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Electric car prices will fall further this year as manufacturers resort to heavier discounting in an effort to boost sales, the boss of Auto Trader has predicted.
Nathan Coe, Auto Trader’s chief executive, said discounts were increasing “month-to-month, and we do expect that to continue.”
He said: “Getting consumers to buy new cars from retailers [generally] is challenging and we’ve seen discounts go from effectively nothing up to around 10pc or so today on average.
“That’s true of [petrol] vehicles and EVs, but a bit more so for EVs because they are just not, in the minds of consumers, going to command such a big premium over their [petrol] counterparts.”
The level of price reductions has already reached record highs this year, with new EVs sold at an average discount of 10.6pc in April on the online dealer’s marketplace.
Petrol and diesel cars are also being discounted but not as heavily, data from the company shows.
Mr Coe said he expected the EV price cuts to get deeper still in the coming months as carmakers seek to meet net zero sales targets.
The Government introduced the zero emissions vehicle (ZEV) mandate in January, requiring at least 22pc of carmakers’ sales to be electric this year regardless of demand.
That is pushing some to aggressively discount to boost EV sales, although Vauxhall owner Stellantis and Ford are among companies to have warned that they will not cut prices to the detriment of profits.
Mr Coe said: “Consumers want to use EVs, they’re getting more and more comfortable with them generally speaking, but they are not going to pay £35,000 for an EV compared to £20,000 for its [petrol] counterpart and that’s kind of where we do see the pressure.”
In a report last week, Auto Trader said the cost of EVs – both new and second-hand – continues to be the biggest barrier to adoption.
Only nine EVs in the new car market are on sale for less than £35,000, compared to 76 petrol or diesel cars, the report found.
Just two EVs were on sale for less than £25,000 – both of them so-called microcars such as the Citroen Ami.
Against that backdrop, car rental firms and businesses remain by far the biggest buyers while private consumers have proved more reluctant.
In April, the number of EVs sold to consumers dropped by 22pc to 3,544, according to the Society of Motor Manufacturers and Traders (SMMT).
Mr Coe said this sales slowdown was one of the factors behind the sudden surge in discounting.
He also echoed a previous warning from rival car dealer Vertu that some manufacturers could seek to reach their EV sales targets by constraining the supply of new petrol cars.
He said: “The ZEV mandate could mean there is more volatility on pricing to help EV sales, or there is some talk that some [carmakers] might restrict the number of alternative vehicles.
“That does feel like a bad outcome, if I’m honest, but the manufacturers do need to manage their profitability through this transition.”
Mr Coe’s comments came as Auto Trader reported a “robust” year of sales, with group revenues rising from £500m to £571m in the year to 31 March. Profits rose from £294m to £345m.
Shares in Auto Trader surged 14pc to an all-time high of 837p following the announcement.
Elsewhere, a major Chinese carmaker said it was closing its European headquarters amid a slowdown in EV demand on the continent.
Great Wall Motor (GWM), China’s eighth largest EV manufacturer, will shut down its main office in Munich, Germany, axing 100 jobs.
The move comes after a slowdown in European sales and as proposed EU tariffs on cars from China loom.
The European Commission (EC) has been investigating alleged unfair subsidies given by the Chinese government to EV manufacturers.
The EC claims subsidies from Beijing have allowed Chinese car companies to flood the West with artificially cheap EVs, undercutting local manufacturers. It is planning to hit Chinese EVs with tariffs to create a “level playing field”.
GWM plans to continue selling cars in Europe but will manage the trade from China. The carmaker currently sells vehicles in the UK, Ireland, Germany and Sweden.
A GWM spokesman was contacted for comment.