By Jonathan Turner, Strategic Development Manager, Hitachi Capital Motor Finance

After test driving the new DS electric concept car recently, Richard Branson tweeted that “the day everyone drives electric cars isn’t far away”. And while their share of the global market is still negligible, it’s certainly true that electric vehicles (EVs) have made impressive gains in recent years.

Once confined either to glorified golf buggies or sleek sports cars, there are now more than 40 models available in the UK, including large family cars, hatchbacks, estates, SUVs and medium-sized vans. Prices range from the Peugeot iOn, which starts at £16,995, to the BMW i8, which comes in at over £100,000.

Sales are rising – and fast. In 2011, 1,056 new electric cars were registered in the UK. By 2015, that number had soared to 28,188. In June this year, the government predicted that half of all new car sales will be electric by 2027.

A worthwhile investment

According to the UK Department for Transport, Brits choose electric cars for three main reasons: financial, environmental and technological – in that order.

T8 Editor Jess and her Route 57 Kia Soul EV.

T8 Editor Jess and her Route 57 Kia Soul EV.

The fact that financial concerns are paramount is something of a surprise given the heftier price tag most electric models carry compared with their conventional counterparts. But motorists who are prepared to stump up the cash at the outset can reap the rewards later through savings on fuel, vehicle excise duty and congestion charges.

On the supply side of the equation, the availability of new models is also having a positive impact on sales as the range of choice increases.

Policy shifts

The global EV market hit a milestone in the second half of 2015 when the one millionth modern plug-in EV was sold. Unsurprisingly, EVs are accounting for a higher percentage of total car sales in countries with stronger green agendas such as Norway, Sweden, Denmark and the Netherlands, where registration tax is based on CO2 emissions. In China, by contrast, electric cars account for just 1% of the total market, although that share is growing fast.

Here in the UK, a number of government schemes have been set up to encourage further take-up, including the ‘plug-in car grant’, which contributes up to £4,500 towards the price of a new EV, and the ‘Electric Vehicle Homecharge Scheme’, which covers 75% of the cost of a home charge point.

In tough economic conditions, however, incentives like these are among the first under the spotlight, and many governments are beginning to talk of phasing out support for EVs as the cost of battery technology falls. The main question for policymakers is therefore how to ensure EVs grow market share as that support falls away.

Longer distances, lower prices

Besides the higher price tags, another concern among motorists is ‘range anxiety’. Until charging points become more widespread, people will understandably be wary of buying a car which may leave them stranded if they travel too far afield. There are also concerns about reliability.2016 Nissan LeafBut both the technology and the availability of charging points are improving. EV models like the Nissan Leaf and Renault Zoe can now go for 150 miles on a single charge and charging stations are being installed in a growing number of town centres and motorway service stations.

And crucially, of course, prices are coming down. The day we all drive electric may still be some way off, but even as incentives wind down the current growth looks set to continue as the range of affordable options keeps growing.

Find out more at http://www.hitachicapital.co.uk/motor-finance/.