Recent reports suggesting that affordability is driving the next phase of the electric vehicle market are, in part, true.
Writing in Motor Finance online, Joseph Simpson, analyst at GlobalData, Strategic Intelligence, argues that affordability is emerging as a primary factor influencing consumer uptake. Affordability is shaping the next phase of the EV market
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However, this perspective overlooks crucial factors that will shape the industry’s future. Of course, lower prices are extremely important, especially for retail consumers, but they alone won’t determine the success of mass EV penetration: charging infrastructure is an equal or even more crucial factor. What’s more, meaningful EV uptake will be limited to the mature European and global markets which can accommodate the transition from ICE to electric.
The true drivers of EV adoption
Affordability is just one piece of the puzzle. Other critical factors that will shape the EV market include:
- An advanced road network
- A countrywide network of public charging points: ideally high-speed/ultra-high speed
- The ability to produce and sustainably deliver electricity across the charging network
- Government policies: incentives, regulations and emission standards will continue to play a significant role in EV adoption
- Brand trust and loyalty: Established automakers have built decades of consumer trust, which new entrants will need to overcome
Convenience for motorists is sacrosanct. When access to public charging points becomes as convenient as it is today to fill up at a petrol station, and when the affordability of the asset provides accessibility (driven largely by residual value funding solutions) then, and only then will we witness the tipping point for mass adoption of EVs.
Battery costs: a complex picture
It’s true that battery costs have decreased significantly over the past handful of years. For example, one of several critical ingredients for the manufacture of car batteries is lithium carbonate. In November 2022, battery-grade lithium carbonate was trading at around £64k per metric tonne. By comparison, in May 2025 the same amount trading at around £8,400k, according to Trading Economics. This represents a massive fall in value of more than 760%.
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By GlobalDataHowever, the rate of cost decline is slowing. Recent geopolitical tensions and supply chain issues for rare earths and other metals required for battery production have led to volatility in supply and, in turn, prices for raw materials. The assumption that battery costs will continue to fall at the same rate is overly optimistic and fails to account for potential setbacks in the supply chain.
Battery design and manufacture
Source: www.Hicron.com
China controls the global battery supply chain and enjoys more than 70% market share. With new chemistry is being discovered at a rapid pace, the speed of development in battery technology is mind-boggling. For example, sodium-ion batteries are emerging as a promising alternative due to their lower cost and improved safety. Other technologies like graphene-based batteries are also being developed, promising increased energy density and faster charging times.
Chinese EV makers: quality and safety concerns
The Global Data article as published by MF 02.05, highlights Chinese manufacturers as setting new standards for affordability, which is most definitely the case. That being said, the article fails to address the potential trade-offs that come with aggressively priced, ‘value-for-money’ vehicles whose nameplates are unfamiliar to the majority of Western consumers who therefore may be hesitant to embrace. Practical concerns surrounding long-term reliability, after-sales support, data security and potentially, safety are at this stage largely unknown which may further complicate decision making for European and UK consumers. In addition, ongoing geopolitical tensions could lead to trade barriers that limit the impact of Chinese EVs in certain markets. A lot of unknowns remain…
New entrants: simplicity vs. consumer expectations
Known for their high standards, European consumers expect more than just affordability; they also seek quality, safety and innovative features. Chinese EV entrants are responding by incorporating advanced tech, like smart connectivity and efficient battery systems, to meet these expectations. Consequently, these new players are reshaping the competitive landscape, offering European buyers compelling alternatives that combine simplicity with high-value features.
Complex interplay
While affordability and accessibility are undoubtedly important factors in the EV market’s evolution, it’s overly simplistic to claim it will be the primary driver of the next phase. The future of EVs will be shaped by a complex interplay of technological advancements, consumer preferences, infrastructure development and policy decisions – the last two being market-specific. To succeed, EV manufacturers must balance affordability with quality, performance and meeting diverse consumer needs. The winners in the EV race will be the companies that offer the best overall value proposition to consumers.
Paul Bennett, Senior Partner at Madox Square LLP.
