The UK boss at Kia, Paul Philpott, has said that car makers are finding it ‘economically difficult’ to bring affordable smaller vehicles to market due to the high cost of batteries, despite the ban on new petrol and diesel cars looming in 2030.
His comments follow a report from the Advanced Propulsion Centre earlier this month that confirmed it has dramatically cut UK electric car production forecasts up to 2025 because battery vehicles remain too expensive for many motorists.
Kia’s Niro EV, which starts from £36,795, was the third best-selling electric car in Britain in 2022, while its cheapest battery-powered car is the Soul EV, which starts from £32,845.
Kia UK chief executive Paul Philpott has said that smaller affordable electric cars are ‘economically difficult’ to bring to market due to the high cost of batteries
Mr Philpott’s statement came during a launch event last week hosted at its British headquarters in Walton-on-Thames, Surrey, where the UK boss reflected on the brand’s progression over the last 15 years – and where it’s going next.
Industry figures show that Kia celebrated record sales of 100,191 units in 2022 – four times as many vehicles it sold to UK customers in 2007, making it Britain’s fastest-growing mainstream car brand.
To put its increasing popularity into perspective, more UK drivers bought Kias than Citroens, Fiats and Peugeots put together last year.
The Korean car firm officially overtook Vauxhall for 2022 sales and only Volkswagen, Ford, Audi, BMW and Toyota shifted more motors in the previous 12 months.
And sales of electric vehicles were a major contributor to its success.
Of all the vehicles the brand shifted in 2022, 16.3 per cent were battery electric cars.
Its Niro EV was the third best-selling pure electric model in Britain, amassing some 11,197 registrations. Only Tesla sold more examples of the Model Y (35,551) and Model 3 (19,071) last term.
And Mr Philpott said 20 per cent of this year’s advance order bank is already for fully-electric cars – and there’s an expectation for this figure to rise throughout 2023 and beyond, with Kia already setting in stone its commitment to sell only electric vehicles from 2030 onwards.
Kia is the fastest-growing car brand in terms of UK sales, with the Korean maker shifting more motors in 2022 than Citroen, Fiat and Peugeot combined
THE 10 BEST-SELLING ELECTRIC CARS OF 2022
1. Tesla Model Y – 35,551 sold
2. Tesla Model 3 – 19,071 sold
3. Kia e-Niro – 11,197 sold
4. Volkswagen ID.3 – 9,832 sold
5. Nissan Leaf – 9,178 sold
6. Mini Electric – 7,425 sold
7. Polestar 2 – 7,345 sold
8. MG5 EV – 7,030 sold
9. BMW i4 – 6,699 sold
10. Audi Q4 e-tron – 6,594 sold
Yet despite the increase in EV demand, he hinted that a small, affordable electric model from the brand might be some way off.
He said: ‘The electrification of the small car is really difficult, economically speaking,’ according to a report in The Times.
Most car makers are predominantly offering premium electric models in their fleets, which provide stronger profit margins on the cost of installing electrified systems, with the battery pack by far the costliest component of all.
Paul Philpott, Kia UK Chief Executive
That’s because the smaller the car, the larger the proportion the battery in its production cost, which is why there are so few sub-£30,000 small compact EVs on the market.
Under Kia’s current ‘Plan S’ strategy, it intends to launch 14 electric vehicles by 2027, including a model under the current guise of ‘EV1’, which will be an ‘A segment’ supermini or city car.
Yet Mr Philpott’s comment suggests this smaller vehicle will likely arrive towards the end of the plan’s timeframe.
Ministers are pinning their hopes on the introduction of a Zero Emission Vehicle (ZEV) mandate in 2024 to encourage car makers to bring cheaper models to consumers in the imminent future in order to meet increasingly-strict sales requirements.
From next year, the ZEV mandate is expected to mandate that 22 per cent of all auto brands’ UK sales to be electric.
This market share requirement will increase with each year, with a third of all sales needing to be battery powered in 2026, under the Department for Transport’s technical report released back in April last year.
By 2028, more than half (52 per cent) of all model sales will need to be battery-powered cars, it said.
While the ZEV mandate is expected to be enforced from next year, the government is still yet to confirm the ins-and-outs of the scheme, including what punishment manufacturers will receive if they fail to adhere to these binding targets.
Electric future: The Zero Emission Vehicle mandate will make it a requirement for car makers to increase their EV sales each year to 2035
Projection for year-on-year ZEV mandate targets
2024: 22% new car sales electric
Source: Department for Transport
Electric car makers put the brakes on UK production
Earlier this month, the Advanced Propulsion Centre, which provides taxpayer funding to makers of zero-emissions vehicles, said in a report that the ‘uncertain economy’ will push drivers towards cheaper – petrol and diesel-powered – cars for a longer period than it had previously expected.
As a result, makers of electric cars are slowing down UK production as the vehicles are too expensive for many motorists.
It is now expected that the UK will produce 280,000 fully electric cars and vans in 2025, down from previous estimates of 360,000.
The forecast means only a quarter of car output will be electric within the next two years, lower than prior forecasts of more than a third.
It is now expected that the UK will produce 280,000 fully electric cars and vans in 2025, down from previous estimates of 360,000
It added that the phenomenon was not unique to the UK, with electric vehicle production across Europe predicted to be 12million – a million less than previous estimates.
The slowdown comes as prospective buyers see their budgets hammered by the cost of living squeeze and inflation, which is already showing signs of impacting appetite for expensive EVs.
Tightening purse strings already appears to be a concern at Tesla, with the brand slashing the price of its Model Y and Model 3 by as much as £9,000 and £8,000 respectively this month – much to the anger of Tesla customers who paid far more for cars that were delivered in December.
Kia’s Niro EV (starting from £36,795) was the third best-selling electric car in Britain in 2022 with 11,197 registrations
Kia’s cheapest electric car is currently the Soul EV (left), starting from £32,845. The svelte EV6 (right) rings in from a whopping £45,245
There are just THREE electric cars for less than £30k
Currently, Kia has three fully-electric cars in its model range, including the popular Niro EV, which starts from £36,795.
The cheapest model is the Soul EV, which starts from £32,845, and the most affordable sleek EV6 premium hatchback costs a whopping £45,245.
Its next model won’t be inexpensive either; the Kia EV9, an electric seven-seat sports utility vehicle, is set to start in the region of £60,000 when it is officially unveiled later in the year.
While Kia’s first ‘affordable’ small electric model might not arrive for the next four years, experts have predicted that the price of new electric cars will shrink dramatically in coming years.
A 2021 report predicted that electric vehicles will have price parity with new petrol models from 2026 onwards, though this is looking increasingly unlikely with EV prices going up
A report in 2021 produced by BloombergNEF produced on behalf of campaign group Transport & Environment said that by 2027 electric cars will be cheaper to produce than models with petrol and diesel engines.
It claims that falling prices will be driven by cheaper batteries, with their price in 2030 estimated to be 58 per cent lower than they were in 2020.
It says manufacturing costs will be lower for electric family cars and SUVs by 2026, with battery superminis and city cars being less expensive to make by a year later.
The study claims that lower costs will drive a surge in EV demand, predicting that more affordable prices will result in 100 per cent of passenger car sales across Europe being battery electric by 2035.
However, the market points at prices going in the opposite direction.
As it stands, there are just three pure electric cars in showrooms today that cost less than £30,000, down from seven under that price point in September 2022.
The cheapest is the new MG4 EV – a family-size hatchback launched late last year that starts from £25,995.
This is the cheapest electric car on sale in Britain , the MG4 EV. It costs from £25,995, which is £3,000 less than the next least-expensive battery model in showrooms
Nissan’s Leaf, which is built in the UK at the Sunderland plant, is second least-expensive EV on sale in Britain, with prices starting from £28,995
The Mini Electric hatch is the third and final electric car for under £30k in the UK. It costs from £29,000, though a new-generation version is due to replace it soon
The remaining two models under the £30k price point is the Sunderland-produced Nissan Leaf at £28,995 and the soon-to-be discontinued Mini Electric at £29,000 – which is currently made in Oxford but assembly will soon move to China.
In comparison, the cheapest petrol-powered car in Britain today is the Dacia Sandero, which starts from £12,995 – almost half the price of an MG4 EV.
Experts claim the dwindling number of sub-£30k electric cars on sale is a result of ‘a perfect storm of inflation together with manufacturers streamlining their ranges’.
This has pushed the price of even the smallest electric cars much higher in recent months.
The biggest increase has been the tiny Fiat 500e. The price of the cheapest version has leapt from £19,995 in early 2021 to £30,645 today – an increase of 53 per cent.
This is partly due to the Italian company deleting the entry-level model with a smaller battery from its range, but the car has also had an inflationary increase of £2,650 in addition to the government terminating the plug-in car grant last June.
Other big risers include the Honda e, which has shot up by 38 per cent from £26,660 in 2021 to £36,920 for an identical model today. It means the Honda e’s current starting price is just £2,000 less than that for a new petrol BMW 3 Series premium saloon.
Another example of EVs rocketing in price is the Skoda Enyaq; the cheapest version of the Czech brand’s electric SUV is £38,970, up from £30,450 two years ago.
Some electric cars have sky-rocketed in price in recent months, including the Fiat 500e. The cheapest version now costs £30,645 – that’s 53% higher than it cost in 2020 (£19,995)
Another small EV that has seen a huge leap in price is the Honda e. It has risen 38% from £26,660 to £36,920 for an identical model in just two years
The cheapest Skoda Enyaq iV electric SUV is now £38,970. That compares to £30,450 only two years ago