The phase out of ICE cars: what you should know
- What is the phase out of ICE cars?
- When will ICE cars be banned?
- What is affected by the phase out of internal combustion engines?
- Will ICE cars be worthless?
- Should I buy, finance or lease an ICE vehicle?
Have you heard of the phrase ICE cars, but unsure of what it actually means? ICE stands for internal combustion engine. When we talk about ICE vehicles, we refer to cars that contain petrol or diesel engines.
So, why is there a phase out of ICE cars, and how should you best prepare for it? In this article we guide you on what you need to know about the phase out of ICE cars, and how to get ready for the UK 2030 ban on non-electric vehicles.
What is the phase out of ICE cars?
You may have heard it on the news, or you may have noticed it through increased advertising of electric cars. The UK, and other parts of the world, are heading towards a phase-out of ICE cars.
With an announcement from the government to ban all internal combustion engine vehicles by 2030, there has been huge pressure on manufacturers to now focus on selling electric vehicles. Along with the rising success of Tesla as an electric vehicle company, other brands have begun following suit.
But what exactly triggered the beginning of the phase-out of ICE cars? Arguably, the beginning of ICE vehicle’s fatality was the emissions scandal with Volkswagen and Mercedes. This is also known as the infamous Diesel Gate scandal. This happened in 2015 when manufacturers were found guilty of using software to manipulate the emission statistics of their cars.
Volkswagen was the first manufacturer to be caught out. In September 2015, the US Environmental Protection Agency discovered the brand had sold vehicles that weren’t truly reflective of how earth-friendly they were. These vehicles had software installed that detected when the car was in test conditions, and when in these conditions it could change its performance to improve the desired results. 1.2 million Volkswagen vehicles in the UK were installed with this software.
This resulted in many people driving a car with what they thought released low emissions, when in reality they were driving cars on the roads with much higher Co2 emissions than promised. Not good, right?
What happened next?
Before the Diesel Gate happened, there wasn’t a whole lot of knowledge about whether diesel engines were kind to the environment or not. However, after the scandal it was discovered that diesel and the earth weren’t the best of friends. Then what? Diesel sales went down.
When will ICE cars be banned?
So, when exactly can we expect all diesel and petrol cars to be completely banned from UK roads? As mentioned before, the government has set plans by 2030 to ban all sales of new vehicles with internal combustion engines. This does not include plug-in hybrids or full hybrids. Mild-hybrids, however, will be banned by 2030.
What are the different hybrid engines? All hybrid vehicles are powered by both an internal combustion engine and an electric motor. Mild-hybrid’s engines are supported by their electric motors only during acceleration. Whereas, a full hybrid (FHEV) can run on just the diesel or petrol engine, the electric engine, or both. A FHEV’s battery is charged by running the combustion engine.
A plug-in hybrid (PHEV) works very similarly to a FHEV; however, it must be plugged into the mains to charge its battery. PHEV vehicles can also self-charge, however, this is not always as effective as you might think. This type of vehicle will have to decelerate or go downhill for a long time to make any meaningful difference. An alternative is to set the internal combustion engine to charge the battery, sadly this defeats the objective as you’ll be using more fuel to charge the battery. Unsure which engine type you should go for? To discover the best type for you read our article on plug-in hybrid vs. Electric: which is best?
We understand that sales of new ICE vehicles will be banned, but what about ICE cars altogether? Will ICE cars be dead? All we can do is predict the future. However, it’s likely that manufacturers won’t sell any ICE vehicles after 2028. By 2035-2040 we can predict there will be next to no ICE vehicles on the road anymore.
But that is just a prediction. We do know however, that with the planned phase out of these vehicles, it’s highly likely that the infrastructure will shift to support electrical vehicles rather than the traditional petrol or diesel car. On top of this, the “traditional” car technician won’t be there to keep ICE vehicles on the road, as predicted this type of knowledge will die out.
What is affected by the phase out of internal combustion engines?
Value of ICE cars
It’s possible that the value of petrol and diesel cars will start to plummet, as the convenience of charging electric vehicles will have been resolved and the infrastructure to support it will be building more and more.
If, as predicted, fuel prices increase it will be more expensive to run ICE cars, and more people will be inclined to switch to electric. On top of this, insurance companies are likely to write off electric vehicles much faster than ICE cars due to the cost of changing the battery if it has been reported as damaged in the claim. We’ll touch on these points in more detail further down.
Another sector that will be affected is used cars. We can predict that the average used electric car will plummet in price, and the traditional used ICE vehicle will be much more expensive than it is today.
Currently, you can purchase a used electric vehicle and petrol vehicle for around the same price. How will this change in the future? It’s hard to say. However, taking into consideration that fuel prices may increase for ICE cars, and electric cars will be cheaper to ‘fuel’ – it can be said it’s likely that the used electric car market will dominate over ICE vehicles.
The spike in fuel prices will put pressure on the used ICE car market to sell for much less. This is because if you’re given the option to buy a secondhand ICE vehicle that costs more to run, at the same price as a used electric vehicle with lower running costs, a lot of people will likely opt for the more affordable option. So used car prices will have to become lower than the cost of an electric engine in order to survive the competitive market.
Say, just for an example, in five years’ time 30% of cars on the road are fully electric – this will mean the demand for diesel and petrol will decrease by 30%. This also means the cost of traditional fuel will rise and there will be fights in fuel stations for space for electric charging vs petrol and diesel fill-ups. Should electric car drivers or petrol and diesel drivers be prioritised? How much space will be given out to who?
Another thing to consider is that if fuel does become even more costly, the gap between the cost of charging an electric car and the cost of fuel will increase and in turn, the value of ICE cars will plummet further. It’s likely we’ll see used electric vehicles on sale at more affordable prices. So, I ask you, would you buy a secondhand petrol or diesel car for the same amount of money as an electric one, even though it will cost you significantly more to run?
So, we spoke earlier about how the phase out may impact insurance companies, and how they react to the change. We can predict that electric vehicles will be written off much faster than ICE vehicles due to the cost of changing the electric battery.
Why do we think this? If an electric car has been involved in an accident and the battery has been damaged in any way at all – that’s a write-off. Any electric car with a value of less than £10,000 it’s likely the insurer will write it off because the repairs will amount to more than the vehicle is worth.
However, if you have an accident in an ICE vehicle the engine is a lot simpler to repair. So, it won’t be financially viable to repair an electric car compared to petrol or diesel, because it will be more complex and costly to fix.
Will ICE cars be worthless?
Once the ban on sales of new ICE cars arrives, will they become totally worthless? Well, it depends on what worth means to you. For the avid classics and sportscar collectors, no they will not be worthless. For the average road user, yes, it’s likely they will become worthless. There’s no way of knowing with certainty as it depends on many factors.
One thing it depends on is how the car insurance industry reacts. For example, say someone buys an electric car worth £10,000 and to change the battery it costs £9,000 – if the average car lasts for 12 years it’s worth considering if the batteries will last just as long. It also is dependent on how long the battery takes to degrade, as well as how much range the vehicle is capable of offering at that point.
So, depending on how the relationship changes between insurance companies and electric vehicles, there’s no real way of knowing whether ICE cars will be worthless or not.
Should I buy, finance or lease an ICE vehicle?
From 2026 onwards we would not advise buying an ICE vehicle, as the risk of what it’s going to be worth will affect you financially. The best advice we can give to you is to finance or lease a vehicle on a personal contract purchase or a contract hire, as this will balance the risk of depreciation for you.
Why do we say not to buy? With the increased value of used cars and the predicted phase out of ICE vehicles, it’s too uncertain to know what will happen to the cost of traditional fuel.
Considering we have only recently seen a huge spike in petrol and diesel prices, buying a new ICE vehicle now is a gamble. Can you predict how much it will cost to fill up your car in 5 years’ time? Of course not. Taking this along with the unpredictable used car market is why we suggest getting your vehicle on a secure finance scheme, rather than dealing with the unknown.
Thinking of buying an electric vehicle outright ahead of the 2030 ban? This is something else we wouldn’t recommend. Your best bet is the lease an electric vehicle until the technology has fully developed. Another aspect to consider is there isn’t a complete understanding of how long the batteries in electric cars last, as well as the fact we haven’t yet seen these vehicles developed to their full potential. The expectation of an electric car’s mile range has drastically risen over the last few years. Back in 2018 cars offering a 125-mile range were impressive, now in 2022, you can drive vehicles with an electric range of 485 miles. So, the standard is always changing and improving.
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