Stimulating demand for BEVs in the UK and Europe: a complex challenge of cost, confidence and consistency

Summary

In a timely and wide-ranging discussion hosted by Asset Finance Connect and sponsored by Odessa, key voices from the UK and European motor finance and leasing sectors came together to explore one of the automotive industry’s most pressing challenges: how to accelerate the uptake of battery electric vehicles (BEVs). With participation from Adrian Dally (Finance & Leasing Association), Stijn Blanckaert (Renta), Ian Plummer (Auto Trader), and Nick Smith (Deloitte), the conversation — moderated by David Betteley — highlighted the intricacies of EV adoption and the need for cohesive policy, financial innovation, and consumer confidence to drive meaningful change.

The state of play: a transition still on shaky ground

The UK and EU have both made ambitious public commitments to achieving Net Zero goals, with BEVs forming a key part of that strategy. However, BEV adoption remains patchy and heavily dependent on the timing and strength of government support schemes. As the panel agreed, a fundamental truth underpins the EV market today: when incentives are withdrawn, sales plummet. When reintroduced, they surge.

This dynamic has led to volatility in consumer uptake, particularly in the private market. As Blanckaert noted, Belgium’s EV success is largely attributable to consistent B2B incentives such as favourable tax treatment and low benefit-in-kind rates. However, consumer interest quickly evaporates once temporary grants expire. “Without government support, EV uptake remains low,” said Blanckaert. “People simply aren’t demanding them unless pushed by policy.” The UK has witnessed similar patterns, most recently in the context of the Spring Budget, which — rather than introducing new support — brought in new EV-related costs such as road tax and the luxury car tax from April 2025.

The discussion revealed that current policies are not only inconsistent but often counterproductive. Ian Plummer stressed that “consumers do not like murkiness — they like clarity and certainty.” In the UK, the delay of the ICE vehicle ban from 2030 to 2035 wasn’t just a policy shift, but a tonal signal that undermined confidence.

Price and perception: the twin barriers to private uptake

Price remains the biggest hurdle. While more affordable EVs are now entering the market — with over 30 models in the lower price bands — the upfront cost and monthly payments still exceed those of ICE equivalents by 20–25%. Nick Smith pointed to Deloitte’s global consumer surveys, which consistently show price as the leading barrier to EV adoption, followed by concerns around features and charging.

These affordability issues are compounded by uncertain residual values. As Adrian Dally explained, setting residuals for EVs remains complex due to limited historic data and an unstable used EV market. Leasing companies, attempting to offset the risk, have extended lease terms, which delays vehicle turnover and limits the flow of second-hand EVs — the main route through which lower-income consumers can enter the market.

Stijn Blanckaert detailed how leasing firms are now absorbing losses on EV remarketing, which forces them to price future leases more conservatively. The result is a vicious cycle: low residual values lead to higher leasing costs, which in turn dampen consumer demand and slow fleet replacement. This further limits the stock of used EVs entering the market, especially for private buyers.

Charging anxiety and battery myths

While early concerns focused on range anxiety, most consumers today are more worried about charging infrastructure — particularly those who don’t have access to home chargers. The lack of reliable, convenient public charging points continues to erode confidence, especially in urban areas and among second-hand buyers.

A related issue is the misconception around battery degradation, which remains a psychological barrier even if not a technical reality. As panellists agreed, education is crucial, but it must be a joint effort between governments, OEMs, and the leasing sector, particularly in dispelling persistent myths and highlighting the advantages of EV ownership — such as lower running costs and simplified maintenance.

Inconsistent policy, fragmented Europe

At a policy level, both the EU and UK face the same core problem: lack of consistency. The EU recently introduced an action plan to protect its automotive sector from rising Chinese competition and regulatory fatigue, but as Blanckaert and Smith noted, it remains more of a “roadmap” than a policy overhaul. Meanwhile, incentives remain highly fragmented across Europe — robust in countries like Belgium and Greece, but weak or disappearing in key markets such as Germany.

Norway was presented as a benchmark: with 89% of new car sales in 2024 being electric, its success was attributed to 15 years of coherent policy — from taxes on ICE vehicles to strong charging infrastructure and EV-friendly benefits like free tolls and VAT exemptions. The UK and EU, by contrast, have yet to build such sustained momentum.

Who pays? And who benefits?

A central question lingered throughout the webcast: who should pay for this transition? Governments are under budgetary pressure and unable to sustain high-cost incentive schemes. Meanwhile, OEMs are being asked to reduce their margins, and leasing companies are absorbing financial risk due to weak residual values. Yet the panel was united in their belief that unless stakeholders share the burden, EV adoption at scale will falter.

Companies are electrifying out of regulatory necessity, not consumer demand. Blanckaert observed that private individuals will support the environment — but only if it costs them no more than an ICE car: “People will be green—but only if it doesn’t cost more.”

For most, environmental benefits are not enough to justify a price premium. This view was reflected in the event’s polls, where only 15% of respondents saw environmental impact as a “very important” factor in EV purchase decisions.

Long-term vision: circular models and multi-life cycles

Nick Smith introduced a longer-term strategic view, calling for a circular economy approach. Rather than focusing on just the first ownership cycle, OEMs and finance providers should be thinking about how to manage EVs across multiple leases or users over 10 to 15 years. This would allow better return on assets, stabilise residual values, and reduce waste — but would also require new business models, partnerships, and long-term investment from OEMs and financiers alike.

The circular model aligns well with sustainability goals, particularly as regulators begin pushing for extended producer responsibility — including tracking battery materials and ensuring environmental accountability across a vehicle’s full life cycle.

Final reflections

The consensus from the webcast was clear: BEV adoption in the UK and Europe is still far from secure, and without a coordinated, long-term strategy, the transition risks stalling. Supply and demand remain misaligned, policies are inconsistent, and costs remain too high for average consumers. Meanwhile, confidence is being undermined by erratic government signals and lagging infrastructure investment. “Soft power matters,” said Dally. “A consistent, positive tone from government can boost sentiment just as much as direct funding.”

But the opportunity remains substantial. As more affordable EVs enter the market, and as the residual value landscape matures, the conditions for broader adoption will improve. What is needed now is stability, consistency, and collaboration — across governments, manufacturers, finance providers, and consumers — to ensure that electric vehicles become the default choice not only for the affluent, but for the mainstream public.

As the panel concluded, once people make the switch to EVs, they rarely go back. The challenge now is getting them to take that first step — and making sure it’s one they can afford, understand, and trust.

Watch the webcast in full here.