With electric vehicle uptake continuing to be a hot topic for the automotive industry, we take a look at the latest Monthly Payment finance data to give our predictions on the trends we could see in 2024.


Prediction #1: Big 5 European markets – Will high-costs for BEVs remain or decline in 2024 ?

The automotive industry has been abuzz with discussions surrounding the affordability of battery electric vehicles (BEVs) for the average retail consumer in the Big 5 European markets. Factors such as high list prices compared to internal combustion engine (ICE) cars, diminishing government incentives, uncertainties in resale values, and expensive public charging infrastructure have all hindered widespread adoption.


While major European original equipment manufacturers (OEMs) have announced plans to introduce more affordable BEV models, these offerings may take time to materialise. As a result, consumers seeking cost-effective alternatives in 2024 could turn to newer EV brands entering the market with competitively priced, high-spec models, despite lacking established brand recognition.


The current BEV market in major European markets is dominated by larger conventional and SUV models; typically priced above €40K, and beyond the reach of the average private customer. Established OEMs are likely to focus on offering substantial incentives on base model BEVs rather than significantly slashing list prices across all model versions and trims to prevent long-term impacts on residual values.


Analysis of JATO’s Monthly Payment data (outlined below), indicates that the “cost premium” for purchasing a new BEV compared to an ICE car remains significant, with a price gap that has stayed above 20% since March 2023. As of January 2024, this premium has increased to 28%, presenting challenges for most legacy OEMs and retailers on how to sell more BEV cars in greater numbers given the regulatory and financial pressures they are under to do so.

While the introduction of more affordable BEV models is anticipated in the second half of 2024, the “BEV cost premium” trend is unlikely to plummet substantially throughout the current year, delaying widespread adoption, which is already facing increasing consumer scepticism on the financial merits of switching away from ICE cars at the present time.


 Prediction #2: German car market – Retail price cuts and higher OEM incentives in 2024?

After the German government abruptly withdrew the environmental bonus for electric vehicle purchases on 17th December 2023, many OEMs stepped up to replace the lost support for customers by providing the equivalent incentive amount in their own monthly payment finance offers, or in some cases exceeding it. So, while sales of BEV cars have not collapsed coming into 2024, BEV market share in January 2024 was down (10.5%) compared to (18.4%) the whole of 2023. This trend is likely to continue given the weak economy, high financing costs, and general market uncertainty, which is putting off both potential private and business buyers. Another knock-on effect of the withdrawal of BEV incentives, and general concerns around resale values of electric cars, has refuelled interest back towards ICE car models among private customers, forcing manufacturers to increase incentives further on ICE models than on their BEV model range.

For the German EV car market, the competition between established brands such as VW and challenger EV brands like Tesla, MG, and BYD has been intensifying. The start of the year saw not only headline grabbing list price cuts on electric cars by VW, Tesla, and BYD, but also double-digit discounts being offered on both BEV and ICE models to make their offers more attractive to retail customers. However, this has not been enough to encourage private customer orders of BEVs, which have slumped by 50% year-on-year in January 2024. In contrast, orders for ICE models were up by 11%.

Given that the outlook for the German economy for the remainder of 2024 is still unpredictable, it is anticipated there could be further list price cuts – particularly for BEVs – and a significant increase in OEM incentives as part of their monthly finance offers in 2024. Undoubtedly, this will put pressure on the financial stability of emerging brands with BEV-only models in their portfolio.


Prediction #3: UK car market – ZEV Mandate requirements to drive OEM finance offers?

From the start of 2024, the UK government placed a set of legally binding annual minimum sales proportions for ZEVs (zero emission vehicles) on OEMs, covering both the UK car and van market. This measure would be complemented by manufacturers also receiving allowances to sell non-ZEVs up to a certain given percentage of their fleet, with ZEVs accounting for the remainder of sales (the ZEV Mandate target).


For cars, the ZEV target rises from 22% in 2024 to 80% in 2030, and for vans from 10% in 2024 to 70% in 2030. In addition, new non-ZEV C02 regulations will also be introduced alongside the ZEV Mandate to drive down excess emissions. Therefore, the main thrust of the above policy is to get manufacturers to meet their targets in each scheme by increasing ZEV sales each year, while also ensuring no regression in their non-ZEV C02 efficiencies.


Every car sold above the 22% limit will attract a £15,000 fine, unless an OEM defers the sales to a future year. Another way to avoid penalties is by buying credits from other car makers (typically BEV-only makes) with credits in hand.

Given the steep ZEV compliance target now placed on all major OEMs, how have their NSCs responded from the start of 2024? For now, we can measure how much retail tactical support (incentives) OEMs have placed through their monthly payment finance offers to get a sense of how hard they are trying to create attractive financial propositions to attract new retail sales. Given the different strategies in play from different OEMs, it is important to group the OEMs by brand classification (premium vs volume) to get a real sense of how each part of the market is reacting.


As can be seen in the chart below, the amount of incentive support on offer from all OEMs, regardless of brand classification, continues to rise exponentially. To get a sense of how quickly incentive support has risen since the start of the fourth quarter (October 2023) in comparison to January 2024, on a non-weighted basis average, discounts have risen by 56% (premium) and 48% (volume) for brands respectively. Given the struggle for OEMs to attract enough retail BEV customers to hit their ZEV targets, expect further surges in incentive support to continue, especially number plate changing months of March and September 2024, backed by strategic list price cuts as well.

2024 predictions overview

Change is on the horizon for the electric vehicle market as government incentives and legislation modifications continue to disrupt OEMs’ strategies, and in turn purchasing behaviour. If widespread adoption is to be achieved, OEMs need to evolve their product or finance offerings to encourage sales.


If you would like a comprehensive analysis of the monthly instalment trends for new cars purchased on finance across the five largest European car markets throughout 2023, pre-register for our free report, ‘Monthly Payments: market insights review (2023)’ here.


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