Industry Insights & Trends

Current and Future Electric Vehicle Market: Key Players and Models, and Consumers

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African American buyers were left out of the electric transformation conversation and now feel disengaged. They are not fully aware of the benefits EVs can bring to their community and tend to overestimate their price. Meanwhile, Tesla owners demonstrate a cult-like mentality, viewing owning a Tesla as being part of an exclusive club. Traditional automotive manufacturers, such as General Motors, Ford, and Volkswagen, are investing billions in the EV market, with 130 models expected to be released in the United States over the next five years. Furthermore, the Biden administration will likely stimulate the market with stricter emission regulations and increased fiscal incentives.

Psychographic Profile

  • African Americans (AA) account for a small share of the electric vehicles (EV) market, which is heavily dominated by Non-Hispanic Whites (NHW). However, increased awareness, new car models, and the potential financial benefits that are likely to emerge during the Biden administration could increase AA EV owners’ number, especially for specific brands, such as Cadillac.
  • Research surrounding AA EV owners is limited, a likely result of their low market share. However, examining both groups individually (AA and EV buyers) reveals that there are behavioral intersections, as well as significant distinctions. Moreover, although quantitative insights were rarely available, declarations from insiders and AAs EV owners helped paint the picture of the EV market through African Americans’ lens.

Attitudes

  • The first step to examine any market through the lens of African American consumers is to understand the concept of “Living while Black,” as it is ingrained in their culture and experiences, including upper-class African Americans. It is a social context that affects AAs’ daily lives and impacts how they interact with brands, products, and society, even if unconsciously.
  • High-income AAs usually learn that money does not shield them from racial profiling. As such, their decisions and perceptions, consciously or not, tend to reflect this context. The affluence of African Americans is “overshadowed by their blackness. When operating in the white world, whether it be on the job, or as a consumer, affluent African Americans do so with limited credibility. Racism is more commonly manifested in a pervasive attitude that all black people start from the inner-city ghetto, and before experiencing decent treatment or trusting relations with others, they must demonstrate that the ghetto stereotype does not apply to them.”
  • For example, it is quite common for car brands to advertise using the idea of road trips; a man alone in his car on the open road. This idea that appeals to the general population may lead to fear and anxiety in many AAs, despite being inspirational, as “driving while black” is not always a great experience. Two New York Times articles explored how AAs feel about road trips. Some highlights:
    • Brian Oliver, founder of a non-profit that encourages AA students to travel, talked about his own experience traveling with friends: “We were in the car laughing about not stopping in this place or that place, but the sad truth is that we all knew that we really couldn’t stop in some of those places. It’s crazy to try and describe the kind of threat and fear you feel at the prospect of getting lost, losing signal and not really knowing where you are.”
    • One teacher explained all the work that she puts into planning a summer trip: “We try not to stop in places that are desolate and we try to only stop in cities for gas,” she said. “If we have to stop for gas in a rural area, we use a debit card so we don’t have to go into the gas station store. If we are going to stay somewhere overnight, we look at the demographics to make sure we aren’t going to a place where we would be the only black people or where we would be targeted, especially at night.”
    • Jeff Henkins, a travel blogger, explains that the fear of being stopped by the police has affected his choice of car, “I go for soccer-mom cars because they seem to be less intimidating to the police. A typical sedan or something that sort of just says, ‘I’m safe and boring, don’t look at me’.”
    • Many other outlets and prominent figures back the NYT’s claims. For example, Republican Senator Tim Scott stated that he was pulled over seven times in just one year, “The vast majority of the time, I was pulled over for nothing more than driving a new car in the wrong neighborhood or some other reason just as trivial.”
    • Research conducted by the National Geographic reported that AAs are much more likely to be stopped by the police while traveling.
  • Affluent AAs have a different attitude and perception surrounding products and brands than their NHW counterparts. They place greater importance on style and appearance as an attempt to outweigh race with class. For example, many see dressing casually as a liability as it increases the likelihood of being challenged. In this case, clothes provide “means to get the respect that is only provisionally granted by white society.” Research suggests that this mentality extends to other purchases as well.
  • Additionally, they are much more aware of how they are treated than NHW. “The search for respect manifests itself in other attitudinal statements related to customer service. Affluent African Americans, across both gender and age, place more importance on personalised and superior service at levels higher than their white counterparts. Across the entire battery of luxury and style statements in the Affluent Survey, African Americans consistently over-index against whites.”

Values

  • One common characteristic between affluent AAs and EV owners is their political affiliation. EV owners are five times more likely to be Democrats than Republicans.
  • EV buyers tend to be concerned about the environment and their own influence on climate change. Research conducted by Stanford University discovered that believing climate change is a serious problem is the most effective indicator of a potential EV buyer. More than technology adoption.
  • Like affluent AAs, EV owners place great importance on style, luxury, and design. For example, people who buy EVs tend to live in expensive homes in prestigious suburbs or affluent metro areas.
  • There is a common misconception that AAs never really cared about the environment and sustainability due to “greater concerns about jobs, crime, education and other ‘survival’ issues.” In reality, AAs were more likely to make lifestyle choices to protect the environment. In Congress, African Americans were among the most consistent and strongest early supporters of environmental protection legislation in the 80s and 90s.
  • A 2015 survey showed that 83% of AAs supported setting limits on coal and gas power plants’ carbon pollution. A strong majority also believed “that as the nation drives down dangerous carbon pollution, it can drive up the use of clean, renewable wind and solar energy.”
  • AA consumers scored similarly to other groups when “citing a preference for gas alternative engines for environmental and sustainability reasons. While the study revealed all buyers still prefer gas engines, African Americans ranked higher than or as high as their counterparts in terms of electric vehicle preference, at 8% African American; 8% Hispanic; 6% white, and 7% Asian.”
  • However, as noted by several analysts, AAs were excluded from the current conversation around climate change, EVs, and the transition to a clean energy economy, which resulted in disengagement.
  • For example, climate change affects AAs significantly more than NHW, but only 14.5% of environmental organizations track any diversity data. Furthermore, they are disproportionately affected by asthma and respiratory diseases, but little effort occurred to bring awareness to Black communities on how much EVs can help mitigate the burden of respiratory diseases.
  • According to Dorceta Taylor, professor of environmental sociology at the University of Michigan, “Black and white environmentalists ultimately want the same things, but they have lived experiences with the environment that are different.”
  • Terry Travis, co-founder of the non-profit EVHybridNoire, the largest US network for diverse EV drivers and enthusiasts, states that few people in the Black community are genuinely aware of the health effects of gas emissions. The non-profit organizes events and educational opportunities in these communities, hoping to increase awareness and adoption of EVs. “One of the reasons we’re doing this is so people can see more people who look like them, so they can see it as a viable option,” said Travis.
  • The group is quite active on Facebook, 1.200 members and an average of 400-500 posts per month. Unfortunately, it is a private group.

Emotions

  • American EV owners are likely to be car enthusiasts.
  • Scholars discovered that Americans who attach “high symbolic value to their vehicle are more prone to purchasing an EV, implying that EV symbolises high social status.”
  • “Prestige buyers” is one of the four segments of EV buyers identified by E-Source. These buyers want the social currency of owning an EV, and are attracted to exclusivity, uniqueness, and luxury. They are considered one of the most relevant groups of buyers. “Themes of uniqueness, the latest technology, and the driving experience are all central to marketing to prestige buyers.”
  • The second segment, Environmental Buyers, see EVs as part of a greater purpose. They typically have solar panels, buy green, and watch their carbon footprint. They take pride in their sustainable efforts and like the prestige that it brings. They are more likely to pay premium prices for sustainability. “Messaging for environmental buyers should focus on creating a connection between driving an EV and specific environmental outcomes for their family and society. And the tone should be aspirational and positive.”
  • The next group, Irrational Economic Buyers, is vital to growing the early-adopter market. They are focused on saving money but tend to overlook final costs, such as EVs’ low resale value. They prioritize direct savings. “Overall, irrational economic buyers convince themselves of the value basis for purchasing an EV and being an early adopter, but they are also likely to be influenced by some environmental or prestige elements.”
  • Finally, Rational Economic Buyers compare the overall costs. They are willing to compromise, but the “economic decision is paramount.” They represent a small percentage of EV buyers, typically limited to commercial buyers.

Lifestyle

  • AA Millennials comprise 26% of the total AA population and have a large and growing spending power. They are big fans of technology and lead the way in “ownership of smartphones and tablets when compared to the total U.S. population, as well as in use of messaging apps, audio streaming services and ideation apps like Instagram and Pinterest.”
  • EV owners are usually early adopters of technology, which is also a common trait among AA millennials. However, with price droppings and increased awareness, analysts estimate that this buyer profile is “evolving from early adopters and technophile purchasers to mass adoption.”
  • It is important to note that there is a clear distinction between affluent AAs and the average AA when it comes to technology adoption. While affluent AAs tend to love gadgets and new technologies, and several are early adopters, the average AA is often a laggard due to economic reasons, lack of incentives, and poor accessibility.
  • Tesla buyers are likely to have the “highest average credit scores among customers looking to purchase a vehicle. The study noted that Tesla buyers on average have a credit score of 740, putting them on top of the research’s rankings.”
  • AA, particularly millennials, are avid media consumers, with higher than average usage of both digital and traditional media. According to Nielsen, Podcasts have become a “central stage for Black voices.” AA podcast consumers spend, on average,1 to 4 hours per week listening to their favorite podcasts.
  • When choosing a TV show to target Black Americans, it is worth noting that they gravitate towards content with Black protagonists and leads. “African Americans’ increased appetite for news and stories that reflect their life and experiences, is evident from what they are watching. When it comes to TV shows, Black Americans gravitate toward content with Black protagonists and leads.” Given the demographic profile of an EV owner, Last Dance and Empire are likely to reach potential AA buyers.

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Consumer Profile

Drivers

  • The number one reason people buy EVs is environmental concerns (43%). Researchers found that the higher the educational attainment of EV buyers, the more likely they are to name environmental concerns as the main reason. For example, 32.5% of those with a high school diploma say they are buying for this reason versus 54.8% of those with a doctoral or professional degree.
  • The second most common reason is a desire to reduce dependence on petroleum (16%), followed by price of electricity versus gasoline (14%), advanced technology (9%), and tax breaks and net price of vehicles. Researchers also compiled the possible reasons into three overarching categories: Environmental reasons (46%), Price and Status of EV owner (26%), and Efficiency and Performance (22%).
  • This could also be perceived as a barrier since 28% of Americans believe that “driving an EV will not help the environment at all (14%) or that it will help the environment “a little” (14%). These individuals may be less motivated to consider buying an all-electric car than the one-quarter of Americans (25%) who believe that driving an all-electric car will help the environment ‘a moderate amount,’ the 17% who believe that it will help the environment ‘a lot,’ and the 29% who believe that it will help the environment a great deal.”
  • A recent survey reported that more Americans are now considering car ownership as a result of the pandemic. Google’s research showed that new car buyers, those being pushed due to the pandemic and safety concerns, are worried about financing their purchase and will probably need some reassurance and guidance. They are also excited about the process and more likely to purchase the vehicle online. The excitement created by this milestone is a great opportunity for building brand loyalty, Google claims.

Barriers

  • The perception that “batteries pose a safety hazard substantially reduces people’s openness to purchasing all-electric vehicles.” Thirty-four percent of Americans believe that “EV batteries are extremely likely (5%), very likely (6%), or moderately likely (23%) to catch on fire. These individuals may be less motivated to consider buying an EV than the nearly two-thirds of Americans who believe that batteries catching on fire is either slightly likely (32%) or not likely at all (31%).”
  • For AA consumers, the initial high cost of buying an EV is a barrier. McKinsey also discovered that it is more difficult for AA buyers to obtain reasonably priced car financing. They are offered higher-cost loans than their NHW counterparts with similar credit scores. The consulting firm concludes, “POC car shoppers who are more qualified than their white counterparts are 62.5 percent more likely to be offered costlier pricing options—adding up to $2,662 in extra fees and interest over the life of the loan.”
  • Additionally, they do not fully understand how the rebates and incentives work, a characteristic also shared by the general population. Seventy-eight percent of Americans surveyed by Consumer Reports said that they were “unaware whether their state currently offers any discounts, rebates, or credits for purchasing or leasing PEVs.”
  • However, given that AA millennials are 57% more likely to own Cadillacs than the average population, particularly Escalades, which have a starting price of 76,000, cost alone is not the only barrier.
  • Terry Travis, EVHybridNoire co-founder, states that “For too long initiatives and programs focused on engaging consumers and increasing EV Adoption have targeted one-dimensional segment of Early Adopters.” This leads to AA and Hispanic communities being left behind, even though they are more likely to suffer the impacts of pollution and climate change. Black Communities need to be educated about EV adoption, along with its benefits.
  • Access to charging locations is typically difficult for the cohort, as urban accessibility tends to be limited.
  • The price of an electric vehicle is often confusing for customers. Google reports that “share of cost-related searches for BEVs is more than 20X that of regular car searches in the U.S. and the U.K.” New buyers are not familiar with costs such as battery replacements and charging, which makes them frustrated and confused. Google recommends, based on search trends, providing tools and easy-to-follow instructions to increase the likelihood of attracting new car buyers.
  • Twenty-nine percent of Americans believe that “maintaining EVs is more costly than maintaining gasoline-powered cars, and these individuals may be less open to purchasing an EV then the 13% and 50% of Americans who believe that maintenance of all-electric cars is less costly than or as costly as maintaining gasoline-powered cars, respectively.”
  • Fifty-eight percent of believe that only “a few auto mechanics can repair EVs, and 7% believe that “essentially none” can. These Americans may be more reluctant to buy EVs than those who believe that “about half,” “most,” or “all” mechanics can fix them (22%, 9%, and 1%, respectively).”
  • Twenty-two percent of believe that “charging EV batteries is extremely difficult, 24% believe it is very difficult, and 32% perceive it to be moderately difficult. If perceived difficulty of charging EV batteries factors into the decision to purchase, these 78% of Americans may be more reluctant to buy EVs than are the 13% and 8% who believe battery charging is slightly difficult and not difficult at all, respectively.”
  • Access to charging locations is typically a challenge for AAs, as urban accessibility tends to be limited. Dr. Francis, a former Medical professor, focused on health disparities and public health, and member of the Noire network, describes her own experience as a AA EV owner, saying that she would talk with other people of color at charging station, chatting about having to drive long distances to get a charger and “then using up a lot of that charge to get home.” Travis agrees with Dr. Francis, stating that in AA communities, EV infrastructure is a common problem.
  • One AA living in Los Angeles brings out an interesting point regarding how companies choose where to install infrastructure and the low adoption of EV in the Black community: “They use registration information to make the decision where to put chargers, and people in these communities tend to fear the unfamiliar” referring to EVs. He goes on to say, “But why would people in these communities change if there’s nowhere to charge? What reason would there be to change?”
  • Furthermore, “driving while Black” is part of the experience for EV drivers, who often find themselves the target of microaggressions. “Just because someone drives a Tesla, doesn’t necessarily mean that they don’t live in a community of color.” Travis states, “Sometimes those drivers aren’t taken seriously when they bring up the lack of equity in regards to charging infrastructure in their community.”
  • “In black and brown communities, there is limited awareness and few places to charge.” Dr. Tony Reames, an Environmental and Energy Policy Professor and JPB Environmental Health Fellow at the Harvard School of Public Health. The lack of charging stations and range anxiety were the reasons why he chose the Chevy Volt.
  • He also notes why he is a part of the Noire community, saying that it feels good to share familiar experiences. Other members echo his statement, saying, “We are no longer the only “one,” the only EV driver of color that we know. And beyond that, we are shifting the narrative from what an EV driver looks like.” Another goes on to say, “We need to be part of the conversation from the beginning. We want to be a priority when key stakeholders are making decisions.”
  • Furthermore, increasing EV adoption within the AA community will require “expanding the narrative of what an EV driver looks like.”

Vehicle Preferences and Path to Purchase

  • Travis explains that members of the Noire community are benefiting from lower-priced EVs. “We have members ranging from retirees who purchased $6K pre-owned EVs because being on a fixed income it worked for their budgets to high schoolers whose first vehicles are EVs. That generation may have no intention to ever drive an internal combustion engine vehicle.” These cars are appealing for these younger AAs due to their features, sustainability, and financial benefits. A common sentiment among all EV owners.
  • As reported by Nielsen, AA consumers are aware of fewer car brands than the general population. They recall “a shorter set of brands off the top of their head, and there is an imperative for marketers to close that gap because most purchase decisions can be traced back to brands that consumers already have in mind before starting out on the path-to-purchase.” However, they consider more brands throughout the path-to-purchase than other car shoppers.

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  • AA millennials and Gen X, in particular, which would fall in the 25-54 category are even more likely to consider multiple brands throughout their path, with AA Gen Xers considering 5.7 brands, and AA millennials 4.9 brands, versus 3.9 and 4.8 for the general population.
  • Vehicle preferences directly impact EV adoption. “A key factor that influences American car buyers’ interests in purchasing a PEV is the type of car Americans are considering for their next vehicle. More than half of prospective car buyers likely to buy a compact would consider getting a PEV, as would around two-fifths of those who are likely to get a sedan, small SUV, sports car, or minivan. Even about 30 percent who are in the market for larger vehicles like medium/large SUVs or even pickup trucks would at least consider getting a PEV, which is strong considering the very limited selection in this class.”
  • AAs are more likely to prefer sedans and pickups. They also embrace semi-autonomous driving technologies, are more likely to drive full-size or mid-size cars, particularly millennials, and 13% less likely than the general population to prefer SUVs. Style and power are priorities, as well as cultural context. For example, Cadillac is popular due to rap references.

Influences

  • TV is still a relevant marketing tool for AA car shoppers and the top source of recall for auto ads (79%), followed by digital (31%), print (29%), radio (20%), outdoor (17%), and direct mail (13%). Digital is more relevant to the Black community than the average (20%), losing only to Hispanics. They also show the highest recall for radio ads among all ethnic groups.
  • A 2020 survey showed that AA consumers are now 53% more likely to expect the brands they buy to take a social stance and 37% more likely to buy a brand when they do. However, they also expect authenticity and are rejecting brands that seem opportunistic.
  • EVHybridNoire believes that incentives beyond tax credits rebates can have a greater impact in engaging diverse communities. A survey conducted by Consumer Reports discovered that more than half “of all prospective car buyers agree that lower purchase prices (59 percent) and longer PEV driving ranges (51 percent) would be most effective in increasing their interest in getting a PEV.”
  • Affluent AAs are much more aware of how they are treated than NHW. “The search for respect manifests itself in other attitudinal statements related to customer service. Affluent African Americans, across both gender and age, place more importance on personalized and superior service at levels higher than their white counterparts. Across the entire battery of luxury and style statements in the Affluent Survey, African Americans consistently over-index against whites.”
  • Pristine customer service is a requirement to attract affluent AAs, with 59% of AA men and 54% of AA women looking for superior service when shopping, 12% more than NHW men and 17% ahead of NHW women. They also seek a higher level of personal attention (44% and 36% respectively). This is a common point between affluent AA and EV buyers, who also tend to prioritize experience and personalization.

Trends

1. Traditional Players are Starting to Fully Embrace EV

  • In 2020, multiple manufacturers announced billions in investments in the EV market, including GM, VW, Ford, and others. There are numerous reasons why EV investments are rising despite its low adoption in the United States:
    • Rising regulatory requirements are forcing automakers to adapt.
    • Automakers are increasing their efforts to catch-up and challenge Tesla’s domination in the American market. Ford has said it is “spending $11.5 billion on electric vehicles in a five-year period ending in 2022. Volkswagen recently said it would spend 73 billion euros on electrification over the next five years.”
    • Investors are putting pressure on companies to ramp their EV investments.
    • It is also important to consider that the United States is only one market. EV adoption in China is widespread, while Europe has witnessed steady growth. Therefore, R&D investments are not going to waste.
  • EV is perceived by automakers as a long-term investment. Even if the United States initially rejects the new EVs, it is not likely that OEMs will stop their efforts in the country, mainly because these massive companies have room for error, unlike startups.
  • Big automakers committing to the EV market is an important milestone, indicating that the EV transformation is genuinely just a matter of time. Nevertheless, it will not be soon, “IHS Markit expects that in 2030, 87 percent of new cars will still feature some form of internal-combustion engine.”
  • It is estimated that there will be 130 available EV models offered by 43 brands in the United States by 2026. GM promised in November a $27 billion investment in “all-electric and autonomous vehicles through 2025, an increase of $7 billion, from initial plans announced in March.” The company is hoping to make 40% of its cars electric by 2025.
  • On November 23, 2020, GM announced that it was “abandoning Donald Trump’s effort to take away California’s ability to set fuel efficiency standards. The company, along with Fiat Chrysler and Toyota, previously backed Trump’s efforts to roll back fuel efficiency standards.”
  • The automotive giant also expressed its support for Biden, saying, “We are confident that the Biden Administration, California, and the U.S. auto industry, which supports 10.3 million jobs, can collaboratively find the pathway that will deliver an all-electric future.” The company promised 30 new EV models by 2025 worldwide, and 20 will be available in the US, including the Hummer and the Cadillac SUV, Lyriq.
  • Lists with examples of vehicles announced for the next 2-3 years are available here, here, and here.

2. Partnerships with Tech Giants

  • Infotainment is a critical driver of the EV market. EV owners expect their cars to be as smart, connected, and entertaining like a smartphone. It is not uncommon to see comments such as “boring to drive” or “boring experience” attached to bad EV reviews.
  • While some automakers chose to keep pushing their own systems, others are partnering with Tech Giants like Google, Amazon, and Apple to “compensate for missing competencies, avoid larger investments and still offer attractive and up-to-date solutions.”
  • Consumers are increasingly making a habit of using voice assistants while driving. For example, between September 2018 and January 2020, the number of US users increased by 13.7%, while monthly active users rose 8.7%. Not only is adoption rising, but these assistants are becoming a factor in consumers’ car purchase criteria, with only 36.9% of US consumers saying that voice assistants do not influence their car purchase decisions (survey not limited to EV buyers).
  • A survey conducted by J.D. Power with car owners (not limited to EV owners) reported that consumers (76%) would prefer to own the same brand of in-home voice assistants on their next vehicle and 59% would be more willing to buy from a car company if the in-home assistant is available.
  • GM announced in 2020 that Amazon Alexa would be available in its new cars, including the Chevy Bolt and Cadillac EV.Customers already love using Alexa at home, and soon they can bring her with them on the go, whether they’re looking for a new car or own a compatible Chevrolet, Buick, GMC or Cadillac vehicle already on the road,” added Ned Curic, VP of Alexa Auto at Amazon.
  • EV startup Rivan announced that the R1T pickup and R1S SUV, will be fully integrated with Alexa (from the factory). Skoda has introduced “remote charging for its electric vehicles by incorporating with Amazon’s Alexa voice command service.” All BMW i3 come integrated with Alexa as well. Other companies incorporating Alexa into EVs include Kia and Hyundai.
  • Charger companies, such as SolarEdge and ChargePoint, also allow integration with smartphones and virtual-assistants.

The Future of the EV Market

Biden’s Win Will Stimulate the Market

  • EV penetration grew exponentially between 2017 and 2018 (80%) but suddenly dropped in 2019 and 2020. Popular models, such as the Chevrolet Volt, were phased out or saw a decrease in sales, such as the Model 3, and new launches, such as Kona, were not able to offset the decline of other models. Low oil prices also contribute to the EV slowdown since it is not financially effective to own an EV if the cost to maintain a car with traditional fuels decreases, given their initial cost.
  • Sales of EVs are tied to Federal actions, incentives, and CO2- emission limits. The Trump administration helped decelerate EV penetration by revising fuel-economy standards. The EV market largely depends on incentives and rebates, as the starting price of the cheapest model is much higher than traditional cars. According to Bloomberg, “President Trump has let a tax credit program for EVs fade and did little to build out a charging network, relying instead on the largesse of states to promote clean cars.”
  • Biden’s victory eliminates some uncertainty circling the market, as automakers can rely on government support to increase EVs’ penetration. Given that these manufacturers will collectively “spend $230 billion before the end of Biden’s first term to bring dozens of EVs to market,” Biden’s plans to accelerate adoption help reduce risks.
  • Biden has already outlined a “plan that will replenish money for a tax credit that gives consumers $7,500 for buying an electric vehicle, and he wants to build 500,000 charging stations across the U.S. That will help GM and Tesla, who have already burned through their credits, and enable other carmakers to sell more EVs with government help. It’s a much-needed shot in the arm for an industry that’s building expensive battery-powered cars with little consensus on how many consumers will actually buy them.” The expansion of tax credits can help manufacturers reduce costs and increase consumer demand.
  • Despite this positive development, many challenges still persist. Ben Prochazka, national director of the Electrification Coalition, stated, “We shouldn’t be deluded in believing that just because we have a president who might be more excited about EVs or who has demonstrated more interest that this is going to be an easy path.” One of the challenges is the difficulty to advance plans to develop the EV industry, as Republicans tend to block these bills.
  • Nonetheless, just reversing the SAFE act signed by Trump, which reduced carbon-emission goals from 5% to 1.5%, would already increase EV adoption. “This has already been evidenced in other global markets. Setting a target at an automaker fleet level forces the automaker to manufacture more efficient cars. Automakers would also be required to spend more money on effective marketing campaigns and automaker-provided subsidies.”
  • Some experts anticipate that stricter emissions would result in 50% more sales than what is expected now. Others predict that by just increasing the tax credit cap from the first 200,000 vehicles sold by a manufacturer to 600,000, as promised by Biden, would “positively impact over 7.5 million new EV sales, whereas the current cap helps only 2.2 million EVs,” further boosting adoption.
  • The big winners under the new administration are expected to be Tesla and GM, followed by Ford and Volkswagen AG.

Tesla’s Future in the United States – Evidence from Europe and China

  • As previously noted, EVs owners are no longer just the early-adopters. EV education associated with government incentives is likely to inspire new consumers to acquire EVs. Some companies, like VW, Nissan, and Tesla (to an extent) are starting to invest in mass-produced EVs.
  • The delivery of “new mass-market models such as the Tesla Model 3 caused a spike in sales in 2018 in key markets such as the United States.” With dozens of new models entering the scene in the next two years, associated with the desire for personal vehicles due to the pandemic, consumer demand should start exponentially increase over the next five years.
  • Unlike other regions, Tesla reigns unchallenged in the United States. It is estimated that Tesla holds 80% of the EV market in the United States, despite buyers not always having access to tax cuts due to the 200,000 cap. The company is valued at $472 billion, while G.M. is valued at $62 billion, despite reporting profits 10x higher than Tesla. Widespread adoption and a new consumer profile could create a more balanced market in the United States.
  • For example, in one year, Tesla’s market share in Europe went from 33.8% to 13.5%. The drastic fall is due to three main reasons: Tesla is expensive, it is a “single brand going up against multi-brand conglomerates,” its competitors have more entry-level EVs available, and many of these competitor companies “are likely willing to sell their EVs with a much smaller profit margin to meet corporate emissions targets.”
  • The company is also losing market share in China to more affordable options, such as the ID.3. Furthermore, Tesla does not have a constant influx of new models, and consumers are always looking for something new.
  • Some anticipate that the company will remain popular, marketing its “cool factor.” In contrast, others believe that “Tesla’s abysmal build quality and infamously poor customer service put them behind the global leader in car sales, Volkswagen. It has happened in Europe, is about to happen in China and will happen soon in the U.S.”
  • Most analysts seem to agree that Tesla will not have the capacity to mass-produce in the near future. With OEMs pushing their entrance into the EV market, some estimate that while EVs will be more adopted, Tesla could be stuck in the “niche” category.
  • Morningstar analysis is more detailed. Some highlights:
    • The firm believes that “Tesla has a chance to be the dominant electric vehicle firm and is a leading autonomous vehicle player as well as a vertically integrated sustainable energy company with energy generation and storage products, but we do not see it having mass-market volume this decade.”
    • “Tesla will have growing pains, recessions to fight through before reaching mass-market volume, more competition, and needs to pay off debt. It is important to keep the hype about Tesla in perspective relative to the firm’s limited, though now growing, production capacity. Tesla’s mission is to make EVs increasingly more affordable, which means more assembly plants must come on line to achieve annual unit delivery volume in the millions. This expansion will cost billions a year in capital spending and research and development and will be necessary even during downturns in the economic cycle.”
    • Tesla’s brand cachet is not likely to be impaired anytime soon as other automakers move into the battery electric vehicle space because we expect Tesla to keep innovating to stay ahead of startup and established competitors.”

Price Parity Between EVs and ICEs

  • The EV market is expected to reach price parity with ICE models by the middle of the decade, “primarily due to the falling cost of batteries and automakers’ optimization of their manufacturing processes, with expected increased profitably due to economies of scale. Increases in the driving range of EVs and the expansion of charging infrastructure may further boost public acceptance.”
  • Some estimate cost parity will be reached in 2023, 2024 or 2025. The cost of batteries already started to decrease, while new technological developments are improving the range, which will hopefully address customers’ range anxiety.
  • For example, Nissan R&D chief stated, “Technology is getting better, and the costs of batteries and the e-powertrain are getting cheaper and cheaper. Our mission is that, before 2030, we will have EV costs similar to, or cheaper than, ICE.”
  • The International Council on Clean Transportation predicts that US “new vehicle buyer will see an attractive proposition to choose electric vehicles in the 2022–2026 time frame. The consumer ownership parity point for each vehicle application is one to two years sooner than initial cost parity, due to the high fuel savings of electric vehicles.”
  • Tesla expects to reduce battery pack costs per kWh by 56%, enabling production of a profitable $25,000 vehicle by 2022. “This, in our view, is a critical component to exceed cost parity with internal combustion engine vehicles. Additionally, due to a simpler cell manufacturing process, we believe capex per GWh of battery capacity should decline by 69% compared to today’s production process.” Not everyone believes Tesla will be able to deliver this reduction at this scale.
  • However, some analysts noted that even with a significant drop in battery prices, manufacturing costs would still be higher than ICEs, maybe reaching parity by 2030.

Key Players

  • It is important to note that many models on this list are considered expensive models, but new EVs have a high starting price regardless of the brand or luxury. For reference, US News compiled a list of the cheapest EVs in the US, and the 2020 Mini Cooper SE Electric Hardtop, with a starting price of $29,900, took the first place, followed by Nissan Leaf.

Tesla

  • Tesla’s value proposition surrounds selling more than just a car, it sells state-of-the-art, best in class, stylish, high-performance, innovative sustainable technology.
  • Tesla’s best-selling EV in the United States is Model 3, the most affordable Tesla model. Since its launch, Model 3 has completely dominated the US EV market.
  • The company claims the car is “Built for Safety,” and able to withstand four times its own mass. It can go from 0 to 60 mph in 3.1 seconds, and has an option of dual motor all-wheel drive. It can recharge up to 175 miles in 15 minutes at Supercharge locations. “We currently have over 20,000 Superchargers worldwide, with six new locations opening every week.”
  • The model also counts with Tesla’s famous autopilot and smart features, such as using smartphones as keys and the interactive touchscreen panel. The car has an all-glass roof that creates a “sense of openness from every seat.”
  • Tesla models are viewed as luxury cars, even at lower price ranges, such as Model 3 (starting at $35,000). The Model 3 was revealed in 2016, available for purchase in 2017, and it is still the best-selling EV in the United States in the first half of 2020.
  • The company enjoys great customer satisfaction, with its vehicles usually being rated higher by consumers than competitors’ EVs. It has a cult-like following, loyal to the”Tesla lifestyle.” It is perceived as an innovator and a trail-blazer.
  • Tesla announced four EVs for 2021, Model S, 3, X, and Y. These models are not new releases. They are new versions of the old Tesla models.

Marketing

  • Tesla markets Experience and Innovation. It does not rely on traditional marketing strategies, typically leveraging word-of-mouth, social media, and referrals to market its cars. While Tesla has “zero paid campaigns, they are active on organic social,” It had over 2 million organic engagements, mostly (55%) on Instagram and Twitter (11%).

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  • The company has millions of subscribers in every social media channel. On its Instagram page, Tesla usually posts photos of customers; however, the company is not that active, with around one post every three months.

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* The comments were censured by the research team as they contained offensive language.

  • Its recent video series, “Discover,” shows multiple features, such as Dog Mode, Sentry Mode, PIN to Drive, among others.
  • For the launch of Model 3, Tesla surprised selected Tesla owners with a chance to test drive the new model. This ad (video) shows that the Model 3 was marketed as an everyday car for urban areas. There are also indications that despite the lower price, Tesla is still targeting upper-class buyers. Additionally, sustainability and clean energy are the main themes.
  • One customer says, “It feels good, it still feels like a Tesla,” which could indicate the company’s intention of making it clear to buyers that they would still get the “Tesla experience” despite the lower price.

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  • A video of Elon Musk unveiling the new model in 2016 is available here. The first thing Musk notes is the sustainable aspect of EVs. Another important feature was Safety, probably a response to consumers fears.

Weaknesses and Strengths

  • One interesting thing about Tesla, and a common complaint on review sites and forums, is the fact that Tesla changes models frequently and updates are not accessible to all clients. One customer explained: “Caveat emptor… never assume a Tesla has a specific feature unless it’s listed on the website when you order, even if people on line says theirs has it. They do cr*p like this all the time.”
  • Model 3 is so popular that Bloomberg surveyed 5,000 owners in 2019 to obtain details about their experiences and perceptions. Most complaints are about exterior problems, particularly paint, as it is easily scratched, as well as gaps in panels and alignment issues. There were some issues with the touchscreen, smart system, but they were quickly fixed. There was also a major problem with the high- voltage battery in some EVs, but Tesla replaced them.
  • The following charts show the score Model 3 received from buyers in multiple categories:

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  • Tesla’s customer service seems to be one of its weaknesses, as not only it received lower scores, but it is a common complaint on customer review sites.

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  • Bloomberg also asked customers which car they gave up for the Tesla Model 3. Toyota Prius came first, followed by BMW 3 Series, Honda Accord, Honda Civic, Nissan Leaf, Chevrolet Volt, Toyota Camry, Tesla Model S, Mazda 3, and Audi A4.
  • Furthermore, the survey shows why Tesla relies on word-of-mouth. Its customers are loyal advocates. One buyer added, “It has forever changed my expectations for what a car should be.”

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General Motors

  • GM is one of the key players investing billions in the EV market. It is a well-known company, with immense capital, a long history in the United States. It has popular brands under its umbrella, including Cadillac and Chevrolet.
  • GM is one of the largest automakers in the US. With over one century of experience, it aims to offer solid cars, with “great design and performance for the right price.” It is the only manufacturer “with a fully integrated solution to produce self-driving vehicles at scale.”
  • In September 2020, the company announced it was teaming up with Uber to “help accelerate the rideshare industry’s transition to an all-electric, zero-emissions future by offering drivers on Uber’s platform special pricing on the purchase of a new electric vehicle and charging accessories.” GM believes it will help accelerate widespread EV adoption.
  • The Chevy Volt line was discontinued in 2020 (older models can still be purchased). Currently, the only new Chevrolet EV model available in the United States is the Chevy Bolt, a hatchback market as an “affordable all-electric” option, with a starting price of $36,620.

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  • Cadillac, another GM brand, introduced the Lyriq, its first EV model, an electric luxury SUV, and the second GM EV announced in the US, expected to be available in 2022.

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Marketing – Bolt

  • Chevrolet launched the “Just Better” (video) campaign in 2020.
  • For the upcoming 2021 Bolt, the company launched the campaign “It’s time to charge forward,” showing new features “with slick editing and quick shots of the hatchback, all while some groovy beats play in the background.”
  • At the end of the video, the message “Our Future Is Electric,” (video) pops up on the screen, followed by a glimpse into the new 2022 Chevy Bolt EUV.
  • The “Bolt EV: It’s time to charge forward” video is available here.

Weaknesses and Strengths

  • Chevy Bolt has a score between 4.6 to 4.8, according to consumers, depending on the website. Buyers noted comfort and styling as weak points, while performance, quality, and reliability were noted as strengths. Overall, it has a better price than Tesla, with less infotainment and innovation.
  • The long driving range is a plus, but the disappointing cabin quality and interior design were major pain points for buyers.

Nissan

  • Nissan was one of the first big manufacturers to offer all-electric cars when it released Leaf in 2010. The model is still among the top best-selling EVs in the United States.

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  • Nissan executives announced in July 2020 that the company will come out with eight new electric vehicles by 2022, including its first electric SUV, Ariya, “The dawn of a new era.
  • The Ariya crossover SUV will become Nissan’s second electric vehicle available in the US. It’s bigger and roomier than the Leaf, a compact car, and has a design somewhat like Nissan’s Murano SUV. The most noticeable difference is the front “grille” design. Electric cars don’t require nearly as much incoming air as gasoline-powered car, so the front grille is purely a design feature. The Ariya’s grille has a large sunken area with a subtle pattern that’s supposed to resemble a traditional Japanese kumiko design. It also has a slightly redesigned Nissan logo that lights up.”

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Marketing

  • Nissan USA has launched several video ads in the last few months about its EV models:
    • Nissan Ariya. The Next Gen-EV video — “Nissan Ariya brings a premium standard of sophistication to Nissan Intelligent Mobility. With its revolutionary design, spacious interior, and advanced technologies, it marks a new era for electric vehicle excitement and accessibility. Nissan Ariya. Force of Wonder.”
    • 2022 Nissan Ariya All-Electric Crossover | Force of Wonder — “The Nissan Ariya brings a premium standard of sophistication to Nissan Intelligent Mobility. With its revolutionary design, spacious interior and advanced technologies, it marks a new era for electric vehicle excitement and accessibility. USA”
    • Drive Your Truth | Nissan USA — At Nissan, representation is a goal we’re always driving towards. This Hispanic Heritage Month, we wanted Latino voices to be heard. #HispanicHeritageMonth.”
    • A New Day for Nissan — “Nissan as a brand stands for technology that moves you. It brings you to life every time you drive. This new identity film launches our new brand logo by awakening the elements as we embark upon a new day for Nissan. Move Beyond.”
    • Nissan | Help When You Need It | Responding to Coronavirus (COVID-19) — Nissan is here. In these uncertain times, we want to provide support and reassurance however we can. For current and future owners, we are offering car payment options. This is help when you need it.”
  • Nissan’s COVID-19 response has been more prominently advertised than some other entrances on this list, such as Tesla, who has remained somewhat silent, a likely result of the controversy it endured during the crisis.
  • In 2020, Nissan introduced the next phase of the company: “Nissan Next – A new chapter,” centered around ARIYA and Z Proto.
  • December 2020 saw the 10th anniversary of the Nissan LEAF, a car usually marketed around the idea of safety, price, and control.

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Weaknesses and Strengths

  • The LEAF is a reliable, yet not cutting-edge, EV model. It has a lower range, average interior, and a good price range. It is often considered a “boring car,” as it does not have a lot of features or infotainment.
  • It is typically referred to as “EV on a Budget,” with a starting price of $31,600.
  • Many consumers report deterioration issues with the battery. Additionally, it is not an ideal choice for consumers with long commutes due to the low range, in fact, its “limited range,” is what buyers dislike the most.

BMW

  • BMW’s value proposition is providing “the ultimate driving machine.” Designed to be a middle ground between more traditional models like Mercedes and sports cars, it targets an audience who loves to drive. “A BMW is not just a car, not cold and impersonal, but a precision instrument that comes to life when you drive it — one that makes driving a joy.”
  • BMW’s “i” Line, the EV line, follows the same line. “The future of mobility is a place where performance, design, and efficiency define the new normal. Where plug-in hybrids and full electric vehicles don’t just turn heads, but change minds. Where high-performance electric mobility is not just attainable, but sustainable. That’s the world of the future — the world of BMW i.”

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  • The BMW i3 has a starting price of $44,450 and it is considered a luxury car. The sedan version, BMW i3s starts at $47,650.

Marketing

  • In 2019, BMW announced it would discontinue the i3 line. The model is still being sold, but there is no plan for new models. Instead, BMW will focus on electrifying its mainstream models, “So, instead of focusing on creating new and different models completely from scratch like the i3, BMW will from now on focus on electrifying its current range of models.” The strategy indicates that BMW will no longer treat EV models as a side project.
  • In 2020, BMW announced a new line of fully electric cars, the BMW iX. With a range superior to 300 miles, fast acceleration, and fast charging, the iX electric SUV will have a much higher estimated starting price, $75,000 (compared to Ariya’s $40,000), and it will be available in the US in 2022.

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  • The “Introducing the BMW iX | The All-Electric SAV | BMW USA” ad (video) makes it clear that this is the “new generation of electrics,” fully connected and fully electric luxury, and leverages the company’s tag line “the ultimate driving machine.”
  • The Fully Electric BMW Model: 2020 BMW i3 | BMW USA” ad (video) showcases an EV that is clearly targeting a younger audience than the iX line, for “people who like cars and enjoy driving.” This is impression is further validated by the “Leave a Greener Footprint | 2020 BMW i3 Electric Car | BMW USA” ad (video).

Weaknesses and Strengths

  • The BMW i3 consumer score stands between 4.2 to 4.4. Consumers tend to rate the model higher than critics. It seems to be somewhere in the middle of the road, consumers are not praising it as much as a Tesla or Bolt, but there are no major issues with the car.
  • They like the design, value, and spaciousness of the vehicle, while the slow charging and limited range for the price tag are considered weaknesses. Furthermore, it has a very similar price range to Tesla’s Model 3, which is probably one of the reasons why it was the second most traded car for a Model 3.

Audi

  • Audi is known for having excellent customer experience and quality, and it is steadily increasing its presence in the United States.
  • It promises clients a modern, sophisticated, and luxury experience, demonstrating its core value proposition of “Progressive Performance.” In fact, “Progress” is a common word in Audi’s communication and marketing efforts.

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  • The 2021 Audi e-tron is the first SUV built with “Audi DNA.” It has an infotainment system with an “array of functions including navigation, entertainment and ride dynamics with the 10.1″ screen of the Audi MMI® touch response system.” Audi announced that the starting MSRP would be $65,900, $8,900 less than originally expected.

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Marketing

  • For the e-tron 2019 marketing campaign, Audi set out to debunk “perceptions about EVs that have kept them from breaking into the mainstream, including fears about range, charging infrastructure and performance.” The campaign counted with TV ads, social media ads, OOH, and targeted ads.
  • One of the ads, “Not for you,” (video) begins by “showing a man in his bathrobe who skeptically gazes at his neighbor’s Audi e-tron parked in a garage. Then he is transported into several scenes meant to tackle his skepticism head-on. One shot shows the vehicle zooming through a desert landscape, which is an attempt to debunk the so-called “range anxiety” fears that are considered a major barrier to purchase. Other scenes show the vehicle easily handling inclement weather. The ad also juxtaposes a crowded gas station with a more visually pleasing EV charging station.”
  • As part of our commitment to electrification, we’ve recognized the need for more consumer education on what it really means to ‘go electric’,” Loren Angelo, VP of marketing for Audi of America, stated. “Our goal with ‘Not For You’—and ads like this year’s Super Bowl spot ‘Cashew‘—is to ensure consumers have a better understanding of electric vehicles and debunk some long-standing myths about EV ownership.” The Super Bowl ad is available here.

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  • The campaign, developed by Venables Bell & Partners, also included an educational video called “Range Tranquility,” (video) which aims to eliminate range anxiety by explaining that most single-trip rides in America require less than a fourth of the battery’s capacity, as well as showing features that allow owners to plan their trips based on distance and charger availability.

Weaknesses and Strengths

  • Audi’s 2019 e-tron review score is around 4.2, and 75% of buyers recommend the car.
  • Buyers enjoy the luxurious state-of-the-art cabin. The EV ranks well in comfort and style.
  • The car is also perceived as being a safe vehicle. Customers also report being satisfied with the fast charger.
  • It has a low range for its price tag (200 mi), lagging behind other luxury models. The touchscreen layout is considered overly complicated, according to some reviews.
  • One buyer mentioned that Audi does not have parts for this vehicle in the US, therefore, any maintenance that requires new parts may result in a long waiting. However, it is unclear if this is true for all models.
  • The price tag competes directly with Tesla, and the e-tron seems to be less exciting than the Tesla Experience, according to reviews.

Volkswagen

  • Volkswagen announced in March that it was discontinuing the e-Golf and replacing it with ID.4.
  • The ID.4 is an affordable EV SUV compared to other models. Starting at $39,995 and potentially going as low as $32,495 after federal tax credits, the ID.4 has an estimated range of 250 miles, 201/302 hp, with a charging time (at a DC fast charger) of 60 miles in 10 minutes.

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  • Price and familiarity are the main advantages of VW’s EV. The company also managed to build a car that feels familiar to those used to SUVs due to its size, design, and interior.

Marketing

  • The marketing strategy revolves around price. Volkswagen is marketing the ID.4 as the first mass-produced EV, a car for “the millions, not the millionaires.
  • It included three years of “unlimited DC fast charging on the public Electrify America network.”
  • According to VW, ID.4’s is meant to be an electric vehicle for the “average American family,” which means “it’s not an EV with the most flashy features, something Duncan Movassaghi, VW sales and marketing’s executive vice president, says the automaker fully understands.” For example, the ID.4 does not offer over-the-air (OTA) updates.
  • The “Prepare for the all-new ID. 4 I Volkswagen” (video) claims this is the new generation of SUVs. Another ad, “The new Volkswagen ID.4: 100% SUV — 100% electric!” (video) reminds customers that this is VW’s way to Zero.

Weaknesses and Strengths

  • The model will be available to the American public in the beginning of 2021. It received great reviews from early testers due to its strong range, storage, ride quality, design, and good value. Others classify the car as an average EV with not many differentials.
  • Noise (video) and power are weaknesses. However, overall, “the ID.4 has everything necessary to be a serious competitor.”
GLENN TREVOR
Glenn is the Lead Operations Research Analyst at Simple Manifestation with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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