EVs fall short of consumer expectations: Deloitte

CONSUMER expectations of electric vehicles in terms of pricing, driving range and battery recharging times far exceed the first wave of EVs now available and only a major blowout in fuel prices is likely to prompt a widespread shift in attitude, according to new global research from consulting firm Deloitte.

In a recent study titled ‘Gaining traction: Will consumers ride the electric vehicle wave?’, which surveyed more than 12,500 consumers in the US, Europe, China and Japan, Deloitte found that expectations for EV range were two to three times (320-480km) the current models from major automotive manufacturers, which is typically up to 160km.

Moreover, expectations of EV battery recharging times were two hours or less for the majority of consumers in these markets – specifically, 81 per cent of respondents in Japan, 67 per cent in Europe, 60 per cent in the US and 55 per cent in China – compared to the eight-hour charge time (using ‘level two’ chargers with a 24kWh battery pack) typical for current market offerings.

While Australia was not included in the initial research (a follow-up survey covering our market is due soon), there were some significant variations in responses in the different regions.

Chinese consumers were found to be more likely to see themselves as ‘potential first movers’ in the adoption of EVs – that is, people who are very interested in an EV and likely to purchase or lease one within the next 12 months – compared to people in more developed automotive markets.

From top: Nissan Leaf, Renault Kangoo EV, Volvo C30 Electric.

Some 50 per cent of the 1163 Chinese survey participants identified themselves as potential first movers, compared with only 12 per cent in the US (from 1007 participants), 16 per cent in Europe (from 4760) and just four per cent in Japan (from 2075).

While those who said they ‘might’ be willing to consider buying an EV were roughly equivalent between the major regions, ranging from 43 to 53 per cent, those who were ‘not likely’ to consider an EV was as stark as those who said they were keen.

No less than 52 per cent of respondents in Japan – the world’s biggest hybrid market – said they were not likely to consider an EV, with 46 per cent saying likewise in the US and 31 per cent in Europe, which covered Belgium, France, Germany, Italy, Spain, Turkey and the UK.

Yet in China only seven per cent had such a negative attitude toward electric cars.

Although the purchase price of EVs will continue to move downward – as evidenced by the $48,800 retail price of the Mitsubishi i-MiEV announced for Australia last week, down from $63,000 ‘foundation customers’ were required to pay – most consumers surveyed by Deloitte said they were unwilling to pay significant price premiums for an EV.

This is clearly a significant challenge for car-makers, particularly in countries such as Australia where there are no government incentives offered to make EVs more affordable.

But even where there is, and in countries such as China were there is plenty of support for EVs, Deloitte found that the majority of consumers still expect to pay less than the equivalent of $US20,000 ($A18,860) for an EV – after subsidies.

In China, this group comprised 52 per cent of the sample, while in Europe an even larger number – 58 per cent – were unwilling to pay more than $US20K for an EV.

Compounding the issue, the survey also found that more than 50 per cent of consumers in these markets refuse to pay any kind of price premium for an EV – 51 per cent in China and 57 per cent in Europe.

While their American counterparts had a similar response (56 per cent), consumers in Japan were clearly unprepared to cop a premium (63 per cent).

Yet, in the US and Japan, the biggest proportion of consumers (47 and 41 per cent respectively) expected the price of an EV to be between $US20,000 and $US30,000.

Delving further into what might tip consumers towards EVs, Deloitte asked specific questions about fuel prices and found certain price points where consumers would be more likely to consider buying or leasing an EV.

Nevertheless, the survey results also show that fuel efficiency advancements of internal combustion engines serve to reduce the attraction of electric cars.

The tipping point in terms of fuel price for Chinese consumers was 10 RMB ($A1.46) a litre – a point where 66 per cent said they were ‘more likely’ to consider an EV – but if fuel efficiency reaches better than 3.0L/100km with regular cars, 82 per cent would then be less willing to purchase an EV.

In Europe, the critical fuel price per litre was €2.60 ($A3.50) for interest in EVs to pick up (for 77 per cent of respondents), while in the US it was $US5.00 a gallon (for 78 per cent) and in Japan ¥210 per litre, or equivalent to $A2.47 (for 65 per cent).

However, EVs were soon off the agenda for consumers when vehicles with petrol or diesel engines of the same size, performance and other features reached specific levels of economy.

The equivalent of 3.0L/100km for a regular car was crucial in markets other than China, prompting 71 per cent of consumers in Japan, 73 per cent in Europe and 82 per cent in the US to be much less likely to consider buying or leasing an EV as a result.

Notably, 4.7L/100km (or its equivalent) was also the point where a majority of American (68 per cent) and Chinese (57 per cent) consumers became less willing to consider an EV – possibly due to their lower mileage expectations compared to high-economy markets like Japan and Europe, where the percentage of respondents at this point was 39 and 48 per cent respectively.

Deloitte LLP vice-chairman Craig Giffi said: “Offsetting the fuel factor is the finding that the better the fuel efficiency of internal combustion engine vehicles, the less interested consumers become in EVs.

“For mass adoption, auto-makers ... will be challenged to price electric vehicles to meet the expectations of consumers and still make a profit on them.

“Consumers are not likely to pay any sort of price premium for EVs. Therefore, government incentives are very important to the purchase decision.”

Mr Giffi said global mass adoption of EVs would be “significantly influenced” by a number of factors, including “rising fuel prices, advancements in ICEs (internal combustion engines) and the availability of government incentives”.

“While interest in electric vehicles is growing, current market offerings generally fall far short of consumers’ expectations.”