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Glacial Drift

What happens to the ICE vehicles currently on the road and being manufactured after 2030?
Glacial Drift

I bought my first car in 1984. It was a Fiat 126. The 1984 vintage 126 was not the fashionista’s favourite that the more recent 500 model has become. My motoring world was dominated by XR3is, GTIs, and Turbos. The 1984 126, or the Maluch as it was known in Poland meaning “little one” or “toddler”, was not a muscle car. It "sported” a 650cc engine, daringly positioned at the back, which was capable of60mph downhill with a prevailing wind.

I had to buy this car and, when my funds could bear it, I sold it. From memory, I booked a small loss on the transaction.

In 2021, we in the UK are nine years away from not being able to buy a new ICE (Internal Combustion Engine) powered vehicle. According to most sources, it takes up to five years for a new model to move from drawing board to showroom. While we acknowledge that the ban on new ICE vehicle sales was not a shock, it is likely that car producers are some years away from having EV only product lines.

This is borne out by data from the Society of Motor Manufacturers and Traders (SMMT). In the year to June 2021, the SMMT records that ICE vehicle sales have increased by4.7% compared to total market growth of 39.2%. Within ICE, diesel vehicle sales fell by 21.7% while petrol vehicle sales increased by 12.7%. Despite the high growth in sales of Mild Hybrid Electric Vehicles (MHEV), Plug-in Hybrid Electric Vehicles (PHEV), Hybrid Electric Vehicles (HEV) and Battery Electric Vehicles (BEV), petrol and diesel new car sales still accounted for almost 80%of the total in the year to June 2021.

The picture is changing and may change fast. Yet, the SMMT expects the transition from ICE to EV to result in a total new car market by 2030 some 7.0%, or 161,000 vehicles smaller than that recorded in 2019. The top 3 best selling cars in the UK during 2020 were the Ford Fiesta, the Vauxhall Corsa, and the Volkswagen Golf. Combined, these cars sold around 140,000 units. While the SMMT is not specific regarding the composition of the total sold in 2030, we infer that it believes that there is a gradual transition from “ownership” to “usership”. If true, we could witness further downward revisions to the SMMT’s forecasts.

Using, rather than owning cars is certainly “dans le vent”. How we access music, entertainment and, even, homes and clothing have all undergone and areundergoing significant change; from owning to using.

VIP believes that the automotive sector will catch up and catch up quickly. We offer three points to support this view:

·        The Vauxhall Corsa is the best-selling car in the UK currently. Its base model, the Corsa SE, is an ICE vehicle and retails for £17,015. The equivalent EV Corsa retails at £29,960 or a 76% premium to the ICE model.

·        Volkswagen is running an EV trial project on the Greek island of Astypalea where its entire EV range is available to use by residents. It is focusing on the ID3 model, widely acknowledged as VW’s electric Golf. The current Golf retails at £23,860in the UK. The ID3 is priced at £29,635, a 24% premium to the ICE version.

·        Loveelectric.cars has launched recently. “The business exists to make electric vehicles affordable and accessible for everyone”. Working with businesses, the site aims to provide them with company fleets of EVs at prices which do not reflect the apparent differences in the “to buy” market. Using salary sacrifice, loveelectric can offer companies a Volkswagen ID3 for £205 per month, £40 cheaper than the equivalent lease in the wider market.

The advent of the EV, now enshrined in Government regulation around the developed world, asks a central question of the populace. Do you want to comply, buy an EV and pay a premium for doing so? This is not an easy question to answer, not least as it is set in the context of demographic change, rising inflation and possibly tighter monetary policies. Alongside this calculation is the question of whether, as we buy more EVs, this demand will produce economies of scale and price reductions. The answer to that remains too complicated to provide not least because of the “other question”.

The other question which in our progress to an EV world we may have ignored is this: what happens to the ICE vehicles currently on the road and being manufactured?

While we cannot buy a new ICE vehicle in the UK from 2030 onwards, we are perfectly at liberty to drive one. As of April 2020, there were 35 million cars registered in the UK, 98% of which were ICE powered. The SMMT’s own long-term forecasts SMMT new car market and parc outlook to 2035, by powertrain - SMMT show that the total UK parc of cars is expected to reduce in size to 34 million units by 2035. At that point, ICE vehicles will still account for 45% of the cars on the road.

This poses a problem for the authorities, the company fleet managers, and the drivers alike. Do we keep the ICE infrastructure in place despite the fact that we cannot buy a new one from 2030 onwards? Does BP and Shell maintain petrol and diesel pumps alongside their new EV charging points? Does the MOT system reflect the nature of a now obsolete technology powering almost half of the cars on the road? Will companies be able to provide vehicles to their employees which are not EVs?

VIP does not have all the answers to these questions but knows a company which could provide solutions. DRIVE and its ODO platform is focused on providing fleet managers and their drivers with a suite of interactive “dashboards” whose inputs and outputs address the questions which may be faced by fleets who, for credible reasons, comprise ICE as well as electric vehicles. ODO is designed to assist both but, in terms of the transition from ICE to EV, its functionality could make the difference between “just managing” and “managing well”.

As ever, in the world in which we now live, it is not over until we are all in the same place. The journey from here to there will not be linear. Stump-orientated, crowd-pleasing initiatives cannot accommodate the reality of a market which, like it or not, will consist of ICE vehicles for some time to come. How we manage this situation, and the eventual end of the ICE age will require systems such as ODO.

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