With all the promises, goals and desires pitched by federal and provincial governments, OEMs, and other industry players around electric vehicles and EV adoption, there remains a number of hurdles to overcome.
That point is obvious when reviewing Deloitte’s 2022 Global Automotive Consumer Study, which looks at consumers’ feelings about advanced technologies, EVs, the purchase experience, and more.
“The absolute, most surprising thing out of the study is where we’re at right now in terms of what we’re seeing in the data, relative to where the demand for an all battery electric vehicle (BEV) is,” said Ryan Robinson, Automotive Research Leader at Deloitte Canada, in an interview with Canadian auto dealer.
The study offers a glimpse into the level of interest that Canadian consumers have in wanting to purchase an all battery electric vehicle as their next vehicle. The global study involved more than 26,000 consumers in 25 different markets around the world, with the Canadian sample including just over 1,000 consumers across the country—enough to be nationally representative by both age and gender, on a national basis.
Credit: Deloitte
“Somewhere conservatively in the single digits of demand right now, somewhere around the 5% range of all battery electric vehicles represented in the Canadian market right now, our data is telling us that only 10% of Canadians surveyed in the study would most want an all battery electric vehicle as their next vehicle,” said Robinson.
The study shows that more than half of consumers still prefer vehicles with a conventional engine: 57% for gasoline/diesel, 20% for HEV, 11% for PHEV, and 10% for BEVs.
Considering the need to reach 100% new zero-emission vehicle sales by the middle of the next decade, that 10% represents “a huge hill.” Robinson said the short timeframe is equal to two model cycles, which in turn increases the importance around the electric vehicles that will be launching over the next three to five years.
“There’s really no margin for error anymore,” he said. “Those vehicles have to hit the market the right way and generate the kinds of demand that are going to allow us to continue having the momentum along this journey towards these goals that have been set.”
Robinson said the challenge the industry is currently facing is one of affordability.
When asking consumers what they expect to pay for their next vehicle, regardless of the type of powertrain, overall 76% of respondents said they expect to pay less than CA$50,000. Which means most survey respondents that intend to buy an EV or internal combustion engine (ICE) expect the pricing to be similar.
For example, 77% of consumers expect to pay between $15,000 and $50,000 for a gas or diesel engine vehicle—the same percentage that expects to pay between the same price range for an HEV, PHEV and BEV.
Credit: Deloitte
“And when we consider an average transaction price that has been inflated—that was on a long term upward trajectory before we had the inventory crisis that spiked both new and used sales—we’ve got an average transaction price north of $40,000 now,” said Robinson.
He said that figure offers very little room between the average transaction price, and the threshold for spending that consumers have in mind at the $50,000 mark. This challenge brings into play the continued importance of some form of incentive mechanism that will allow consumers to essentially “sit in the intersection” between cost and being able to drive what they want, in terms of the vehicle and body style.
“The key question here, in order for us to get to the electric future that we’re striving for, is allowing consumers to drive what they want to drive without having to compromise on the amount of money that they’re willing to spend,” said Robinson.
The study also shows that the main draw for EVs continues to centre around the consumer perception that fuel costs will be significantly lower than an ICE vehicle. This is for 71% of consumers, compared to 47% that would select an EV as their next vehicle due to government incentives and stimulus programs, which is still a strong percentage. Thirty-six per cent of consumers would choose an EV for maintenance reasons.
However, a third of consumers intending to buy an EV would rethink their decision if the price of electricity was similar to that of fossil fuels. Fifty per cent would still be interested, but 34% would reconsider and 16% remain uncertain.
With everything that is in the works to shift to an electric future, Robinson said we are still not moving the needle fast enough by the middle of the next decade if we want to be 100% fossil-free in terms of new vehicles being sold in the market.
“What the study is telling us over the next few years to where we need to go is that the slope of the line increasingly needs to be vertical, in terms of consumer adoption. And I’m just not sure how realistic that actually is,” said Robinson.
For dealers, he said if they really want to be successful at selling EVs or in going through the transition to sell EVs in the Canadian market, they will need to provide compelling experience for consumers so they can purchase their vehicle in a more convenient, easy, and less time-consuming way.
“These are all the perceptions that consumers have relative to what an online purchase experience can do for them. And it’s exacerbated amongst those consumers that are looking for an EV,” said Robinson.
The good news is that 84% of consumers still want to purchase their next vehicle in-person, overall. Among different age groups, that percentage is still high—between 72% and 91%. And even among consumers that plan to buy virtually, 45% would still prefer to buy from the dealership. For the younger 18-34 age group, most would prefer to buy from a third-party retailer (28%) versus the dealer (23%), although the difference is relatively small.
“They’re continuing to tell us that there is some local connection or personal connection and that they value what they’re currently getting, or they have been getting through the dealer environment. So it’s good news for dealers, as a bottom line,” said Robinson.
