While the slowdown in EV demand is well known, a new study by Cox Automotive points to steadier growth in the next three to five years as long as automakers and charging infrastructure efforts continue to address the speedbumps and obstacles keeping shoppers on the sidelines or continuing to buy ICE vehicles.
The biggest obstacles, the study points out, are not exactly surprises: high cost relative to ICE vehicles, immature and unreliable public fast-charging, fast depreciation of EVs relative to ICE vehicles. Other issues include dislike of government mandates, which are driving the transition to EVs, as well as fear of fires from EV batteries in their garages.
There are opportunities to accelerate EV consideration. Ninety-six percent of those intending to buy a vehicle in the next 24 months could be enticed to consider an EV earlier than a three- to five-year window if their knowledge of how EV ownership works increased. Those shoppers would like more information on total cost of ownership and cost of charging. And their consideration is highly impacted by non-financial, but still costly to automakers, incentives, such as free out-of-home charging credits, a free home charger, free maintenance plans, etc.
“We saw EV consideration go down since 2022, and what we see is that consumers who were considerers early on already bought, and now it’s going to be a tougher sell to overcome the barriers that are still there for consumers,” says Vanessa Ton, lead research and market intelligence manager at Cox Automotive. “EV considerers say that price is the No.1 barrier.”
(Editor’s note: Wards classifies battery-electrics, hybrids, plug-in hybrids and fuel-cell electrics as electrified vehicles (EVs); battery-electric vehicles are specified as BEVs.Ton says a key group to look at are the “Skeptics.” “The EV skeptics are those who are saying, ‘You know what, right now I'm going to consider buying a car in the next few years, but I'm not buying an EV yet because I’m waiting for the EV and charging technology to improve.’ Those people are specifically waiting for faster charging and longer driving ranges.”
Ton notes that the slowdown in demand is measurable. Seventy-three percent of considerers in 2022 were sure their next vehicle would be an EV, versus 48% this year.
Fifty-one percent of all those intending to buy a new vehicle in the next 24 months, as measured in 2022, were considering an EV. That consideration level dropped to 45% this year. The study also shows that 54% of EV Skeptics, those not considering an EV in the next two years, believe 2026-2028 will be the right time to seriously consider purchasing an EV.
Among Skeptics, the top barrier is lack of charging stations, followed by cost of vehicle, followed by inability to charge at home. But 46% of Skeptics said they would become Considerers if EVs were at price parity with an ICE alternative.
The chief barrier to consideration – cost – is only marginally within the scope of automakers. Ford, for example, lost $65,000 per EV sold last year, while General Motors lost about $36,000 per EV last year. Lowering costs of existing vehicles on those automakers’ existing vehicle architectures would be precarious. That’s why both GM and Ford are trying to rapidly develop a lower-cost EV architecture. Some other automakers, such as Hyundai and Toyota, were already working on lowering costs for more affordably priced EVs.
Some key demographic indicators in the study: 55% of males intend to buy a new or used vehicle in the next two years. Of that group, 55% were considering an EV while 45% were not, instead considering only ICE vehicles. Of the women intenders, 40% were considering an EV, while 50% were shopping ICE only.
Other key findings that should inform automakers and dealers: Only 29% know of the federal 8-year/100,000-mile (161,000 km) guarantee on batteries, while fear of the cost of replacing a battery pack remains a big concern among car buyers. Familiarity with EVs, too, will increase consideration, which explains why many automakers are using auto shows to get shoppers/intenders behind the wheel at test tracks. Seventy-two percent of Considerers know someone who owns an EV, while 49% of Skeptics don’t know anyone who owns an EV.
Some of the noise in the EV consideration/sales picture this year is election rhetoric and media coverage of the election. Donald Trump recently said he asked oil industry CEOs to steer $1 billion to his campaign in exchange for rolling back the existing EV mandates. However, most consumers do not realize automakers must comply with California emissions and clean-air mandates, which the federal government can’t supersede. California is the fifth biggest economy in the world, and accounts for almost 40% of new-vehicle sales. Twelve states, including the highly populated states of New Jersey and New York, plus Washington, DC, all follow California’s emissions rules.
The Cox Automotive study shows there are plenty of opportunities to step up information and education to vehicle shoppers to reduce the anxieties and sense of risk-taking among many would-be EV considerers.
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