Drivers have moved the goal posts for electric cars
Drivers have dramatically increased their expectations of electric vehicles as the prospect of mass electrification rapidly approaches, according to a major new study by international management consultancy firm Arthur D. Little.
The Future of Automotive Mobility 2021 found that drivers now want the range of batteries to match the distance achieved on a tankful of petrol or diesel, but they do not expect zero emission vehicles to cost any more than their internal combustion engine (ICE) predecessors.
“Customers have increased their requirements for operating reach over the last few years,” said Wolf-Dieter Hoppe, co-author of the study and partner in ADL’s Automotive and Manufacturing Practice.
“In China, they want a range of 500km, in Europe it’s 600 to 700km and in the US it’s 700km plus. This is the benchmark set by the ICE. Drivers have seen a lot of success in increasing range over the last two years and now they are setting a higher threshold.”
No price premium
At the same time as moving the goal posts for range, only 22% of drivers in Europe would be prepared to pay a premium for an electric vehicle, compared to 45% in 2018, and the percentage is even lower in the US, where only 14% (2018: 41%) would now pay more for battery power. China is an exception to this rule, although its figures may be distorted due to restrictions on car ownership, with licences more readily granted for EVs.
At cost parity, however, 39% of drivers would choose a BEV and 25% an ICE vehicle.
In some respects the higher expectations of BEVs represent good news for the technology, signalling that drivers now view these cars as everyday vehicles and are therefore reluctant to pay a premium for them. However, the Future of Automotive Mobility also adds that: “It looks like manufacturers will have to sharpen their pricing.”
BEV drivers won't return to ICE
The survey of more than 8,500 drivers across 13 countries did find that current BEV drivers are unlikely to return to ICE vehicles when they replace their cars, which is further good news for fleets implementing a transition to EVs, although traditional fleet manufacturers could find their market shares under pressure as electrification prompts drivers to re-evaluate their brand loyalty and consider other brands. The report found that more than half (51%) of premium brand customers expect to have to buy a different brand when they go electric, because new, emerging brands offer a more exciting proposition.
“This means that alternative powertrains could be a hidden market disruptor,” said the report.
It forecasts that hybrid engines will provide a stepping stone to full electric vehicles, with vehicle range and recharging infrastructure still insufficient to persuade drivers to switch to BEVs. According to the report, 43% of drivers consider the availability of public charging points to be of greater importance than charging speed (20%), ease of use (18%) or energy price (10%) in committing to an EV.
Klaus Schmitz, co-author of the study and partner in ADL’s Automotive and Manufacturing Practice, said: “Consumers don’t have petrol in their heads, they are just asking for the same solution as an ICE, and the automotive industry and politicians have to learn from this. The industry will need to give customers the choice – cheaper vehicles or longer range.”
Possible solutions include government subsidies and tax breaks for EVs, as well as bigger cars carrying more batteries to extend their ranges between recharging.
“The interesting area will be small cars that cannot accommodate batteries for an 800km range,” said Schmitz. “But those cars are not typically the vehicles that are driven those distances.”
Car ownership in cities
The Future of Automotive Mobility also measured the importance of car ownership in a world with rapidly developing alternative mobility solutions. Unsurprisingly, the smaller a town or city, the more important car ownership becomes, while mega cities with well developed transport alternatives show less devotion to the private car.
“We asked why it’s important to own a car and for company car drivers it’s the same reasons as for private car drivers: independence, comfort, convenience and status,” said Hoppe. “When you look into company fleets there is an obvious trend to sustainable solutions, but there is still a high demand on the corporate side for vehicle-based mobility solutions. Mobility budgets are being discussed and they’re coming, but the company car, even if it becomes more electric or hybrid, is still important because the desire to have exclusive use of a car remains.”
However, across Europe 30% of drivers expect car ownership to become less important, with ride-hailing likely to be the biggest winner in on-demand transport until fully autonomous vehicles arrive. Car sharing suffers from the intractable problem that the principal reason to use a car is for commuting and no business model could supply sufficient cars to meet this demand and then let the cars stand idle during the working day.
“Once you have autonomous robo-fleets, car sharing has every potential to take off. The only question is when autonomous driving will be here, and personally I would say well before 2030,” said Schmitz.
But the Future of Automotive Mobility identified a sharp reduction in the number of people prepared to use a robo-taxi compared to the previous study, primarily due to safety fears, as well as data privacy concerns. Across Europe, 44-54% of people said they would not use fully autonomous vehicles, and this figure rose to 49% in the US, although China was an exception with 71% supporting driverless technology.
“When only between 15% and 37% of licensed car drivers are in favour of fully autonomous driving technologies, it is obvious that manufacturers have some way to go to win the market round. Even when it comes to semi-autonomous driving (SAE level 4), over 50% of respondents in our survey were not convinced that this is the technology for them,” said the report.
New car sales 2030
ADL has lowered its forecasts for new car sales figures for 2030, predicting a market of between 97 and 113 million units, which represents a relatively modest 2% CAGR rise from today’s 90 million total.
“We have calculated that in a very disruptive scenario, fewer than 8% of the vehicles produced annually would be autonomous mobility-on-demand vehicles,” said Hoppe. “In a more conservative scenario it would be 1.5 to 2%. This represents between 2 and 8 million units worldwide, so if any OEM group wants to capture a bigger portion of this market, it would need to win a significant share.”