Boosting EV Demand Is Vital to Meeting Sales Mandates
Advances in electric vehicle (EV) technology over the past two decades have boosted driving range and reduced the cost of production. But, consumer demand has grown slowly, at least in part because consumers lack information and resources to understand the benefits of switching to electric vehicles (EVs). Automakers and dealerships are now scrambling to boost demand in order to meet increasing EV sales mandates in 10 states, like California, New Jersey, New York, and Massachusetts. According to the latest industry and academic research, consumers need assistance to understand the benefits of driving an electric vehicle.
The vast majority of consumers are buying an electric car for the first time, and therefore, have questions and concerns about the new technology. In a study from the Missouri University of Science and Technology on the “barriers to widespread adoption of electric vehicles,” the biggest concerns among car buyers were EV battery range limitation, high cost, and charging infrastructure.
Recent research from the University of California, Davis found that providing information can persuade more consumers to switch to electric vehicles. Deploying targeted resources and education to consumers results in “increasing users’ perception of the amount of potential savings with alternatively fueled vehicles, promoting more favorable attitudes toward BEV charging, and increasing stated intention to purchase or lease alternatively fuel vehicles (while decreasing intention to purchase or lease gas vehicles).” Furthermore, research from Indiana University suggested that, “high costs and deferred financial savings of battery electric vehicles lead to reduced rates of adoption” but “providing total cost of ownership data could overcome this barrier [to widespread electric vehicle adoption].”
Car dealerships should provide this information to consumers, but a recent mystery shopping study from market research firm Ipsos RDA found that dealerships were “ill-prepared for the coming wave of electric cars.” In the study, dealership salespeople steered customers who were interested in electric vehicles towards conventional cars that each salesperson felt more comfortable selling. Furthermore, dealerships lacked designated salespeople to answer the various questions and concerns that potential owners ask. First-time electric vehicle buyers typically have questions regarding the total cost of ownership, savings from buying and maintaining an electric vehicle vs. a conventional gas car, and the availability of charging (both at home and at public stations). Finally, many potential buyers were never offered test drives of electric vehicles, which can demonstrate the benefits that EVs have, namely superior handling and acceleration.
Dealerships and automakers need to address this critical consumer education gap in order to meet EV sales mandates in 10 states. In California, Governor Jerry Brown recently expanded the EV sales mandate to 5 million electric vehicle sales by 2030. Nine other states adopted the California mandate through 2025, requiring nearly 4 million electric vehicle sales in 10 states.
State EV Sales Regulations:
Depending on the state, the mandate will require up to 65% compound annual growth rate in EV sales according data we analyzed from the Association of Global Automakers. For example, in New York, there were an estimated 8,400 electric vehicles sold in 2017, representing 25% growth over EV sales in 2016. However, the sales mandate in New York will require cumulative EV sales to reach 843,000 by 2025, necessitating 57% compound annual growth rate over the next eight years.
Automakers and dealerships are under pressure to sell more electric cars. Meeting the EV sales mandate regulations will require targeted education and resources to help consumers understand the benefits of switching to electric vehicles.