Consumer Knowledge Remains Key for PEV Market Expansion

In June 2020, Guidehouse Insights fielded its annual Vehicle Preferences and EV Awareness Consumer Survey. The survey collected more than 2,000 responses and assessed several vehicle preference and EV related topics, including:

• Consumer preferences for vehicle powertrain, body style, and features
• Perceptions and knowledge of plug-in EV (PEV) technologies
• Demographics of PEV owners and those likely to purchase a PEV
• Potential barriers to PEV adoption
• Coronavirus-related changes to vehicle purchasing plans

One key finding from the survey is the lack of consumer knowledge surrounding PEV incentives. Such knowledge is particularly important for the market because consumers also view purchase price as a main barrier to PEV adoption.

Purchase Price as a Barrier to Adoption

To understand the hurdles consumers perceive to be prohibitive for PEV ownership, the survey assessed five potential barriers: charging availability, range anxiety, charging time, vehicle reliability, and vehicle cost. Respondents indicated that charging availability and purchase price of PEVs were their two major barriers to adoption.

Battery EV Adoption Barriers: 2020

(Source: Guidehouse Insights)

Respondents were also asked if they were willing to pay more for a PEV than a traditional internal combustion engine vehicle. Results indicated that more than 45% of respondents were not willing to pay more to purchase a PEV rather than a conventional gasoline or diesel vehicle. An additional 30% of respondents were only willing to pay up to $5,000 more for a PEV. Furthermore, respondents were asked to correctly identify the maximum amount available for a battery EV (BEV) from the US federal tax incentive. Only 18% correctly identified that the maximum available tax credit is $7,500. While this is an improvement of 7% from the 2018 iteration of the survey, nearly 25% of respondents did not know a federal tax credit for BEVs exists.

Knowledge of Federal Tax Credit for Battery EVs: 2018 and 2020 Respondents

* Indicates correct answer
(Source: Guidehouse Insights)

So, consumers are not willing to pay the premium that comes with purchasing a PEV and view purchase price as a main barrier to adopting a PEV. Many consumers, however, are not aware of purchase incentives offered on the federal (and likely state) level.

Bridging the Gap

Increasing consumer knowledge and awareness of PEV (e.g., BEV and plug-in hybrid EV) technologies and incentives is one of the challenges for the PEV market. PEV purchase prices will likely continue to decline as technology economics become more favorable; however, increasing adoption in the interim will require educating consumers and bringing awareness to current EV incentives.

Part of this education process revolves around experience and exposure to vehicle technology. To increase exposure to PEVs, consumers can ride in or drive a PEV, which is shown to increase the likelihood of vehicle purchase. Exposure to the vehicles also increases general impressions that may lead to more word-of-mouth and PEV awareness.

However, outside of California, many dealers are reluctant to promote PEVs. Dealers must make capital investments in showrooms and service departments to support PEVs and often do not fully understand the technology they are selling. OEMs will need to be more involved in marketing to increase awareness of PEVs. The market for PEVs is expanding globally and educating consumers is a crucial step in the adoption process that cannot be overlooked.