Although battery-electric vehicles are getting closer
to price parity with their internal combustion siblings, the
affordability factor is the main reason consumers are holding back
on adopting electrification, according to a recent survey by
S&P Global Mobility.
Although range anxiety and the charging network remain reasons
to hesitate, a recent global survey of consumers showed that
potential EV buyers are most concerned about the impact to their
wallet. What’s more, this is not just a US-market phenomenon. It’s
affecting consumers worldwide – even in regions where EVs have made
significant market inroads.
Almost half (48%) of the 7,500 respondents globally consider EV
prices to be too high, even though they understand that most EVs
inherently carry a price premium.
“Pricing is still very much the biggest barrier to electric
vehicles,” according to Yanina Mills, senior technical research
analyst at S&P Global Mobility.
Consumer sentiment toward buying an EV has cooled considerably
over the last two years. This rise and fall are emblematic of an
immature market segment, Mills said. That said, improved electric
vehicle range, and the increased number of model choices, have
moved down consumers’ list of reasons to avoid purchasing an
EV.
Despite an increased number of EVs available, and improved
consumer awareness of tax-credits and benefits, fewer than half of
respondents believe the EV technology is ready for mass market
adoption. Only 42% of respondents are considering an EV for their
next vehicle purchase and 62% of respondents are waiting until the
technology improves before purchasing a new vehicle, the S&P
Global Mobility survey found.
How things have changed
Initially, consumer interest was smothered by the limited
variety of available EV models. Just 58% of 2019 S&P Global
Mobility survey respondents were open to purchasing an EV, as
luxury-priced models dominated the early EV market. Just a handful
of mainstream models, like the Chevrolet Bolt, Nissan Leaf, and
Tesla Model 3, were available at that time.
But 2021 saw a dramatic burst of consumer EV acceptance. Buyer
willingness soared, with 86% of global respondents being open to
acquire an EV. Multiple factors stirred up these good feelings: New
mainstream models from Ford, Hyundai, Kia, and Volkswagen hit the
market. The pro-EV push in the US by the Biden administration, and
legislation in multiple US states and in Europe banning future
internal combustion-engine (ICE) vehicles, further heightened
visibility.
While 67% of the 8,000 participants surveyed in May 2023 were
open to the idea of purchasing an EV – certainly higher than in
2019 – it is a whopping 19 percentage point decline from 2021.
What happened?
The last two years have brought more consumer choice. These
span the far ends of the market, from hulking EV pickups in the US
to many small EV choices becoming available in Europe and
China.
For one, price fatigue has set in, driven by rising interest
rates and inventory shortages that have only recently seen relief,
said Brian Rhodes, director of connected car and vehicle experience
for S&P Global Mobility.
Depending on where an EV is manufactured, changes to the
tax-credit program in the US now force consumers to lease – rather
than purchase – many models. Frequent media reports about charging
network reliability shortcomings have not helped either. At this
point in the evolution of EVs, adding more models simply cannot
cancel out these issues.
Owning an EV forces some changes in routine. Compared to an ICE
vehicle, EV driving range is typically less. Once the battery
charge is depleted, it takes longer to recharge a battery than it
does to refuel a gas tank. Inherent EV drawbacks like these make
consumers reluctant to buy, especially those regularly making long
journeys. However, survey results show that consumers accept living
with an EV’s concessions – relative to an ICE vehicle –
post-purchase.
That said, many EVs purchased to date are second – often smaller
– cars in the household. “For those considering an EV as their
primary car, the range/charging issues are amplified since there is
no alternative on longer trips,” Rhodes said.
The charging network
Charging concerns are second only to vehicle cost among reasons
cited for those respondents against buying an EV. About 46% of
respondents are concerned about the time required for charging,
while 44% are concerned about the availability of charging stations
– a reversal of reasons from last year.
“Consumers know (charging) will not be the standard gas station
in-and-out experience,” Mills said. “But they don’t want to delay
for much more time than what would be a lunch break.” Indeed, the
plurality of 2023 survey respondents said they were willing to wait
between 30 minutes and an hour to recharge.
Meeting this charging expectation requires
both infrastructure investment and vehicle capability. The only
current technology that can support 30-to-60-minute recharging is
fast (DC) charging, so an extensive fast charger network becomes
necessary to match consumer demands. An industry-wide shift towards
using Tesla’s previously proprietary NACS charging design should
accelerate charging network availability if installation rates keep
up with sales.
Likewise, EVs need to have high-capacity built-in chargers that
can take full advantage of fast chargers. For example, several
Hyundai, Kia, and Genesis vehicles have 350kw/800V charging that
can charge a battery from 10% to 80% in 18 minutes – assuming the
charging location is operating properly.
As for the concept of battery swapping, consumers in mainland
China, India, and Brazil continue to be most interested in the
concept – with more than 75% of global respondents willing to wait
up to 30 minutes for a battery swap, at an average price point of
$16.
Home isn’t where the charge is
One common complaint against widespread electric vehicle
adoption (either battery-electric, or plug-in hybrid) is that
charging is difficult for owners who don’t live in houses and thus,
don’t have a charger on-site. But survey results reveal that this
concern may be overstated.
Respondents confirmed that the most common – and best – single
place and time to recharge is indeed at home, at night. However,
only 42% of owners typically charge their electric vehicle this
way. Furthermore, just 51% of current and repeat EV owners have a
charger installed at home. While the industry’s common refrain is, “Most owners will recharge at home,” barely half of the early
adopters surveyed met that circumstance.
Turns out, owners charge their vehicles in a wide variety of
places, including streets, highways, and during work. Among EV
intenders, 25% plan to use public charging stations (15%).
Owners who do charge at home aren’t in a hurry. Most respondents
aren’t willing to pay anything extra (31% of respondents), or are
willing to pay a minimal 10% extra (40% of respondents), to upgrade
to a faster Level 2 charger that takes five hours for a full
charge. Consumers want fast charging on the road, but they will
wait overnight for a full charge at home.
Has range anxiety been cured?
Competing manufacturers have driven something of an EV “range
war,” particularly within the luxury segment. The longest-range
Tesla Model S claims 405 miles of range, while the Lucid Air Grand
Touring promotes 516 miles. These luxury vehicles push the envelope
in both range and price – the Lucid stickers at nearly $126,000 –
but most consumers have more modest needs and wants.
Most respondents indicated that they would accept a minimum EV
range below 300 miles. 19% would accept a range between 251 and 300
miles, while 21% would be fine with a range from 201 to 250 miles.
Only 29% preferred a minimum range above 300 miles.
Current EV range capabilities match this consumer demand. Almost
every EV on the market has a United States Environmental Protection
Agency (EPA) range of more than 200 miles. Vehicles with an
estimated range over 300 miles are limited to vehicles from luxury
brands, such as Lucid, Tesla, Rivian, BMW, and Mercedes-Benz.
While current technology might be ready for consumer acceptance,
it does not mean that consumers are ready just yet to make the leap
to an EV. 62% of respondents agreed with the statement, “I am
waiting until vehicle technology improves before purchasing a new
car.”
Asked about this disconnect, Mills explained, “There’s always
that little bit of ‘What if…’ that continues to hold consumers
back, even if for the most part they know they’re probably going to
be OK with the capability of their new EV.”
EV purchase reasons remain consistent
Consumer willingness to buy an EV has waxed and waned over the
last few years, but their reasons for purchase remain the same. The
three main reasons to purchase an EV or hybrid are fuel savings
(69%), environmental benefits (56%), and performance/driving
experience (31%).
Electric vehicle advocates, including the EPA, often tout
downstream cost savings as a reason to purchase an EV. Many buyers
will indeed save money on operating costs, but the equation is more
complex. But buyers in coastal US states – where the vast majority
of EVs are purchased in that market – also suffer from high
electricity costs, increasing the cost of operation for charging at
home.
Meanwhile, while some free Level 2 chargers are available,
charging at a fast DC charger is far from free. Among global
respondents, those in the United States and Brazil were the most
willing to pay for 10 minutes (60 miles of range) of fast charging,
both at $19. For most ICE vehicles, this is more expensive than the
gasoline needed to drive that distance.
A desire to reduce greenhouse emissions drives many consumers to
purchase an EV. This goal also encourages the replacement of fossil
fuel burning consumer goods – including heating/cooling systems and
outdoor garden equipment – with their electric-powered equivalents.
But all of this comes at a cost, both at purchase and for
recharging. Says Mills, “All-electric everything doesn’t seem to be
achievable for a lot of consumers.”
Multiple hurdles need to be cleared to achieve widespread EV
adoption. Buyers may want to wait for the next technological
advance, or have concerns about charging time and charger
availability, but in the end, consumer finances – not engineering –
lead the current buying resistance to EVs.
FOR MORE CONSUMER SURVEY INSIGHTS
ALTERNATIVE PROPULSION FORECAST
This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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- Source: http://www.spglobal.com/mobility/en/research-analysis/affordability-tops-charging-and-range-concerns-in-slowing-ev-d.html
