Electric car inertia risks leaving Britain in the backseat

All of which brings us to the electric vehicle (EV). In the case of EVs, we can be rather more confident in our predictions, if only because governments around the globe have mandated the end of the internal combustion engine. Like it or not, it will become virtually impossible to buy a new fossil fuel-powered car within 10 to 15 years.

Downing Street likes to think of itself as the motorists’ friend – in attempting to appease those who wouldn’t give up their trusty old banger for love or money, it recently pushed back the date for abolition of the internal combustion engine by five years to 2035.

This may ease the path of the transition a little for some auto manufacturers, but in overall terms, it won’t make a great deal of difference.

The so-called Zero Emission Vehicle mandate still requires that 22pc of all new cars sold in Britain next year should be zero emission, rising to 80pc by 2030. Making traditional petrol or diesel-fueled cars quickly becomes uneconomic when limited to such a small proportion of the market.

Any company wishing to remain in the game therefore has to move swiftly in transitioning to EVs, as Nissan declared it would late last week with a heavily subsidised £2bn investment to make its Sunderland plant all electric by 2030.

This is obviously good news for the economy, and rather puts pay to warnings that the forced march to EVs sounded the final death knell for auto manufacturing in the UK.

Nissan’s announcement follows hard on the heels of BMW’s £600m investment in an electric Mini, and Jaguar Land Rover’s plans for a £4bn gigawatt battery factory in Somerset.

Fears that increased barriers to trade with the European Union would see all future EV investment offshored to the Continent are proving unfounded; the advantages of Britain’s flexible labour market, it would seem, outweigh the rules of origin and other export market impediments that came with Brexit.

It nonetheless remains true that to go the next mile and gain mass market appeal, EVs have to become price competitive. As things stand, the infrastructure to support them also falls woefully short.

Tesla’s Model Y was Britain’s best-selling car in June this year, but with prices starting at around £45,000, this is still very much a product for well-heeled enthusiasts only.

Surveys suggest there is a hardcore market of about 25pc of households who are almost evangelical in their desire to own an EV.

At the other extreme, there are around another quarter of car owners who would not under any circumstances buy an EV, though sadly, it is possible to actuarially chart the likely future decline of this mainly elderly group of traditionalists.

For the middle majority, the main deterrents lie around price and “range anxiety” – the fear that the car may not have enough battery power to reach an available charging point.

In any case, after many years in which EV sales have consistently exceeded most expectations, the pace of growth has slowed markedly, prompting the Office for Budget Responsibility to last week reduce its forecast for EV uptake from 67pc of all new car sales in 2027 to 38pc.

The high upfront cost of EVs relative to internal combustion engine powered vehicles is deterring many potential buyers, the OBR concluded, especially among those using car finance, which has become more expensive as a result of higher interest rates.

Charging at home can mean significantly lower running costs, but little if any advantage is gained when charging externally, and that’s if you can find a charging point in the first place.

Fears that the price of traditional vehicles are about to be ramped up so as to help meet EV quotas further fuels the incentive to buy the old tech now while you still can.

The transition, in other words, is not going to happen quite as quickly as previously thought. In the meantime, EVs potentially pose a wider existential threat to the UK and European economies.

In planning to become the world’s predominant supplier of automobiles, China has largely skipped the fossil fuel phase of development and gone straight for EVs, some of which are already beginning to become price-competitive with Europe’s traditional auto industry, and could therefore have genuine mass-market appeal.

Meeting Chinese competition depends crucially on how quickly the likes of Nissan can scale up production so as to bring down unit costs. The technology is also changing at lightning speed. Solid state batteries potentially offer advanced world manufacturers a real opportunity to get back on top.

The challenges faced by incumbent manufacturers in switching to electric powertrains are one thing, but the transition also poses quite a problem for the Government, which at present raises some £25bn a year, equal to 1pc of GDP, from fuel duties.

The last chancellor to propose road pricing as an alternative – Alistair Darling in 2005 – was sent away with a flea in his ear after an online poll suggested overwhelming opposition from motorists on privacy grounds alone.

Yet the problem with loading the tax instead onto the price of electricity is that it would penalise other electricity uses. It would be difficult to differentiate. Higher carbon taxes, moreover, could only be a temporary fix.

Small wonder that ministers don’t like to talk about how to plug the hole. Yet decisions cannot be put off forever.