In the global push towards net-zero emissions, decarbonisation of the transport sector is key. It is currently responsible for 23% of the world’s energy-related CO₂ emissions and, to achieve the 2050 net zero targets, these emissions need to fall by more than 3% per year (or 25% in total) by 2030 to stay on track.

In this article, we look at the current state of play of the EV sector in the UK and different ways of investing.

The obvious way to invest in the EV revolution is via the cars themselves. It’s a growing market, and demand from consumers could be further fuelled by new government regulations: if a ban on the production of new petrol and diesel cars were to come into force in the future, upgrading to electric vehicles becomes an inevitable choice.

In the UK, where the transport sector is the largest contributor to greenhouse gas emissions, decent progress has already been made: the number of plug-in vehicles on UK roads has skyrocketed from 1,650 in 2010 to 1.9 million as of July 2024. Despite this rapid growth, however, EVs still represent only 5% of the total car market, so there is plenty of growth still to come.

While passenger vehicles have led the charge, the commercial sector is also making strides, with light goods vehicles (LGVs) seeing a notable increase in EV adoption, although not at the same rate as passenger domestic transport. LGVs have seen the greatest uptake, with more than 60,000 now registered (out of 4,730,000). There are also c. 3,000 electric buses and coaches, c.2,500 HGVs and 14,000 electric motorbikes.

The second-hand EV market in the UK has recently seen a boom. Nine out of 10 new cars are bought using a lease or similar agreement lasting three to four years - the average holding time of a new car. As the first wave of battery-run car owners come to the end of their agreements, the supply of second hand cars has jumped across UK dealerships.

And, unlike the new EV market, where high costs continue to deter some buyers, the second-hand market is also becoming more competitive and, in some cases, used EVs are now as affordable as traditional petrol cars, making them accessible to a broader audience.

EV fleets will also play a key role in accelerating EV adoption, as the high turnover of vehicles will help supply the second-hand market.. The government is committed to working with large fleet operators to meet their EV and charging needs, recognising their importance in the transition and the effort they have made to date.  

As an example, London’s iconic black cabs are set to become fully electric by 2030, but demand far exceeds supply. Currently, there are c. 15,100 London taxis on the road, 50% of which are petrol and will need to be replaced – further supporting the requirement for the rapid roll out of EV infrastructure, public charging and private funding.

The success of the EV transition hinges not only on the adoption of vehicles, but also on the accessibility of charging infrastructure. The UK’s charging network has grown fivefold, with private funding playing a significant role. Yet, with only c. 60,000 public chargers available, the infrastructure still falls short of supporting the government’s target of 300,000 public chargers by 2030.

Public charging is a critical area for investment, particularly as over 40% of UK vehicle owners lack access to off-street parking and thus rely on public chargers. Due to range limitations, public EV charging will also be required in strategic locations for long range use.

And what we have today is far from what we need. There are approximately 8,500 petrol forecourts in the UK today. It takes an average of about 2 minutes to fill a car tank. There are around the same number of public chargers for EV, but it takes 20-30 minutes to charge an EV from these points and the price is around a third more than that charged at home. What’s more, only 39% of motorway services have met their EV targets.

The UK ranks 11^th in terms of EV adoption among European nations, with the majority of countries seeing less than 5% penetration of plug-in electric vehicles. Norway leads with nearly a third of its vehicles being plug-in electrics, while Southern and Eastern Europe, along with the Baltics, show extremely low adoption rates – often less than 1% of passenger fleets are electric.

In terms of other vehicle types, plug-in electric vehicles make up just 0.82% of vans, 0.11% of trucks, and 2.0% of buses across the EU, with the vast majority still powered by diesel.

In 2023, over 150,000 public charging points were installed across the EU, bringing the total to 630,000. However, much more is needed: the European Commission estimates that 3.5 million charge points will be required by 2030. This means an annual installation rate of 410,000 charge points, or 8,000 per week—nearly three times the current pace of rollout.

The EV charging sector presents clear opportunities. There is an undersupply of public infrastructure to meet EV targets, yet the technology is well-established, with relatively low upfront and ongoing costs (including operating expenses and insurance costs).

However, the long-term nature of the market opportunity brings challenges. The sector faces high initial expected losses, and the crowded market is vulnerable to demand risk and uncertainties around EV uptake.

The EV sector is still very nascent and new ideas and advances in technologies are constantly emerging. For example, when it comes to pioneering vehicle-to-grid (V2G) technology, three energy companies in the UK have led the way: Electric Nation, Octopus and Ovo Energy. The V2G technology allows EV owners to export excess energy stored in their EV batteries back to the national grid to help stabilise it, particularly during times of peak demand. The dynamic charging rates then allow the battery to be recharged during the most cost-effective times (e.g. overnight). Users are incentivised by the payments or credits received for energy that they’ve exported, which will offset the cost of electricity used for charging.

Another example is county councils piloting schemes to run charging cables through a pavement without creating a trip hazard. This allows households with no off-street parking to charge their EV using a home charger.

Government support remains a critical factor in the growth of the EV sector. Various schemes, such as the Local EV Infrastructure Fund (LEVI) and the Rapid Charge Fund (RCF), are designed to accelerate the deployment of charging infrastructure and support the transition to EVs. However, the Spring Budget of 2024 fell short in providing adequate climate support, with a distinct lack of new support or measures to boost EV adoption and charging infrastructure.

The new Labour government has pledged to restore the phase-out date for new petrol and diesel cars to 2030, accelerate the rollout of public charge points, and standardise EV information – including the state of battery health. These policies, alongside investments in domestic battery manufacturing, aim to solidify the UK’s position in the global EV market.

We wait to hear more in the Autumn Budget in October.

Find out more about GCP Infrastructure Investments here.

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