The COVID-19 crisis appears to have put a slight damper on progress towards the adoption of electric vehicles in Canada, according to a recent Deloitte Canada report.
Its 2021 Global Automotive Consumer Study found that, although the longer-term trend towards EVs appears to be solidifying, near-term uncertainty is creating a need among consumers to purchase a more familiar and affordable vehicle.
“The percentage of younger consumers in the United States and Germany that have requested a vehicle payment deferment this year is well above that of their older counterparts, raising questions about their ability to support a sustained demand recovery,” said Deloitte Canada in its report.
The intention to purchase a gasoline or diesel vehicle is climbing back up as consumers search for something tried and true, with technology they have already tested. That interest stems in part from financial concerns caused by the pandemic.
Statistics Canada’s Labour Force Survey conducted between Nov. 8-14, 2020 revealed that employment numbers are slowly crawling back up, increasing by 0.3% (or by 62,000) in November, although it is still significantly down compared to pre-pandemic numbers.
Canadian-specific findings from the study show that nearly six in 10 (59%) of Canadian consumers would prefer a traditional internal combustion engine (ICE) in their next vehicle. This is up from 46% in 2020, but down from 62% in 2019.
For hybrid electric vehicles, 31% of Canadian consumers in 2021 would prefer an HEV compared to 37% in 2020 and 28% in 2019. The numbers are much smaller for all battery-powered electric vehicles or BEVs, from 3% in 2021, to 4% in 2020, and 2% in 2019.
“For people intending to buy an EV, it’s mostly about lowering fuel costs, reducing emissions, and less maintenance,” said Deloitte Canada.
Some of the factors weighing on a consumer’s decision to acquire an EV are lower fuel costs, concerns about climate change and reducing emissions, less maintenance, government incentives and/or stimulus programs, and a better driving experience (quieter and in certain cases, more performant). But consumers still harbour concerns around range anxiety and a lack of charging infrastructure.
Key concerns for full BEVs include driving range (up from 2018), cost/price premium (down from 2018), lack of EV charging infrastructure, time required to charge a vehicle, and safety concerns with the technology (7% in 2021 versus 5% in 2018).
It’s also worth noting that 77% of consumers looking to purchase an EV in Canada are looking to buy in the sub-$50,000 range, which does not include a lot of options yet. For example, 6% of consumers are willing to pay less than $15,000, while 10% are willing to pay between $15,000 and $20,000. Twenty-nine per cent are open to paying between $20,000 and $35,000, and 32% are open to the $35,000 to $50,000 range. The percentage of consumers willing to pay more than that drops significantly.
Deloitte Canada also notes that a third of consumers are unwilling to pay anything extra for an alternative engine, which raises questions around near-term demand potential. Some of the most important factors around finance for consumers include receiving the lowest rate, a convenient and easy-to-use payment process, and a flexible loan account.
Many consumers have also altered their timeline for when they plan to purchase a vehicle, and 59% intend to purchase a less expensive car than originally planned (27% want a smaller vehicle, and 27% want a more fuel-efficient one).
Overall, consumers may be looking to spend less money amid the pandemic — which is something both dealers and OEMs may need to keep in mind this year when advertising their vehicles.
