Fleet Alliance CEO Andy Bruce explains why electric vehicle (EV) adoption will accelerate in 2024
2024 will be the year that companies look to accelerate down the electrification route, as they seek to meet their own ESG agendas and address the environmental concerns of their employees. And they will be helped in achieving these ambitions by lower prices and greater supply of electric vehicles.
Electric cars will be more widely available across the board throughout 2024 as supply increases and prices, inevitably, come down.
The vehicle manufacturers are once again building up stocks of vehicles after several years of shortage of supply, with good levels of many volume models. And, as they are bound by the government’s target to produce 22% of their product mix as EVs in 2024, that means that EV supply will continue to increase.
As a result, the manufacturers now have to be more realistic about pricing, but reductions in list price, as we saw with Tesla, can distort the market. Discounting is the tried and tested route they will go down and already we are seeing some discounts over 30% in certain specific cases.
Threat of tariffs on EVs recedes
The EU proposal to extend the rules of origin for batteries for a further three years until 2027 is welcome as it means stability of parts supply is maintained and the threat of tariffs on EVs has receded for at least another three years.
All of these factors combined add up to good news for our customers as they will mean lower rentals on EVs, making them more affordable along with the continued attractiveness of very low Benefit-in-Kind (BIK) tax rates.
BIK on electric cars is just 2%, and is fixed until April 2025. While this rate is set to increase by 1% each year until it reaches 5% in April 2028, it is still well below that of petrol and diesel cars which can be as high as 37%.
This continues to make electric cars very attractive from a cost perspective, especially when supplied through salary sacrifice schemes.
Pent-up demand
We at Fleet Alliance, like many suppliers, are seeing above average levels of contract extensions with a running rate three times that of normal levels.
I liken this pent-up demand to a dam that is currently showing signs of leaking, but which may well see a more general collapse in the coming months as customers cannot continue to extend their vehicles indefinitely. Salary sacrifice is the route that many will decide to go down.
Finally, we believe that 2024 will bring us all greater political stability and a gradually improving economic backdrop, which I’m sure we would all welcome.
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Sarah Tooze has been an automotive journalist for more than 15 years, specialising in the fleet and transport sectors. She has held senior positions at industry-leading B2B titles Fleet News and Smart Transport, and led campaigns championing motorists as consumer editor for online used car marketplace Heycar and motoring advice website HonestJohn.co.uk. In 2017 she won the Newspress Automotive Business Journalist award.
