Hello everybody, welcome back to another edition of C&F Talks, where I get to interview a speaker at one of our forthcoming events. Today, it's the turn of Ben Foulser, who's the Partner and Head of the Infrastructure Advisory Future Mobility Team at KPMG. Ben's going to be speaking at the EV Infrastructure Summit that we're holding on the 2nd of June in Canary Wharf, London. Ben, welcome.

Maurice, nice to see you again.

Very good to see you. Let's turn to our first question.

I mean, you're at the heart of a very interesting debate here, aren't you, with EVs and the consequences of policy for EV infrastructure. Do you generally think that the UK is on track to meet the target of 300,000 charge points that has been estimated would be needed by 2030?

It's a good question, and you'll have seen those who are in the industry, the outcome of the Public Accounts Committee recently, saying that no, we're falling behind in this space, and there are significant regional variations, with a lot of the focus being on the southeast so far, and not enough focus on deploying infrastructure in other parts of the country, especially in rural parts of the country. So, I think there are some challenges, there's some regional disparity in the rollout, but notwithstanding that, there are quite significant ambitions and funding being pushed out.

So, the LEVI funding, the Local EV Infrastructure funding, is seeing that correction of the disparities across the UK. Indeed, the Midlands only announced last week 40.8 million going into the Midlands region, and we're seeing many tenders now being issued by local authorities outside of London to deploy EV charging infrastructure. I think there will still be a disparity for cities and rural regions, and it's the responsibility then of the local authorities to be working with charging point operators to make sure that we've got portfolios defined that combine both high utilisation with lower utilisation charging points to make sure that there's an equitable rollout.

And then there's also the challenge of just making sure you're not just pushing out loads and loads of infrastructure, that then becomes a challenge later on, if it turns out not to be used and then becomes a bit of a stranded asset. So, we need to be purposeful as well as progressive when we push out charging infrastructure.

Maurice

And do you think that there are sufficient ultra-rapid charge points being made available on motorways and the strategic road infrastructure?

I think there needs to be more. There's always a challenge, of course, with ultra-rapids with grid connectivity, and that's one of the reasons we had the Rapid Charging Fund, trying to correct some of those, what you might refer to as market failures, where it's just incredibly expensive, 20, 30, 40 million pounds to get grid connections in for charging infrastructure. And as a result of the challenges seen with getting that fund across the line and motorway service areas bought in, I think there will be a bit of a natural delay in some of that.

We would like to see more, I think, being pushed out, and certainly you saw Moto's announcement recently in the press about having 1,000 chargers and, of course, EHGV chargers being deployed at its service stations. And we very much expect the other motorway service area operators to follow suit.

And, of course, we mustn't forget that it's not just an MSA play here. There are also opportunities for charging point operators to partner with other amenity services providers or indeed open up their own hubs. And we're starting to see quite a lot of those now starting to take place. So, you take Solstice Park on the A303, there's a couple of hubs open just off the M5 by Bridgend. And what we'd like to see overall is more of those opening up and providing more choice to customers.

Yeah.

Yeah, and is connection to the grid still an issue for these sorts of chargers, or do you think that problem's been overcome?

I think in places and in part it is an issue. Yes, and we've certainly seen through the work that we've been doing with industry some quite significant disparities in grid connection costs. This isn't just, of course, for charges for EV chargers, but things like bus depot connections and freight depot connections as well.

And, of course, it's not just the cost, it's the timelines as well, which is, of course, why we're looking and government is looking at grid connection reform to see if we can prioritise those use cases which will support decarbonisation of industry quicker, but also remove the blockers for people who have put in applications but actually can't progress them, but they're sitting up there in the list taking priority.

Maurice

Moving to sort of the macro picture, Ben, of EV as a concept of whether it's going to really take off, clearly there's a huge debate. There's another article I think in The Times on Saturday that sort of summed it up quite well. Obviously, the government's reviewing the EV mandate. It's hard to know, I think, perhaps what the outcome of that would be.

But the manufacturers point to a lack of demand from consumers for EV because on the basis of the price differential, perhaps more than anything else. How is this going to play out, do you think?

The governments under severe budgetary pressure, so it can hardly introduce any sort of subsidies for electric vehicles to stimulate demand. Do you think the EV mandate will be watered down? And what will happen if it does that, but consumer demand doesn't pick up? And where does all of that leave that transition to EVs?

I mean, what's going to be interesting is I'm going to say something now, then we're going to get to the conference. And of course, we'll have actually had the announcement from the government about what it wants to be doing. So, I can only get out my predicting forecasting stone now and say what the potential is.

I think you're quite right, we are challenged in providing more incentives in what is a very fiscally constrained environment. And of course, you've seen some of the challenges with even removing disability benefits coming up in the press in the last couple of days. So, providing something on the other side to incentivise the chance which we beat is going to be very difficult.

I think you're therefore more likely to be in a position where it's going to be probably a watering down if there is such a thing of the mandate. I don't think government's going to want to remove the ban necessarily, per se, although I could be very wrong. I think it could be that the amount to be actually delivered by 2030, which is the 80% at the moment, could be slimmed down, could be relaxed a bit.

I think the government will still want a ban on pure on ICE vehicles in entirety by 2035. But you might push the hybrid ban back a bit. So, I think all in all, yet to be seen, I don't think we're going to want to be at the polar opposite of actually removing this in entirety. I don't think that's the right way to go. I think part of the issue is creating the residual value to make sure that the total cost of ownership for a vehicle works. And that's going to be about stimulating the second-hand market.

And what has been quite positive, although still a significant challenge, is some research issued by the University of Exeter about four days ago, which said that it sees a pickup in the potential demand for second-hand vehicles, a lot more people looking for second-hand EVs on places like AutoTrader and other platforms.

But indeed, there is still that challenge about residual value. Is the battery going to be worthy of being purchased and run? Is it going to have a good state of health? What more can we do around that? So, for example, accelerating the concept of battery health certificates and making sure that we are able to give comfort to people.

And of course, it doesn't help that you've got the more geopolitical challenges with obviously a well-known brand of EV now seeing significant reductions in residual value because of the more geopolitical kind of issues. So, I think we've got some uphill battles still to face in this space to make sure that demand is met and supports that transition.

Yeah, I mean, that point about residual values, I think is absolutely right. If those residual values could be bumped up and the cost of ownership reduced, then perhaps that would stimulate the demand, wouldn't it?

So, moving on to another, our final question really, the Climate Change Committee's 7th Carbon Budget envisages a very important role for EVs. By 2040, this balanced pathway sees three quarters of cars and vans and nearly two-thirds of heavy goods vehicles on the road being electric, up for only 2.8% of cars and 1.4% of vans in 2023. And this is predicated on the current EV mandate and a dramatic reduction in the cost of batteries. Is it achievable?

I think it's ambitious. I'd love to think it's achievable, but I think it's going to be a really ambitious target, which is going to take a lot of cogs moving in the right direction to actually, to be realisable. I think there is still quite a big debate, especially in the E-HGV market, about what the right time to move is.

I think, fortunately, in some ways, and there will be people who disagree with this, but the 7th Carbon Budget has largely ruled out hydrogen as the mainstream fuel source and said that there will, of course, be niche cases for it, but the vast majority, hopefully, will be electrified in the long term. And certainly, what we've heard from our client base and from industry events is that the OEMs and the hauliers themselves, logistics operators, tend to agree with that. But, of course, their challenge is when's the right time to move? When's the infrastructure going to be in place? When is the cost of capital for that vehicle going to be sufficiently affordable? And, indeed, they see the role of stepping fuels, biofuels, HVO, being something that's more palatable in the short to medium term.

So, for the next 10 years, moving to acceptance of HVO or, indeed, a biofuel truck significantly reduces their emissions, but also is affordable with the current context of where the industry is. So, we might – that, I think, makes that 7th Carbon Budget quite challenging, because if we've got a lot of operators buying biofuel trucks or switching to HVO now, that might see the next duty cycle of trucks come through on that type of powertrain before you get to 2035, 2040. So, I don't – two-thirds of trucks being electric, very challenging.

On the car side, I think it's probably a bit more – car and van, a bit more hopeful. But what we do need to see is the van market really properly filling in now. And we're starting to see that, but it needs to happen faster and have the availability of models.

So, I think that's one of the key challenges. And then the car market, I would hope that we'd be in a fairly decent position. We're now getting to a place where we're starting to see that next tier down of models being available, the £21,000-£25,000 mark, rather than the historically premium SUVs.

And certainly, there's a lot of noise, a lot of movement about those coming onto the market. So, of course, if we fix this second-hand market, the residual value issues around EVs, and we also give people the confidence about range and range anxiety, I think that creates that perfect kind of environment for us to move forward at pace with the car market.

Fantastic. On that positive note, Ben, thank you very much for your thoughts today. For our viewers, very much hope that you'll be able to join us to hear more about this crucial issue at the EV Infrastructure Summit 2nd of June in Canary Wharf, London. Further information available on our website, www.cityandfinancial.com.

Ben, I look forward to seeing you at the event. Thank you so much for joining us today.

My pleasure. Thank you, Maurice.