Understanding Consumer Behavior Influences EV Purchases

This may well be the year auto experts look back upon as the beginning of a steady climb toward greater electric-vehicle adoption in the U.S.

With auto companies such as Tesla, BMW and General Motors rolling out EVs at an increasing clip and consumer interest rising, we’re facing a shift.

Through the end of 2017, total market share of EVs on an annual basis had hovered around 1%, while estimates for 2018 are closer to 2%. In states such as California, long known for its maverick approach on environmental issues, market share is projected to increase from about 5% last year to over 7% this year.

So, with this strong increase in sales and consumer interest, marketing budgets for EV’s must also be increasing, right?

Not exactly. According to a study by the Northeast States for Coordinated Air Use Management, auto manufacturers spent a fraction (about 1%) of their 2017 advertising promoting EVs.

The largest sum, about $16 million, was spent on Chevrolet’s Bolt, which finished a close second in total EV sales last year behind Tesla’s Model S.

If the Bolt saw a strong correlation between increased marketing spend and sales, it begs the question of why other auto manufacturers aren’t following suit.

Why are marketers hesitating to dedicate more significant portions of their budgets to EV ads?

There remains a sizable gap between consumer knowledge of how traditional internal-combustion engines work and EV features and benefits.

McKinsey has reported the number of consumers not yet familiar with EVs and related technology as high as 50% in the U.S.

While this presents a challenge for rapid consumer adoption, it’s also a major opportunity for marketers to create EV awareness. It will take a coordinated effort by auto brands, marketers and dealers to prioritize consumer education over short-term profits.

To help advertisers and marketers better understand consumers who are currently actively EV shopping and to generate more interest among new prospects, let’s look at key features important to EV shoppers.

Fuel Efficiency

Naturally, consumers are interested in how much money they’ll save by switching to an EV, although the short-term price of an EV often is higher than a comparable ICE model.

A major concern EV shoppers express is the availability of charging stations and slow charging times compared with the simplicity of filling up at a gas station. Marketers should use the topic of fuel as an educational opportunity to drive awareness of nearby charging stations.

By utilizing map functionality within their digital creative units, marketers can communicate the benefits of ease coupled with estimated long-term fuel savings. Allowing consumers the ability to calculate their long-term fuel savings with a user friendly fuel calculator, such as the one featured on energy.gov, is an easy way to any commuter’s heart.

Luxury

Often, we see a male skew in the audience most interested in electrics, where annual household income levels are most likely to be $125,000 or higher, well above the annual median household income of about $59,000. 

This suggests current EV shoppers consider the features and benefits of certain electric vehicles on par with gas-powered luxury vehicles, and their incomes allow them to be early adopters of this new technology.

It may also suggest consumers of more modest means think EVs are not within their budgets, or not practical enough for everyday driving.

An IPSOS study says, “It is important that consumer target needs are understood: incentives are important to middle class buyers,” so income-related targeting and incentive messaging could useful ways for marketers to segment the EV audience in order to ensure relevancy and purchase consideration

Consumer research indicates female automotive shoppers consider more practical features such as affordability, reliability, fuel efficiency and safety, while men tend to focus on performance, styling, interior and other aesthetic features.

Given that Tesla commands most of the market share for current EV sales in the U.S., we weren’t surprised to see current EV shoppers tend to skew male, given Tesla’s position as a luxury performance vehicle.

EVadoption.com says, “The Tesla brand and mystique has also done a great job of making this (luxury/performance) customer segment more aware of EVs.”

Considering CDK’s research that suggests 85% of car buying decisions involve women, EV marketers appeal to women by featuring practical benefits of EV usage, such as safety ratings, parking and HOV lane access, driving range and long-term cost savings. This will also help as more EVs come into development, enabling auto makers to scale their offering beyond early adopters and into general market. 

Technology

Most early EV marketing was focused on “green” consumers who were thinking about the positive environmental impacts that zero-emissions vehicles were likely to have.

Research show that while this is a nice perk, most EV buyers are early adopters of technology, embracing innovation and the prestige it brings more so than acting as environmental stewards. 

The site evadoption.com says, “The relatively high share of sales for the Porsche Cayenne PHEV and BMW 530e PHEV is not surprising since upper income consumers tend to be earlier adopters of new technologies often simply because they can afford to pay a price premium, in this case of a comparable PHEV model.” (Wards Industry Voices contributor Jim Johnson, left)

Marketers can leverage the voice of the innovators and early adopters to help evangelize EV adoption among general-market consumers. Customer testimonials and third-party reviews can be leveraged through digital video marketing to help quell fears many consumers have about EV range, charging-station availability and affordability.

Providing a first-hand or expert account of the benefits of EV ownership is akin to a friend or family recommendation.  

The auto industry’s future is driven by technological innovation, with electrification leading the charge (pun intended).

Wide scale consumer adoption of electric vehicles will require close cooperation among government, auto manufacturers, dealers and marketers alike. Moreover, a deeper understanding of consumer needs and purchase motivations is vital.

Jim Johnson is vice president-account planning at Exponential, a digital advertising company.