Is Adoption of the Electric Vehicle at a Tipping Point?
Electric cars aren’t yet mainstream, largely because most Americans still don’t see them as a practical alternative to fossil fuel cars. Yet, for the first time in a decade, there are signs attitudes may be changing – and adoption of the electric vehicle may nearing a tipping point.
While sales of electric vehicles remained flat at one million through 2015, the electric car industry is showing signs of potential growth. In March, when Tesla began taking pre-orders for its affordable, electric car, the Model 3, it received 325,000 reservations in the first week.
Does this indicate a promising future for electric cars? Do consumers view electric cars as a better longer-term alternative to automotive industry‘s traditionally fueled cars, and if so, are they willing to pay more for them? If not, what’s holding them back?
Today’s American Car Market Is Gas Fueled
Traditionally fueled cars are still the mainstay of car purchases in the United States. 72% of the respondents to a new survey conducted by ReportLinker still fill their tanks with unleaded, premium, super or diesel gas.
It’s this comfort level with gas that may drive American’s views on electric cars. When asked what they believe is the best alternative to a traditionally fueled vehicle, 43% expressed a preference for more efficient fuel vehicles, while just 29% said hybrids were a better alternative, according to the ReportLinker survey.
Even more striking is the finding that 81% of Americans say they are not ready yet to buy an EV, even though 52% agree it’s a good return on investment.
And while 30% of Americans value the environmental benefits of an EV, still another 30% believe there isn’t any benefit to owning this type of vehicle, the data show.
In addition, consumers see several drawbacks to owning an EV, including an underdeveloped recharging infrastructure, price to purchase, and the speed of recharge.
The recharging infrastructure, in particular, is a notable barrier. According to one survey cited by the International Council on Clean Transportation, 54% of surveyed consumers would not consider purchasing an EV until charging locations are widely available and as easy to locate as gas stations are today. In addition, they expect total recharging time not to exceed five minutes – about as long as it takes to refill a gas tank.
A Key Problem about EV: Education and Awareness Are Lacking
For automakers and environmental activists, the most immediate barrier may be consumer knowledge. For example, when asked what they know about EVs, survey respondents struggled to answer. Nearly 40% couldn’t specify the autonomy range of a battery-electric vehicle, and many weren’t familiar with the auto brands that are leading the way on EV development, according to ReportLinker.
Just 15% named Toyota as a maker of EVs, even though the automaker had one of the first hybrids on the electric vehicle market. Consumers named Toyota and Telsa most frequently in both aided (27% and 32%, respectively) and unaided (15% and 13% respectively) questions on the ReportLinker survey.
Will Millennials Be the Next Wave of EV Consumers?
Unlike their parents and grandparents, Millennials don’t feel the same pull to car ownership. A significant share – 40% – say they don’t own a car, compared to just 16% of the rest of the US population, ReportLinker found.
There are several factors at play here. Millennials prefer to live in cities, where public transportation and car services like Uber both simplify travel and allow them to work while commuting. And although using a car is their preferred choice, they are increasingly multimodal, choosing the best travel option based on the trip, according to a survey by American Public Transportation Association (APTA) and the Transit Cooperative Research Program (TCRP).
But the ReportLinker survey data shows Millennials are somewhat more open to the idea of EVs than other generations. When asked what they felt was the best alternative to traditional fuel vehicles, nearly half – 48% – said hybrids and other electric vehicles. By comparison, just 41% of all other generations agreed with this choice. In fact, only 34% of Millennials believe more fuel efficient vehicles are the better alternative, compared to 44% of the rest of the US population.
Most notably, Millennials are more likely to consider buying an EV than the general population – a finding that could indicate they’re the next wave of EV consumers. Twenty-nine percent said they would consider a hybrid or other electric vehicle, compared to 18% of the rest of the population, according to ReportLinker.
At the same time, however, Millennials are more likely to be put off by the challenges of EV ownership than other generations. In the ReportLinker survey, 40% cited the underdeveloped recharging infrastructure as the main drawback, compared to 33% of the rest of the population. And one in five called the speed of recharge a problem.
Cost is a significant factor for this group, with 23% citing it as the main drawback, according to ReportLinker. With higher levels of student debt than earlier generations, most Millennials aren’t in a position to buy an expensive vehicle today. But in a decade, their financial situation is likely to have improved enough to purchase an EV, especially as costs come down.
When it comes to brand awareness, Millennials are much more likely than other generations to associate Tesla with EVs, with 34% naming it on unaided questions compared to 12% of the rest of the population in the ReportLinker survey. Brand recognition was significantly higher on aided questions, with 51% choosing Tesla among a list of car brands.
Mass Adoption of the Electric Vehicle
While Americans aren’t inclined to buy an EV today, more than a third of Americans believe mass adoption will happen by 2035, and 29% say it will happen as early as 2025, the ReportLinker data show.
However, Millennials are more skeptical about mass adoption than the rest of the population: 66% believe it won’t happen until 2030 or later, compared to 54% of other generations, according to the ReportLinker survey.
Several trends may change consumer viewpoints. Tesla’s brand and reputation could have an impact, particularly on Millennials. This year, the company electric car industry of advertising research firms WPP and Millard Brown’s annual brand valuation ranking, largely on the strength of its reputation. In addition, its Model 3 seems to have been designed with Millennials in mind, which could draw this generation into the market.
Further, Millennials – and other generations as well – may find EVs far more attractive within a decade. Bloomberg New Energy Finance predicts big reductions in battery prices that will make EVs a more economic option than either gasoline or diesel cars.
Consumer attitudes toward EVs may be at a tipping point, but mass adoption isn’t likely to happen before recharging infrastructure improvements. The most immediate opportunity to fuel a tip may be more marketing investment. As consumers learn more about EVs and their benefits, attitudes – and purchase patterns – may shift.