UK to spend £7bn on electric cars by 2014

Britain's motor industry is in line for a £7bn boost from electric cars between now and 2014, according to a survey to be published this morning. Yet, in the short term, dealerships face a "fraught" 2011, as the stuttering economy and subdued consumer confidence drag sales down by as much as 10 per cent on last year, a leading industry expert warns.

The survey of 5,000-plus drivers by GfK Automotive found 1.8 per cent of people would "definitely" buy an electric car by 2014, equating to more than 300,000 electric cars if extrapolated over the total car-buying population of 19.8 million households.

Using the newly released all-electric Nissan Leaf as a benchmark, the market will be worth £7.2bn by 2014, GfK Automotive says. And another 3 per cent of respondents – equating to 500,000 of all car-buyers – say they would consider going electric in the future, once concerns such as battery "range anxiety" are addressed.

Electric cars may be a smooth ride in the longer-term but in the more immediate future the car industry is facing yet another bumpy road. Although a slight drop in sales compared with last year has always been expected, the tricky economic situation spells problems for 2011, according to Professor Garel Rhys from the Centre for Automotive Industry research at Cardiff University.

Professor Rhys, a leading authority on the British car industry, says sales could drop back to as low as 1.8 million this year, 10 per cent down on the 2 million sold in 2010, and also some way below the 1.93 million forecast by the industry trade body, the Society of Motor Manufacturers and Traders.

Alongside rises to VAT and national insurance contributions, the biggest danger to Britain's car-buying is from the decline in real income levels as rocketing inflation far outstrips wage increases, Professor Rhys said.

"Given that cars are so income-elastic, the developments in the economy are not going to be underpinning the car market at all over the coming year," he said. "All the industry will be able to do is to minimise the decline."

The Office of National Statistics published GDP figures this week showing a 0.5 per cent drop in output in the last three months of 2010. Even accounting for the hit from the cold snap just before Christmas, economic growth in the period was estimated to be "flattish" at best, raising fears that the recovery is too weak to withstand the swathes of public spending cuts outlined by the Chancellor in the autumn.

"Whether we are technically going into a double dip or not is academic," Professor Rhys said. "What we are going to get, at best, is anaemic growth, which for a lot of people will feel like recession because jobs will be lost, incomes squeezed and so on."

But not everyone is so gloomy. Despite car sales numbers in steady decline for the last six months, and the threat from the worse-that-expected end-of-year GDP numbers, the industry is well prepared for a difficult start to 2011.

"Conditions are tough and were always going to be but we are still expecting improvements in the second half of next year," Paul Everitt, the chief executive of the SMMT, said. "We must grit our teeth and not panic."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Operations Manager

£30000 - £38000 per annum: Recruitment Genius: They are a financial services c...

Guru Careers: Stockbroker

£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence