How quickly do dealerships need to prepare for the electric future governments are eyeing and automakers are anticipating?
That is the question asked by Ryan Robinson, Automotive Research Leader at Deloitte, who teamed up with the Trillium Automobile Dealers Association (TADA) during its Auto Dealer Innovation Series on November 16.
In a report not yet released to the public, Robinson said consumers are expecting new technologies to be in the marketplace as almost “table stakes” for OEMs looking to differentiate themselves in the marketplace from their competitors.
“What that means is, I think it’s a good explanation for why we see a significant percentage of consumers saying ‘no, the cost of the introduction of these technologies in any one of these (categories) is not my responsibility—it’s actually your responsibility,’” said Robinson.
Even if consumers are willing to pay for new technologies (particularly in the premium and luxury categories), they do not use many of the features they are paying for. Based on Robinson’s data, 52% of consumers would not pay more for infotainment technologies, 48% for autonomous, 40% for connected, and 28% for safety technologies.
But here is where it gets interesting: 30% are not willing to pay more for alternative engine technologies, 24% would pay up to $600, and 31% would pay between $600-3,000. Which means that overall 54% would not pay much more for alternative engine technologies.
Despite a focus on the global climate crisis, more than half of consumers still prefer a fossil fuel vehicle variant to an alternative engine. Specifically, 57% would opt for a gas- or diesel-powered vehicle the next time they are shopping for a vehicle. Only 20% would consider a hybrid electric vehicle (HEV), 11% would consider a plug-in hybrid electric (PHEV), and 10% would opt for an all-battery powered electric vehicle (BEV).
The data therefore begs the question: how fast do we need to prepare for an electric future? Between the 20% HEV and 11% PHEV, for a total of 31%, almost a third of Canadians say they are still more comfortable taking the “half-step” approach towards electrification.
Most of the consumers that plan to purchase an EV also plan to treat it like their smartphone, in that they plan to charge it at night, at home—but there is a cost to all of that.a
As for the 10% of consumers considering BEVs, Robinson wonders if Canadians are embracing these fast enough to meet the target of 100% zero-emission vehicle sales by 2035—a goal the federal government is aiming for.
Consumers that intend to purchase an electric vehicle expect the price to be somewhat similar to internal combustion engine vehicles, in that they expect the price to be under $50,000. Which means that the upfront cost of an EV remains an issue for many consumers.
If the EV sticker price remains the same and is not trimmed down, it will not be accessible to the mass market—and as Robinson notes—“it’s the mass market really, that is going to tell the tale of whether or not we can actually meet some of the targets that we’ve been setting for the middle of the next decade.”
How then, can dealers overcome the challenges that are posed by “cost-sensitive EV contenders”?
Another issue is that these consumers expect fuel costs to be significantly lower. But as Robinson points out, taxes on fossil fuels are significant and the government would have to be prepared to give up revenue coming from this source. Otherwise, potential EV buyers may have to eventually foot the bill on upfront levies and/or user fees.
The question he asks is, would consumers change their mind if electricity for mobility was priced similar to current fossil fuels? A third of consumers that intend to buy an EV would rethink their decision.
“The good news I suppose, is that, 50% of those people responding to the survey said they would still be very interested in acquiring an electric vehicle, regardless of the price of electricity, if it pulled even with the current price of fossil fuels,” said Robison. “The more concerning percentage on this slide is the third of people in that second bubble that said they actually would rethink their decision to acquire an electric vehicle.”
Most of the consumers that plan to purchase an EV also plan to treat it like their smartphone, in that they plan to charge it at night, at home—but there is a cost to all of that. Some of the reasons for not charging their EV at home include the cost of installing a private charging station at home/ it being prohibited (33%), and the lack of possibility to install an EV charger at home (43%).
But 88% of EV intenders expect to charge their vehicle at home, which means that these consumers will need to factor home-charging into the total cost of vehicle ownership. Questions also remain around the pressure that these vehicles will create on the existing power grid, and if that cost will rise over time. As Robinson notes, the pricing for energy going into satisfying mobility may evolve over time.
Overall, dealers will need to offer better transparency and education around what it means to own an EV.
“It’s a question for dealers in terms of how we can, as the retail arm of the industry, connect with consumers and further the encouragement towards an EV future, but in a way that everybody feels as though they’re being told the correct information,” said Robinson.
