Battery electric vehicles (BEVs) are here to stay, and they’re going to only increase in number. For original equipment manufacturers (OEMs), that’s going to be a challenge, because they have to manage short-term profitability problems at the same time that they try to move forward with BEVs—and still keep their legacy products going. Understanding consumer sentiment around electric vehicles is critical to both serving OEMs’ needs and furthering adoption of these new types of vehicles. The AlixPartners International Electric-Vehicle Consumer Survey¹ of 7,600 consumers in seven regions reveals a gap between consumer interest in BEVs and actual sales of such cars, indicating that there are hurdles to clear.
Consumers’ interests and their concerns vary from one region to another, but we can see from our survey results that their concerns about the environmental effects caused by internal-combustion-engine (ICE) vehicles and the potential savings to be gained from BEVs are key drivers of those interests. Though consumers worry about price, many of them are willing to pay a healthy premium for a BEV over an ICE vehicle. That’s especially the case with traditional brands.
Despite improvements, consumers’ concerns about cost, range, and charging infrastructure remain considerable. For example, many consumers reported they worry about battery range, but their actual driving behavior indicates that they don’t have to be.
First, they think they need more charging infrastructure than they actually do, and second, they may not know how widely available level 3 (high-speed) and level 2 (mid-speed) charging already are. Third, with regard to price, many consumers say they want BEVs to cost the same as ICE vehicles, yet they also say they’re willing to pay a premium for BEVs. None of those concerns have been enough to dampen their overall interest, though.
Global: Gap between interest and sales remains significant
According to our survey, consumers’ interest in electric vehicles is high. Yet the gap between interest and sales remains significant. Many consumers surveyed cited multiple concerns that hold them back. Chief among them are cost, battery range, and charging infrastructure.
Consumer Concerns
Cost
Outside of China and Norway, where BEVs have been heavily subsidized, consumers cite as a concern the additional cost of purchasing BEVs.
Battery range
Consumers surveyed cited battery range as a concern, yet battery range is around 200 miles per charge now and increasing steadily, whereas the vast majority of consumers don’t engage in driving patterns that would run up against that.
Charging infrastructure
For most consumers, some level of charging infrastructure is available, but they may need more availability to feel comfortable. This is a sort of chicken-and-egg problem. Demand for charging stations drives such stations’ proliferation, yet consumers cite perceived lack of charging infrastructure as a concern when it comes to purchasing a BEV.
Purchase drivers
VALUE OF BEV BENEFITS: Breaking down the way consumers value the various aspects of BEVs may yield deeper insight into why interest exceeds actual market share. Fuel-cost savings and environmental impact are primary drivers of consumer interest.
- Fuel-cost savings: $2,500 consumer purchase premium value
- Environmental impact: $1,500 consumer purchase premium value
BRAND RECOGNITION: Also affecting consumers’ perceptions of the likelihood to purchase is brand recognition. Consumers vigorously prefer BEVs from traditional brands, although just under half of consumers surveyed outside China said they would consider a Chinese vehicle that was considerably less expensive.
- 72% would prefer a BEV from a traditional brand
- Around 45% would consider a Chinese vehicle that is 20% less expensive (excluding China)
DEALER INVOLVEMENT: On the other side of purchase drivers are dealers. The disconnect between consumer interest and dealers discussing them with potential buyers appears to be wide. Despite 50% consumer interest of those surveyed, dealers discussed them in only 20% of purchases, thereby indicating strong need for a better incentive structure.
REGULATION: Consumer interest in BEVs extends also to support for further regulation of ICE vehicles. With the exception of consumers in Norway, many said they support outright bans on ICE vehicles. Consumers in China exhibited the strongest support for such regulation. (View figure on page four).
- 33% support further regulation of ICE vehicles
- 21% support outright bans of ICE vehicles
Regional outlook: key points
Conclusion: what automakers can do
BEVs are here to stay: the tipping point for BEV adoption is near, in what will likely be an irreversible shift. Therefore, automakers should take steps to succeed in the new market:
1. Develop the appropriate business case
- Navigate profitability concerns. Automakers must carefully navigate their profitability concerns when it comes to managing more than two vehicle-propulsion platforms, such as the BEV, the plug-in hybrid electric vehicle, and the ICE.
- Evaluate make-versus-buy decisions under several BEV-adoption scenarios. With rapidly changing technology, it’s important to know where your company’s core capabilities fit into the component value chain and to then adjust the company’s product portfolio to more accurately reflect the source of future value creation.
- Stay abreast of strategic and targeted vehicle launches. More than 300 BEV models are expected to be launched by 2021², but some questions arise: will the new models lower the hurdles that now prevent consumer purchases? Will the new models be geared toward fleets (taxi/ride-hailing or home health, for example) where fuel savings are significant?
2. Tailor marketing approaches to consumers
- Market BEVs to consumers. More can be done to educate consumers about the benefits of BEVs and thereby dispel prevailing myths. This requires aggressive marketing campaigns rooted in compelling vehicle-use cases.
- Develop creative solutions to alleviate consumers’ concerns. That includes offering consumers incentives such as a home-charging installation assessment, a trial of the vehicle for an extended time—say, two or three days—and reduced-price ICE rentals for trips outside the battery range.
3. Enhance enablers
- Reevaluate the dealer incentive structure. The incentive model for dealers must be reevaluated to correct for a future in which there will be less reoccurring revenue because of lowered maintenance requirements.
- For infrastructure providers, find public/private solutions. Charging-station infrastructure is a major deterrent to BEV purchases—especially in denser, urban areas where consumers do not own the area where they primarily park their vehicles.
