The Best Car Finance Blog In The World

In a recent piece I wrote about the grave lack of charge points that will prevent people from buying or leasing Electric Vehicles (EV’s) along with the lack of range and the ridiculously high cost to buy an EV compared to a petrol or diesel car – we have another factor. Batteries.

Despite everything, we are starting to see a rise in EV sales this year that has taken manufacturers by surprise. One would think that the solution would be simple – up the production of EV’s and solve the problem. On the face of it, that should be the solution but it would seem that increasing the supply of steel or say plastic components would be simple, increasing the supply of batteries isn’t so straight forward.

This increased production needs to be planned years ahead so the fact that Hyundai sold its whole year’s allocation of Kona electric models by March and has a waiting list of 2,000, Kia has also sold out of its year’s allocation of 1,000 e-Niro models it’s put pressure on battery supply. And there simply isn’t the production capacity.

And the increased demand isn’t just the UK, global demand has shot up making the problem even worse. EV’s have suddenly moved from being in the doldrums to higher than expected demand causing car manufacturers to up the investment stakes into battery development and production. Nissan, whilst suffering low sales of their Leaf has now reached ‘Inflection Point’ according to Roel De Vries, corporate vice president, global head of marketing at Nissan.

In other words, demand has outstripped expectations. But, as he pointed out, increasing supply of batteries isn’t as simple as increasing order quantities or place additional orders with other suppliers. The global suppliers are at capacity and if new suppliers are to come online it will take two years to get from plans to production.

In order to address the problem Nissan has taken a stake in Automotive Energy Supply and Toyota has signed an agreement with Panasonic to develop and make Lithium-ion, solid state and next-generation batteries. Other manufacturers are following suit. Kia has partnered two battery producers in order to avoid future bottlenecks in battery supply.

The other issue is cost which needs to come down substantially. Currently, the battery pack in an EV represents 40% of the total cost of the car and this has reduced from 70% over the last 7 years. KPMG expect the battery cost to drop by another 50% by 2030 to 20% of the cost of the car as a result of cell chemistry and economies of larger scale production.

Autotrader have also pointed out that the cost of producing an internal combustion engine is around £1,000 to £2,500 whilst an electric powertrain is approximately £8,000. But in a typical contradiction whenever we discuss EV’s PA Consultancy predict that parity between electric car cost and diesel car cost will reach parity as soon as next year. Given supply and demand of batteries, I find that very hard to believe.

Tesla pointed out that under-investment in mining over the last few years has led to a situation where raw materials could be in seriously short supply. Lithium is limited and could be the first problem so mining companies are searching for areas to mine to increase supply. Nickel is also another metal that will give supply problems.

Beyond the metals we have Cobalt and other minerals that also have to be mined. And the problems don’t stop with the mining. Specialist group, Security of Supply of Mineral Resources (SSMR) have pointed out that 60% of the world’s Cobalt comes from the Democratic Republic of Congo controlled by Chinese traders who use child labour and low pay.

They warn that we need supplies from more stable parts of the world or risk being held to ransom by unscrupulous traders. Who said moving to electric vehicles would be easy? Probably the same people who predicted that leaving the EU would be a breeze! By Graham Hill

As if things weren’t bad enough for those looking to change their cars this year or to take out a contract hire agreement for the first time, we are now hit with the news that used car values have taken a dive.

Brexit has had an adverse effect on most industries but especially on the car industry. For over 30 years we have benefitted from ‘dumping’, not my favourite expression but used to explain the way European manufacturers use the buoyant UK market to keep their production lines moving or to dispose of excess stock. Got a problem – bung a few more cars in the direction of the UK!

But times are changing. Many manufacturers don’t see the same future in the UK so are heavily investing in Europe, educating them into the methods of acquiring cars more cheaply rather than heavily discounting cars destined for the UK. The net result is higher cost of cars with fewer available forcing up prices even further. Poor exchange rates have affected costs also which in turn has pushed up rates.

The saviours over the last 2 years has been a very buoyant used car market which has had the effect of reducing rentals as lenders factor in strong resale values at the end of each lease. But for the last two months we have seen close to a collapse of used car prices giving the leasing companies the jitters.

2016 was a mega year for new car leases with the most popular lease period being 3 years so we knew that supply would increase this year but with demand dropping it has made matters worse. Whilst things may be wildly different in 3 years, as current cars end their lease period, this drop in used car prices, largely unexpected, has put the leasing companies on the backfoot.

Industry experts have suggested the old argument that this is a re-alignment of used car prices and that used cars had been overpriced for a while but will that wash and remove the panic to re-align lease rates time will tell but for the moment I wouldn’t expect lease rates to do anything other than increase. See a bargain – nab it before it goes. By Graham Hill

So what’s he up to this time I hear you ask? Well Mr Angry of West Sussex here is getting really annoyed that we don’t hear anything concrete from this Government regarding diesel cars vs petrol cars vs hybrids vs electric cars.

He’s called for a national scrappage scheme which I don’t disagree with. The real culprits are the very old cars and vans that can be seen spewing out thick smoke and soot which is clearly not good for the atmosphere and the health of our nation.

Having said that MOT testers now have to carry out a visual check on the exhaust of all vehicles and if they are spewing out smoke they fail – simple as. Back to Mr Khan, he’s calling for a national scrappage scheme, not to put people into newer petrol cars that would be a step in the right direction (not exactly as I’ll explain) but into pure electric vehicles.

Well, first of all, you don’t have to be a financial whizz kid to realise that people that are driving old diesel cars about are either eccentric multi-millionaires that are tight with their money but can appreciate a good deal when they see it or is it because they are financially stretched and can’t afford a newer car otherwise they would be driving one?

So expecting these people to swap their old diesel for either a hugely expensive new electric car or a used electric with a range of 3 miles, on a good day, is pure idiocy! And if we could incentivise the diesel drivers to move across to electric cars what about the infrastructure. I live in a rural Sussex town but with the remnants of an old marriage taking up space in my garage that couldn’t accommodate my car anyway (even if it was empty) and with no power to the garage – charging in my garage would not be an option.

Parking in the road is manic and with lamp posts located on the inside of the pavements, we couldn’t even mount chargers on the lamp posts. The idea that we can convert everyone into EV drivers is a pipedream and not possible until battery technology catches up. A lightweight battery pack that could be easily removed from the car and charged indoors then reconnected into the car when needed could be a solution – but we aint there yet!

In the meantime, the answer would be to get new car buyers, with the ability to charge electric vehicles, to buy EV’s or plug in hybrids, the more sold would bring down the cost of used cars and make them more affordable.

But as the Government has removed the subsidy on hybrids and reduced the subsidy on EV’s it’s hardly a move in the right direction. And even companies, keen to get their company car drivers into EV’s with zero emissions face the challenge from employees that BIK tax this year, even on cars with zero emissions, face a BIK bill of 16% of the car’s overpriced list price.

I should also mention that if you read my 3 part report into the findings by the Germans who carried out a large survey into latest generation diesel cars only to find that emissions of NOx, CO2 and particulates were less than petrol when tested on the road in real world conditions so if anything we should be moving back to diesel as an interim measure.

Sorry Mr Khan, consider the above then I would get back to the drawing board if I were you!  By Graham Hill

We all know that the more electric vehicles on our roads in the UK the greater the demand for public charge points. Even with public charge points you will need a domestic charge point as the cost of charging an electric car using a public charge point pushes up the cost per mile.

When the fuel stations started to introduce fast chargers they were charging an introductory rate which was roughly half price. Once they increased the rates the cost per mile was higher for an electric car than a petrol or diesel car. Whilst local authority installed charge points should be cheaper they will still be more expensive than domestic chargers.

However, London has decided to assist motorists and encourage the purchase of electric cars by converting lamp posts into EV charge points as part of a £300,000 project. The points can deliver charge rates of up to 7.7Kw, and are being installed at 50 lamp posts in Southwark.

The charge points are being supplied by char.gy and funded by Go Ultra Low City Scheme. The chargers can be accessed by EV drivers on pay-as-you-go basis. Poppy Welch from Go Ultra Low said she wants to see, ‘All new street lighting columns include charging points’ in areas with on-street parking. By Graham Hill

Over the last few years, we have seen more company car drivers opt for car allowances rather than replace their current company car with another. For many companies, this is a nightmare. Because whilst an employee is using his own car for business it becomes part of what is known as a grey fleet.

This means that at the time the employee is driving on company business it is the responsibility of the company to ensure that the car is safe and legal along with the driver (health and safety at work). This makes life difficult for businesses who have to ensure that cars are serviced properly and on time. That they are legal with legal tyres and current MOT if applicable. The car must be properly insured for business use and for the carrying of company tools, stock or equipment.

Companies also have a problem with car selection as employees are more likely to use their car allowance for a used executive or maybe a sports car than a car selected by the company that often equates to the status of the employee or the use for which the car is to be used. Some employees would be happy to drive an old car allowing them to take some of their allowance and use it to pay for holidays. This may not portray the correct company image.

The company, therefore, has to decide whether the payment of a car allowance should come with conditions such as type, make, age, safety levels etc of the car selected by the employee. It can become an administration nightmare.

Company responsibilities apply even if an employee drops off post each evening and receives a mileage allowance. From the Government’s point of view, whilst they collect income tax against car allowance payments they are currently losing fortunes as drivers opt for used cars. The vast majority of company cars are new cars which means that the Government can collect VAT, first registration tax, from employees Benefit In Kind Tax and from employers NI.

This ridiculous situation has come about because of the greed of the Government when setting BIK tax levels. In 2018/19 if you drove an electric or hydrogen-powered car emitting no CO2 whatsoever you would still have a BIK bill of 13% of the list price of the car. In the current year 2019/2020 that actually increases to 16% with most petrol cars falling within a band of 19% – 21%. In 2020/2021 we finally see zero-emission cars drop to 2% but petrol cars will increase to 21% – 25%.

Worst of all is the fact that the Government hasn’t released rates for 2021/2022 so if you were to take a company car now on a 3-year lease you wouldn’t have a clue as to what you would be paying in that tax year.

The whole thing is a disaster for both the Treasury and for companies that run company cars. It’s about time the Government got its focus back on the day to day running of the country than Brexit and electing a leader. By Graham Hill

Having just posted huge losses of £3.6 billion and with Land Rover languishing at the bottom of the reliability charts and Jaguar not far behind they are now into more expense as they issue a major recall of 44,000 cars that may be emitting more Carbon Dioxide than was recorded in Official certification.

The recall covers versions of the Jaguar XF, XE, E-Pace, F-Pace and F-Type as well as the Land Rover Discovery, Discovery Sport and Range Rover Sport, Evoque andVelar, made between 2016 and 2019 with petrol and diesel engines.

JLR will contact owners to book their cars into their local dealer for repairs to be carried out free of charge. The recall came just weeks after the Land Rover Discovery TD6outperformed a number of other cars in independent real-world pollution tests thanks to the impressively low levels of nitrogen oxide emissions it produced. By Graham Hill

Incorrect emissions tests could attract some massive EU fines, hopefully, this action will avoid the possibility of the added pain of fines. By Graham Hill

Whilst the three biggest problems preventing drivers from making the switch, i.e. price of cars, range and charging infrastructure a new challenge has emerged. If an electric or plug-in hybrid car breaks down or is involved in an accident it needs specialist recovery. Fleet News has investigated the implications.

The two main issues are battery complications and the fact that electric vehicles (EV’s) cannot be towed or moved unless the car can be switched on to enable the car to be put into neutral, freeing up the wheels that will be locked in gear.

To reduce the risk of battery fires or electrocution, most EVs use circuit breakers that disconnect the high-voltage system if an impact is detected.

The emergency services will also seek to disconnect any high-voltage components on electric vehicles if they are required to attend. These added complications  mean recovery firms can have a tougher job of collecting these often heavy vehicles.

When a BMW i3 operated by Speedy Services was involved in a collision, it took 15 hours for the vehicle to be recovered by the company’s appointed recovery agent, the AA.

“When the first AA man turned up, he said he didn’t know anything about electric vehicles,” said Gareth Jones, transport compliance manager at Speedy Services.

“A second man arrived later. He was concerned that the battery was damaged and there could be a health and safety issue around transporting hazardous materials.”

The i3 was immobile because there was no power to it.  Jones said they couldn’t disengage the handbrake and the electric motor was locked, so the wheels wouldn’t turn.

A third AA vehicle – a flatbed truck with a winch – was able to recover the car. But the operator first had to work out the weight of the car and the angle it would need to be pulled at, to see if the winch was powerful enough.

“The operator had to literally drag the car up onto a flatbed truck. It was the most annoying day,” said Jones. Speedy Services has been operating three BMW i3s, which have been converted into vans, for the past two years. This incident was the first the fleet encountered.

“We were flabbergasted that companies like the AA seemed unaware of how to deal with it,” said Jones.

“I don’t think the UK is geared up to recover vehicles of this type yet. It hasn’t put us off EVs though. We’ve all got to move forwards and embracing new technology is a core part of our business. What we have to do is look at how we are going to stop it happening again.”

In a statement, the AA said all its patrols are trained to work safely on EVs. However, it did point out that where EVs suffer damage in the event of an accident, there could
be additional health and safety considerations before recovering the vehicle. This may require further risk assessments or equipment. In order to make the scene safe, it may also include specialist support for road traffic collisions.

The Institute of Vehicle Recovery (IVR) delivers specialist training to enable recovery firms to handle electrified vehicles correctly. It has seen a lot of demand for its EV course.

Mark Hartell, vice-chairman of the IVR, said: “It is vital that all technicians, and those responsible for sending them out, appreciate the hazards and specialist knowledge required to recover this type of vehicle.”

Jones advises fleet operators to ensure that recovery firms are aware they are being called to deal with an electric vehicle, whether directly or through an accident management provider.

Pete Williams, RAC road safety spokesman, said: “Our approach to EVs and hybrids is consistent with how we deal with conventional petrol and diesel vehicles. In the event of an accident, if requested to recover an EV vehicle by the fleet manager, we would send a flatbed lorry.

“EVs present a particular challenge as most cannot be towed normally and should be transported with all wheels off the ground. It is a similar situation with many other modern vehicles, including crossovers, SUVs, 4x4s, pick-ups, vans and automatics.

“In response, we have developed our new All-Wheels-Up equipment that effectively brings flatbed recovery capability to our standard long-wheel based orange patrol vans. To date, 600 have been equipped with this new kit. So a single van can recover an EV – saving the driver valuable time.”

The total number of fully electric cars registered in the UK rose by 59% last year, accounting for about 1% of total sales. Plug-in hybrids are more popular, making up 2.8% of sales.

A recent survey by Kia found that 87% of fleet managers have encountered increased demand for electrified vehicles, but the majority feel that the cars won’t be suitable for another two to five years.

Kia’s Fleet Green Perspectives Report found that 65% of fleets operate plug-in vehicles, an increase of 27% in the past year.

It seems that we need to go much further if we are to convince drivers to embrace EV’s and move across from petrol and diesel cars. We only seem to be scratching the surface and paying lip service to those who want to live in a cleaner environment. By Graham Hill

At the start of 2019, rumours swept the internet that speed camera tolerances on certain motorways were so strict, they would issue tickets if drivers exceeded the 70mph limit by just 1mph.

This would have been worrying had you not read my report last week on the accuracy of car speedo’s.

The stories  and rumours turned out to be untrue and unfounded. But rather than allow misinformation about speed camera ‘thresholds’ to circulate unchecked, Auto Express asked the UK’s 45 police forces via Freedom of Information requests how strictly their 3,224 speed cameras enforce limits.

The majority of the forces that responded to Auto Express said their cameras would only activate when drivers exceed the speed limit by 10 per cent plus 2mph, in line with prosecution guidelines from the Association of Chief Police Officers.

This means cameras won’t issue tickets until someone is driving at 35mph or more in a 30mph limit, or 79mph or more on the motorway, for example.

The Metropolitan Police, which uses a less strict, 10 per cent plus 3mph threshold, say this is “a proportional response to the high volumes of traffic” in the capital. Lancashire Police also sets its cameras so that they activate at 10 per cent plus 3mph, and says that this has been done “to ensure greater tolerance or discretion”.

A number of forces wouldn’t tell us their camera thresholds, arguing that knowledge of these would encourage drivers to speed. All police forces that told us their thresholds said these applied to both fixed and average speed cameras.

Speed camera thresholds across the UK

I should make it clear that this in no way should encourage drivers to break speed limits as they realise they have a ‘free allowance’. Especially in built-up areas and areas close to schools and homes for the elderly.

Personally, I would like to see greater enforcement of the ‘Keep Left’ rules. Far too often I see cars hogging the outside lane of motorways causing frustrated drivers to either undertake or end up flashing the car in front potentially leading to road rage. By Graham Hill

The Motoring Ombudsman (not to be confused with the Financial Ombudsman) has revealed that few drivers are aware that they can extend their manufacturer’s warranty beyond the initial period. Really? If that’s the case a few dealership salesmen should be sacked!

Anyway, they found that more than half of all participants in a recent survey didn’t know that you can extend the manufacturers warranty. 32% were not aware that you can use an independent provider, you don’t have to take the manufacturer’s warranty.

This is quite important as more people are opting for 4 and even 5 year agreements in order to reduce the costs. In most cases that takes you beyond the manufacturer’s warranty period but whether you take an extended manufacturer’s warranty or take one from an independent provider make sure you check what you are covered for.

Also, if you decide to take out a 4 or 5 year PCP or PCH remember that you have other costs to take into account. Often new cars come with a breakdown service for the first 3 years which would need to be renewed or replaced. Service and maintenance costs increase as more items need to be replaced or renewed. Then there are often connectivity services and subscriptions that need to be renewed such as Sat Nav updates and alerts.

So what may seem like a good deal over say 4 years compared to 3 years, saving £20 per month could easily be eaten up by the added costs in the 4^th year. Graham Hill

Drivers who ignore lane closures on motorways marked with a red ‘X’ will be handed a Fixed Penalty Notice (FPN) of £100 fine and three penalty points from June 10 2019.

At present, only a police officer catching drivers in the act can issue the FPN but the new Road Traffic Offenders (Prescribed Devices) Order 2019 was passed on May 13.

The enforcement will mirror motorway speeding offences. By this it means that the police force where the incident took place will issue the penalty.

Edmund King, AA president says; “Although it has taken far too long, this is a welcome measure to improve safety on motorways.

“Our research shows that one in 20 drivers continue to drive in red X lanes even when they’ve seen it, and so far Highways England has written warning letters to over 180,000 drivers about their actions.

“Red X’s are put up to warn of an obstruction, so drivers must get out of the lane when they see them. We have had several incidents recently where AA members’ cars have been hit in a live lane on ‘smart’ motorways.”

Since the beginning of 2017, Highways England has issued over 180,000 warning letters to drivers who have ignored the signs in an attempt to stamp out the behaviour. This clearly hasn’t worked so more extreme measures were called for. By Graham Hill