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How Best to Recharge a Drained UK Electric Car Rental Market?

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The UK market has seen negligible demand for electric car rental through traditional channels (excluding the car sharing model), despite increased focus on environmental awareness from consumers, and the car rental industry. The various factors involved offer a cautionary tale - poor infrastructure and consumer awareness set against the backdrop of UK austerity have led to these vehicles being poorly positioned. While they may be the future of car rental, the future remains distant.

Why Aren’t Electric Cars More Popular?

The lack of infrastructure and consumer awareness on the market is a major factor affecting this segment. Concerns over the range that these vehicles can cover without running out of power continue to deter consumers who fear they will be marooned on a motorway, and while there may be an increased quantity of charging stations available in London, they remain largely outside mainstream consciousness. A further area of uncertainty for consumers is how the cost of recharging compares to that of refuelling. Moreover, the fact that these stations are so heavily concentrated in London suggests that these cars can only realistically be supported within London.

More concerning though is the lack of clear positioning of the industry that has taken place. Trade sources have stated that UK consumers have proved unwilling to pay more for electric vehicles. With value for money and austerity at the forefront of consumers’ minds, the increased amount of small highly fuel efficient traditional vehicles available, as well as a tightly managed use of fuel and other rental costs, means that they are able to be both green and save money. With obvious environmental benefits, car rental providers are therefore caught between wanting to be ‘part of the solution’, but finding that in a competitive business environment, this solution is commercially challenging.

For example, one of the market players in the UK- Sixt, has a section on its UK website lauding the benefits of renting an electric car in London, but does not offer such cars, and links the consumer to an economy rental. Another operator- Europcar has a microsite dedicated to the Nissan Leaf, but having announced that it would be available in London in 2012, the offering has since been removed, and is only available in Paris. The slow growth rate of the car rental industry in the UK, with a value growth rate of 1.5% CAGR from 2012-17, suggests that while business is not suffering, it is also far from booming, leading to a tightening of purse strings.

What’s Holding Car-Rental Players Back?

To make these rentals a more attractive proposition for businesses, consumer demand needs to be there, and for this to happen there must be investment in consumer education and infrastructure. However, the industry is seeing slow growth in the UK, and already has to factor in the costs of purchasing and maintaining these vehicles. In a consolidated market they are likely to be risk averse. As such, market players may not be keen to provide the capital to try and raise awareness and lobby for benefits and improved infrastructure, certainly not when they can provide green options which are already popular with the consumer.

The Way Forward

Both government and the car manufacturers could support the education of consumers on potential benefits, regarding both cost and reduction of pollution. This would stimulate consumer demand, which otherwise might remain stagnant until the industry is strong enough to afford more significant investment in this segment.

If awareness grows organically, it will be through car-sharing scheme’s increased popularity, where barriers like range anxiety are not as prevalent due to short average journey times. Evidence of this type of growth can be found with the success of Car2Go and Autolib service in France.

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