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Tax changes are set to push more drivers towards electric vehicles. But can the supply chain keep up with the ever-increasing demand?

You ain’t seen nothing yet. Sales of battery electric vehicles may have jumped by a huge 144% last year, but that could be dwarved in 2020.

A number of factors point to a bumper year for electric vehicles – and potentially plug-in hybrids as well. None is more important than the new company car tax rates that come into force on April 6.

Whereas in 2019/20 a zero-emission vehicle sits in the 16% Benefit-In-Kind tax bracket, from April that drops to 0%. For 2021/22 it increases to just 1%, then 2% in 2022/23. The question many company drivers will be asking is no longer “Should I run an electric car?” but “Why wouldn’t I?”.



Other factors set to push more drivers in the direction of electric vehicles include the return of some important models. The Hyundai Kona Electric and Kia e-Niro both took a hiatus from sales after quickly selling out, but are available to order again.

Company Car Today - Green Pages - Minerals shortage may hit EV growth - Image of Kia e-Niro charging

Initial allocation of 900 Kia e-Niro’s sold out in just over four weeks

According to Steve Hicks, Kia’s UK sales director, “The initial allocation of e-Niro was around 900 and it took just over four weeks to take orders against all these.”

Hicks expects much healthier supply for 2020. “Our initial allocation is around 9000 units and there will be flexibility from other EU markets if the demand for EVs in the UK outweighs the rest of Europe,” he explains.

Similarly, VW stopped selling the Passat GTE PHEV when demand outstripped supply. However, the GTE is back as part of the revised Passat line-up, and is predicted to account for a quarter of sales, compared with 1-in-10 for the previous version before dropping from the range.

Despite these past problems, VW is confident it is now ready to keep up with the appetite for its plug-in hybrid. While tax rates for a PHEV aren’t rock-bottom like those for a pure battery EV, a banding of 14% for 2020/21 makes the GTE a much more tax-efficient choice than a diesel.

And Nissan is keen to capitalise on others’ lack of supply, claiming to have stock for delivery in Q1 of this year (see Coffee With Peter McDonald).



While the likes of Kia and Volkswagen are confident, at least in public, that the supply problems of 2018 and 2019 are in the past, not everyone is so optimistic.

The British Vehicle Rental & Leasing Association’s report, Industry Outlook 2020, polls a range of senior executives from the rental and leasing industry for their views on a variety of topics. including demand for EVs.

Company Car Today - Green Pages - Minerals shortage may hit EV growth - Image of the New Honda e

New Honda e and Passat GTE could sell well

“Almost every respondent predicts that getting hold of sufficient pure electric vehicles will be a major concern in 2020,” write the report’s authors.

“While some electric vehicles are available in volume, the latest, highest-range models are in scant supply.

“Brexit is cited as the main cause, with OEMs accused of diverting their prized new products to more profitable markets on the continent, where they can contribute towards car makers meeting tough new EU emissions targets.”

So while Government tax policies may help demand for EVs to reach new heights, the country’s new relationship with Europe could put us at the back of the queue. Even so, the report concludes that by the end of 2020, pure EVs will be responsible for 20% of all new company car registrations.



Our changing place within Europe isn’t the only stumbling block. Harvey Perkins, a partner in Gunnerpooke Consulting, has other concerns.

“Availability of the cars seems to be limited by the supply of some of the metals used in the build of batteries,” he says. “Take cobalt for example; estimates vary on how much is in each battery, with Tesla seemingly using the least. NMC811 chemistry would suggest roughly 6.9kg of cobalt in each 66kWh battery (I’ve heard much higher estimates for current batteries).


Company Car Today - Green Pages - Minerals shortage may hit EV growth - Image of the new Volkswagen Passat GTE Variant

New Volkswagen Passat GTE

“In 2018 we dug up 140,000m tonnes of cobalt globally (64% of that in the Congo). So – assuming we didn’t make anything else with it – that’s enough to make around 20million vehicles a year with an average battery size of 63kWh. We’d need around 11% of that 2018 total just to cover all new UK car registrations.”

What’s more, batteries keep on getting bigger, addressing concerns over range, but increasing the appetite for raw materials. “The latest batteries from Audi, Mercedes and Porsche are all 70-90kWh, and I’m guessing use a lot more cobalt,” suggests Perkins.



If a high-demand product is in short supply, basic economics suggests prices rise. Will leasing rates for EVs increase over the next few months?

The picture is difficult to predict, argues Perkins. “Where supply is limited you might expect prices to rise, but we know that battery technology is improving quickly and therefore the cost of the equipment you would expect to fall.”

Growing acceptance of EVs among used car buyers has also led to improved resale values, which should bring leasing rates down rather than up.

So, demand for battery electric vehicles is certain to increase, but it remains to be seen if manufacturers will have sufficient supply to exploit it.


David Motton