It’s going to be an electric year for New Energy Vehicles
2021 will undoubtedly be the year that Battery Electric Vehicle (BEV) and Plug In Hybrid Electric Vehicle (PHEV) sales will take off. There are a number of reasons why and we have detailed them below.
Some of these predictions have been drawn from the 2021 Boost Auto Top 10 Predictions blog, and Top 4 Trends blog. Apologies of you have read both of these all ready, but we thought it a good idea to put these NEV topics all together.
The March of the PHEVS
Plug In Hybrids are coming – and coming in volume. 2020 was the year we talked about PHEVs, sometimes scratching our head about their purpose. As they become more common their benefits will become more understood. PHEV batteries are roughly 10x the size of a mild hybrid battery; they have real electric and zero emissions range yet without the range anxiety. Every major brand will have at least one PHEV in 2021. New PHEV models are likely to include Hyundai Tucson and Santa Fe, Ford Escape, Kia Sorento and Seltos, MG HS, Skoda Octavia and Kodiak, Toyota RAV-4 Prime, new Highlander, VW Tiguan. We might get new Outlander PHEV this year too. It is already the clear market leader in its older format.
Rapid uplift in BEV and PHEV sales volumes
2021 will be the year of greener transport. The Government has already signalled it wants most of its fleet to be EV. The PHEVs are coming from virtually all the big brands. BEVS will follow later in the year and early in 2022. Virtually every month will see a new PHEV or BEV model entering the market. The shot in the arm will be some kind of feebate scheme, potentially supported by a scrappage scheme late in the year.
Hello Geely. Or BYD or Proton or Lynk & Co or JAC
We know the Chinese brands are coming – some of these brands are the biggest car companies you have never heard of. They have scale, a BEV, PHEV focus and a desire to expand into international markets. Which one will make it here first is tough to call, but expect at least one new brand you have never heard of to arrive this year. And with it a slew of affordable NEVs that might just disrupt the market.
Electric Vehicle Charging Infrastructure Takes Off
NZ already has a charging infrastructure that is significantly advanced relative to its new BEV vehicle fleet – the Electric Highway initiative and EECA funding, as well as the vision of ChargeNet saw to that – aided by our appetite for used Nissan Leaf ex-Japan. But some charging infrastructure is manufacturer driven. New PHEV and BEV models need infrastructure at dealerships, and this focus and activity brings more charging infrastructure at large fleet HQ’s and destinations. For an example look at what The Warehouse Group have already done, installing EV chargers are nearly every one of their stores.
Battery Leasing helps focus on Total Cost of Ownership
Consider this, according to a 2019 TradeMe survey 74%[1] of vehicle owners would consider and EV as their next vehicle. The percentage that actually do is way less. One of the challenges for EVs continues to be the premium over their ICE equivalent. A leading BEV brand was able to demonstrate that over 60,000 kilometres and three years the saving in running and EV over its ICE equivalent was a whopping $8,000. Yet customers rarely factor that saving in, when purchasing an EV. However, a battery lease (at about the same cost or less of your old monthly fuel bill) might help bridge the gap. Battery leases are common in the UK, and not unheard of in China. It won’t be long before a mainstream brand wants to get very serious about EV sales volume and adopts a battery lease programme.
GFV products + Battery Lease Products make BEV cheaper than ICE to run
I accept that is too many acronyms in one heading, but bear with me. Guaranteed Future Value finance products will revolutionise the way vehicles are sold here (they were 30-40% of all my sales, back in the day in the UK; now they are now 80%[2] of the new vehicle market there). Now imagine the battery being leased, and your GFV product includes maintenance in the monthly payment. This makes the gap between a BEV and an ICE vehicle negligible on a monthly basis. It doesn’t take a rocket scientist to see that BEV residual values will be strong in the medium to long term (we have to go through the short-term period of us asking lots a questions about battery life, and battery repair costs etc which will depress values until we get used to the idea that we asked these questions about petrol engines as well, but 40 years ago). Then there’s the $25 a week less in fuel cost for an EV vs. an efficient petrol car. If we factor in the running cost savings, and work around the battery cost then the cost differential disappears.
As more customers and businesses work this out, alongside better availability and potentially some incentives, you will see why 2021 will be the year the electric revolution becomes much more mainstream.
Which then begs the question - what does this mean for your business? How will you adapt to the new opportunities and challenges that the revolution brings? There will be winner and losers. Those that are prepared will be the winners.
Which side will you be on?
[1] Source: https://www.newstalkzb.co.nz/on-air/heather-du-plessis-allan-drive/audio/alan-clark-trademe-survey-finds-more-new-zealanders-would-consider-buy-an-electric-car/
[2] Source: PRA Statement on consumer credit - July 2017 (bankofengland.co.uk). Note that the name for a GFV product in the UK is PCP – Personal Contract Purchase.