Joel Li is the founder and CEO of EV.com. A young entrepreneur building the next generation of Autotrader.
Digital transformation affects every industry, and the automotive industry is no exception. With the number of electric and hybrid vehicles on the road growing significantly over the past 10 years, the automotive industry is experiencing its biggest revolution since the invention of the Model T.
There were more than 10 million electric vehicles (EV) on the road in 2020, and with this shift in auto-buying trends comes new consumer behavior. The manufacturers and dealers who understand this shift—and evolve in tandem with their sales, marketing and customer experience—will be the most successful.
Those who buy EVs don’t research miles per gallon and sports packages. Instead, consumers check battery range, charging networks and technology functionality. What actually? Affairs for consumers has changed, and with it their purchasing behaviour. Increased awareness of sustainability, as well as a general dislike and mistrust of the dealership experience, are just two reasons why EVs are shaking up the auto industry.
Millennials, like me, just don’t want to participate in the traditional car buying experience. We’re happy to trade five hours of car dealership experiences for 10 clicks or less to buy a car online. A recent New York Times article said millennials were almost twice as likely to buy and buy a car entirely online. They want more transparency in car prices and a simpler, less complicated buying experience. The personal sales pitch at the dealer just doesn’t work for this generation. The manufacturers and dealers who embrace this new way of thinking have the best chance of outsmarting their competition.
Recent research show that the average EV owner has remained the same for the past 10 years: 40-55-year-old men with annual household incomes of more than $100,000. But as sales continue to grow at a rapid pace year on year, new trends and demographics are likely to emerge.
With electric vehicle prices likely to become more affordable in the coming years, we’re likely to see more millennials getting behind the wheel of battery-powered cars. In recent research, The Fuels Institute found a collection of trends that lead a consumer to ultimately make a purchase: “Affordability, availability, and familiarity appear to be one of the most important factors influencing the likelihood of EV purchases.”
General, McKinsey predicts industry- and consumer-wide adoption of EVs over the next decade. “By 2030, the share of electric vehicles could range from 10 to 50 percent of new vehicle sales. Adoption rates will be highest in developed densely populated cities with strict emissions regulations and consumer incentives (tax breaks, special parking and driving privileges, reduced electricity prices, etc.).” The more environmentally friendly a city or state is, the greater the chance that there will be more EVs in that area.
Interestingly, one of the biggest concerns for current and potential EV buyers is “range anxiety.” According to Calibrate, more than 50% of motorists are afraid that an electric car will run out of power while traveling. A lack of charging stations, as well as faulty or broken ones, is also a concern for car buyers considering an EV.
Because most EV drivers charge daily or once every two days, and usually at home or in a parking lot at work, they don’t have to worry about frequent commutes. According to Fuel Institute, “most EV fleet customers today (2020) operate in a hub-and-spoke network, charging their vehicles exclusively at night in their home base.”
Drivers are much more concerned about running out of battery on longer journeys when scheduled stops to recharge are necessary. Once the decision to buy an EV is made, one of the first considerations is the network of charging stations. And research shows charging infrastructure remains a barrier. According to McKinsey, “sales penetration will be slower in small towns and rural areas with lower charging infrastructure and greater dependence on driving range.”
As the automotive industry continues to navigate the digital revolutions, it is imperative for manufacturers and dealers to evolve with the changing times. Future success depends on adopting new sales and marketing strategies and understanding dynamic customer needs.