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Shoosmiths LLP 

November, 2021 - Milton Keynes, England

 

Road to Zero Report – an important milestone towards Net Zero transport

 

Leading UK law firm Shoosmiths today welcomes an important new report from The Green Finance Institute exploring the challenges and solutions to universal Electric Vehicle (EV) adoption and ownership.

The new study – released on Transport Day at the COP 26 summit in Glasgow – identifies the need for bold thinking, collaboration and capital investment of £150bn by 2030 to accelerate the mass deployment of decarbonised vehicles in the UK.

The firm has contributed to this study through its membership of Coalition for the Decarbonisation of Road Transport (CDRT), which was established by the Green Finance Institute in January 2021, to identify the most promising market solutions to scale up the investment in zero-emission road transport and supporting infrastructure.

The report says that fundamental to delivering, in an inclusive manner, such transformational change will be the introduction of a portfolio of new financial solutions to enable and empower people from all parts of the UK and from every income group to make the switch from petrol and diesel vehicles to EVs.

Partner and head of Shoosmiths’ financial services sector, Stephen Dawson, was asked to join the Coalition and has taken part in a number of workshops with other sector experts, academics and policymakers. He comments:

“We were delighted to be involved in the creation of this important report, which I believe will be critical to the success of the UK’s aspirations to transition to low carbon transport.

“COP 26 has highlighted the scale of the challenge – and also the opportunity which, in this decisive decade for action on climate change, we must all work towards.

“If we are to successfully transition away from vehicles powered by fossil fuels then making EVs accessible to the majority of people, not just the few, is critically important.

“Today’s report identifies that there is clearly still work to do to create the necessary funding ecosystem for this, but I am confident that with the right government and societal momentum, we will get there.”

The highlights of ‘The Road to Zero - Unlocking public and private capital to decarbonise road transport’ include:

  • To accelerate the redirection of private capital into road transport decarbonisation opportunities and achieve net-zero targets, collaboration between public and private sector needs to happen to a greater extent. This needs to be supported by regulation and a clear direction of policy to give investors confidence.
  • The UK government’s deadline of phasing out sales of new petrol and diesel cars and vans in the UK by 2030 has very significant implications for the road transport market in the UK. An estimated £150 billion of gross capital investment is needed by 2030.
  • A key challenge, which the Coalition has prioritised, has been to address the barriers to consumers adopting EVs through both widening access to the vehicles and financing the charging infrastructure needed to enable large scale adoption.
  • EV adoption by consumers has been slower than for business drivers who have benefited from multiple fiscal incentives to switch to EVs. Consumer adoption is hampered by higher upfront cost of both new and used vehicles relative to fossil-fuelled cars, lack of supply of affordable models and confusion around new technologies as well as concerns about access to reliable, nationwide charging infrastructure.
  • Despite significant progress, there is regional disparity in charging infrastructure provision, and the UK has yet to achieve the nationwide infrastructure rollout required to enable mass uptake of EVs.
  • The £150bn plus of investment needed by 2030 represents a mix of investment opportunities and will require different financial mechanisms across numerous asset classes with varying risk and return characteristics that will appeal to different investors.
  • Analysis performed by the Coalition estimates that the EV consumer financing market could be worth £31 billion annually by 2030, with cumulative growth of £140 billion between 2021 and 2030. However, consumer adoption of EVs is still in its infancy and a number of barriers deter larger numbers of consumers from switching in the short term.
  • The creation of a viable second-hand market for consumers was identified by all stakeholders as a key priority to support development of the primary market. It is also key to ensuring access to EVs across all income groups.
  • Consumer finance products which help consumers understand the total lifetime cost of ownership have the potential to help consumers overcome some of the barriers to accessing an EV, including the upfront price premium and technology risk.
  • Without solutions to reduce the risks faced by lenders rolling out EV consumer finance products, which in turn help consumers overcome their reluctance to switch across both the new and used market, there is a risk consumers will continue to wait, and the market as a whole fails to complete an orderly transition to all new EV sales by 2030.
  • Consumer and business confidence about transitioning to EVs is also hampered by a lack of widespread and suitable charging infrastructure within the UK today. If the potential market growth forecast for EVs is achieved, there could be as many as 11 million EVs on UK roads by 2030, necessitating significant charge point growth from the 27,0007 public chargers in operation today.

Read the full report, here.


 

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