The COVID-19 pandemic gave rise to more consumers being interested in living greener lives and purchasing electric vehicles.
By Martin Cardell and Christian C. Eckhoff
For all the disruption and pain associated with COVID-19, the pandemic has also presented the auto industry with a golden opportunity to supercharge electric vehicle (EV) sales. The consumer mindset is changing fast – over the last 18 months, millions of people around the globe have reconnected with environmental concerns and are now more willing than ever to put sustainability at the top of their mobility agenda. Findings from the latest EY Mobility Consumer Index (MCI) show that no fewer than 41% of respondents who intend to buy a new car are actively considering an EV, and 66% of them intend to buy one in the next 12 months—some of the biggest shifts in buyer sentiment we’ve seen.
The (electric) car’s the star
The rise of home working, virtual communication and online delivery services may have removed the need for many day-to-day journeys, but consumers still prefer mobility to stasis. They want to travel, but to do so more safely and sustainably. The number of journeys taken is broadly expected to return to pre-COVID-19 levels, with the exception of work-related travel:
- 14% of work journeys are expected to be avoided in future.
- More than half (56%) of current and future car owners agree that constant access to a personal car is very important to them.
- 38% of those who don’t currently own a car say they are now looking to buy one, a rise of 7% from the previous survey conducted during phase one of the pandemic last year.
Making the leap
The newfound resolve to live a greener life and choose a sustainable EV is countered by ingrained practical concerns around cost, range and charging infrastructure. How much, in other words, will eco-principles cost consumers — financially and in terms of time, convenience and stress or anxiety — and how much are they willing to pay? The confusing and disjointed information provided around the EV experience does not help buyers seeking reassurance that the sustainable choice is the right one.
These issues are far from new, but despite years of effort from both industry and government, the MCI shows that they remain the key obstacles to wider EV ownership. New, more customer-centric solutions are required.
Cost–surface the savings to avoid social divide
Cost remains the number one bar to EV ownership — cited by 50% of all respondents — but there is evidence of a growing divide between wealthier and mainstream consumers. Nearly a third (30%) of those in higher-income groups would pay a premium of over 20% for an EV, compared with only 19% of those on lower earnings. Well over a third (39%) of low-income respondents are not prepared to pay any premium, a figure which falls to 21% for high-income groups. Helping lower- income groups into EVs will not only drive mass sales and boost sustainability but also prevent the emergence of damaging social divisions over access to sustainable personal transport.
Port availability and EV range remain concerns. Co-locating charging hubs with public transport could up EVs’ sustainability credentials.
Despite considerable progress on infrastructure, the speed and availability of charging points still loom large in the minds of would-be EV buyers. Over 45% of both current EV owners and those planning to buy an EV want to see more fast chargers in parking locations. But focus on the perceived lack of public and fast-charging points obscures the evidence that the majority of charging will be done overnight at home. In reality the need for fast charging will be less than many consumers expect, as EVs that are already on the market have sufficient range for most daily use scenarios.
Range anxiety — all in the mind?
No one wants to be stranded by an empty battery, but is the fear more perceived than real? “Port availability and EV range remain concerns. Co-locating charging hubs with public transport could up EVs’ sustainability credentials”, says partner and Nordic energy lead at EY, Christian C. Eckhoff. Some 43% of respondents say they would be happy with a range of up to 200 miles from an EV, rising to 62% for up to 300 miles range. But while the current generation of EVs are already capable of delivering these numbers, consumer perceptions are lagging. Range remains the second-greatest disincentive among those buyers who still prefer ICE vehicles over EVs.
Look to Norway
“Demand for public charging stations for electric cars is skyrocketing, and globally there will be a need for about 5.5 million new charging stations by 2028”, says Eckhoff.
As of 2020, the EU has introduced increasingly stricter regulations for CO2 emissions for car manufacturers. In the last three years, the number of electric cars has increased by 100% in the EU, while the number of public charging points has only increased by 58%. To ensure adequate coverage of charging stations, some car manufacturers have made significant investments in fast charging, such as through the Ionity partnership. This underlines an increasing need for charging infrastructure, when the car manufacturers themselves have to step in to ensure good enough charging offers.
Even though we in Norway are ahead of the rest of the world in the share of electric cars in new car sales, and have over 3100 charging stations in total, we see some of the same trend here as in the EU. The number of public charging points in Norway increased by 59%, while the number of electric cars increased by 73% from 2018-2020.
By 2025, the Norwegian Public Roads Administration expects the number of electric cars to increase from around 380.000 electric cars (2020) to around one million. In Norway, there is an increasing demand for more fast-charging points along the roads. Consumers want destination chargers in hotels and shopping malls, as well as increased power and lower prices.
The barriers to profitable investment
Poor cash flow and returns are important barriers that slow down investment in public charging infrastructure. A global study shows that a first-generation charging station, with two standard chargers (6.6 kW) and two fast chargers (50 kW), needs five years to provide positive cash flow. Thus, the payback period for charging infrastructure investments will exceed 10 years.
The players in Norway depend on support schemes to make investments profitable. From a political perspective, it is important that the players’ business models show profitability in the investments over time. Electric car technology is still immature, which gives uncertainty in future forecasts. Better technology provides longer range. Hence, there is a risk that infrastructure being built is no longer needed, or that it needs an upgrade to meet the changed demand.
EY has extensive industry experience both internationally and in Norway within eMobility, and EY has assisted players from an early stage until completion. We can assist with strategic assessments to find a scalable and robust business model, as well as assessment of any partnerships.
You can meet EY at stand B02-05 during the Nordic EV Summit // Evolve Arena