‘hybrid’ can mean all sorts of things: mild hybrids, normal hybrids, or plug-in hybrids.
Mild hybrids and normal hybrids cannot be plugged in, and charge their batteries off their internal combustion engines. They typically only drive on electric power for very small periods, while parking or manoeuvring. These vehicles are fossil fuel vehicles in all but name. More controversial are plug-in hybrids. These vehicles have bigger batteries, and can be charged up, so the batteries can run on electricity generated from the UK’s growing fleet of wind turbines. But the distance that these cars travel under electric power varies, and many people question the logic of having a petrol engine that has to carry around a weighty battery, and an electric motor that has to carry around a petrol engine and tank of fuel.
The growth of hybrids could be a cause for concern. The UK government has said it will ban the sale of new hybrids in 2035 - but they have not said what ‘hybrid’ means, beyond the fact that the car must drive a significant distance on its battery. This uncertainty creates risks for consumers, and we’d urge anyone thinking of buying a hybrid to think very carefully before taking the leap. Hybrids could well be overtaken by better, all-electric BEVs, leaving hybrid owners with a sub-optimal product . It would also be helpful if Ministers could set a clear definition that gives consumers the confidence to know that they are not buying a car that will be out of date before they pay off the loan.
To sum up…
The growth of electric vehicles and decline of petrol and diesel puts the UK on course to get to 100% electric vehicle sales by 2030. But how much can we read into trends into 2020? The pandemic has brought many changes to our lives, some permanent, some temporary. The key to predicting the future is being able to tell which changes are temporary and which are permanent. The difficulty is that during the pandemic, things that start as temporary take on a grim permanence. A good rule of thumb may be to look for existing trends, which have been accelerated by the pandemic, such as the shift to home working for many or the struggling high street. Electric vehicles, which have been slowly on the rise for some years, are not likely to be just a blip.