Electric Car Sales and Public Opinion
While electric car market share is on the rise, eclipsing 8 percent in February 2023, there are still a lot of Americans that for various reasons don’t want an EV. And according to industry watcher J.D. Power, their numbers are on the rise. In fact, there’s been a steady increase in the percentage of customers who say they are “very unlikely” to consider an electric car for their next purchase.
According to the company’s E-Vision Intelligence Report, which was issued in May, 21 percent of new-vehicle shoppers said they are “very unlikely” to consider an EV – a pretty big jump from 18.9 percent in February and 17.8 percent in January. On the other hand, the number of car shoppers who were “very likely” to consider an electric car has remained relatively flat for three months, at 26.9 percent.
Top Electric Car Concerns: Price and Infrastructure
Why is that? On the face of it, the stats for sales and overall electric market share have been improving. More new vehicle choices are available than before, with an increasing number of more affordable models. On the flip side, some consumer behaviors suggest a possible that the automotive marketplace is starting to split. Price and access to charging infrastructure remain the most pressing concerns for potential buyers, rather than any questions about the technology itself.
Demographics, J.D. Power says, play a key role in its latest results. Boomers and “pre-boomers” are unsurprisingly resistant to EVs, with the majority of them having no interest in going electric. More interestingly, a full third of gen-Z shoppers, who should be the future of the marketplace, are “somewhat unlikely” or “very unlikely” to consider an electric car, which is greater cause for concern. Like the broader group of survey respondents, their top concerns are price and charging infrastructure: price, because they’re not at their peak earning potential yet, and charging infrastructure, because many still live in apartment buildings or other shared accommodations where home charging isn’t an option.
The demand for electric cars, and consumer interest, sways with price, as EVs continue to have higher upfront purchase costs. J.D. Power’s data shows a clear correlation between consumer demand and government incentives, fluctuating MSRPs, and leasing deals. Interest in the popular Tesla Model Y and Ford Mustang Mach-E surged after price cuts, for example.
Tax Credits on Electric Cars
On the other hand, the federal government’s most recent guidance on specific vehicles’ eligibility for tax credits, which we’ve reported on here at GreenCars, has made pricing more confusing, not less confusing, for potential buyers. The Inflation Reduction act has specific requirements for production in North America as well as minimum thresholds for the sourcing of battery components and critical minerals. Batteries and components must come from the U.S., or countries with which the U.S. has a free trade agreement.
For customers looking to buy, fewer models are eligible for the $7,500 incentive than before, although leasing provides a welcome, if not well-documented, option to continue to take advantage of the credit. Regardless, J.D. Power says that the confusion around incentives will likely have a negative impact on electric car sales.
Lack of public charging infrastructure has remained stable as the most important hurdle, besides price, for potential EV buyers. Not knowing where to charge an electric car, along with associated issues around range anxiety, time required to charge, and grid concerns, remain an issue for many buyers. Thanks to large-scale incentives for businesses to install high-speed chargers across the country, we expect these concerns to ease. Walmart, 7-Eleven, and other companies have made major announcements about new national charging networks, and Tesla has begun opening its Supercharger network to non-Tesla vehicles.
While EV adoption continues to grow around the country – and the number of electric car options continues to increase – J.D. Power’s research shows that it’s not all sunshine on the road to the electric future. Charging networks must rapidly improve, and vehicle pricing must be realistic and understandable, to reduce the barriers to switching, and to prevent more shoppers from rejecting the electric path.