In the past few years, electric vehicles have grown from a once-niche segment to the top of nearly every OEM’s mind. Strengthened by commitments from the federal government, EVs in Operation (VIO) on the road in the U.S. are expected to increase from 1.5 million in 2020 to about 9.3 million units in 2026, according to IHS Markit.
While this may seem far off for some dealers, consumers are already purchasing EVs at record rates. According to IHS Markit, EV registrations in the U.S. reached a record market share of 3.1% in March 2021 – more than doubling year-over-year. This rise in market share is notable as it signifies EV’s shift from niche to mainstream, explains IHS Markit’s Tom Libby.
As consumer interest in EVs has grown, so has federal support for electrification and the number of OEMs committed to future decarbonization. This offers an invaluable opportunity for dealers who are ready to think ahead and plan for their electric future auto sales.
In this blog post, we’ll share how auto dealers can embrace electrification with a customer-first approach, including:
· Understanding the roadblocks to future electrification
· Identifying and connecting with past and prospective EV buyers
· Tailoring messaging to address buyer concerns and motivating factors
Understanding the Roadblocks to Electrification
While consumer confidence in electric vehicles continues to grow, it’s critical dealers understand why buyers may still be hesitant. In a recent Pew Research Center report, nearly twice as many Americans said they consider EVs less reliable than their ICE counterparts (34% vs. 15%). Additionally, 66% view EVs as having a higher price point than ICE vehicles.
Concerns over Vehicle Range
Similarly, in a 2021 industry study of in-market auto buyers, vehicle range and price ranked as the top barriers preventing customers from considering EVs, but it does appear range anxiety is shrinking. While in 2019, Cox Automotive reported 47% of in-market consumers noted that low vehicle range was a concern, only 37% reported the same in 2021.
This shift may be attributed to growing infrastructure to support vehicle charging. Looking ahead, IHS Markit reports almost $7.5 billion has been allocated to alternative fuel charging in a new bill signed by President Biden in November 2021 as part of a $1.2 million dollar infrastructure bill. The emphasis on private charging will still be important however, as IHS Markit expects the infrastructure bill to supplement only 66% of required U.S. EV charger growth through 2026.
Connecting with EV Buyers
On the other hand, it’s also important to understand why customers are purchasing EVs to identify and engage future buyers before they start shopping around. Customers often outwardly attribute their reason for buying an EV to the vehicle’s lower environmental impacts and positive sustainability elements, but those aren’t the only factors contributing to their decision.
In general, customers’ interest in EVs appears to be tied to their overall understanding of them. Or in simpler terms, the more customers know about EVs, the more likely they are to purchase one. In the same Pew Study, only 13% of respondents who reported knowing nothing about EVs said they would be willing to seriously consider purchasing one, while 53% of those who know a lot fell into the same category.
Target Previous EV/Hybrid Drivers
Similarly, Pew found 72% of customers who currently drive a hybrid or EV would consider another, though only 37% of non-hybrid or EV drivers would put an EV on their list. IHS Markit reported similar findings in 2021, as EV loyalty steadily grew over the last five years to reach 55% by the end of 2020.
With consumers’ reasons for adoption varying from person-to-person and from market-to-market, it’s important for dealers to understand their audience and their purchasing motivation to effectively market and sell EVs.
This means starting with the obvious: previous EV buyers. Start by engaging EV buyers who are preparing to return to market or may be adding another vehicle to their household soon. Further target your approach with personalized messaging tailored to the factors influencing their decision, such as early trade-in offers, OEM incentives, tax credits or new electric models available for pre-order.
Download the Whitepaper:
4 Ways for Dealers to Embrace an Electric Future
Tailoring Messaging to Address Customer Concerns and Motivating Factors
With customer education playing a pivotal role in EV adoption, it’s important dealers take this same data-driven approach when engaging ICE customers with EV marketing. This starts with identifying and engaging the customers who are the best EV candidates.
For example, finance and cash buyers may be better suited for EV purchases than lease customers. With a greater length of ownership and thus greater commitment to their vehicle, these customers are more likely to invest in the necessary infrastructure for electric vehicles. This will play a significant role in EV customer satisfaction. These customers may also qualify for federal and state-level EV incentives, such as the $7,500 federal tax credit or the $2,000 CVRP for California buyers.
Next, look to your service department. Consider targeting customers with repeat service visits, knowing they may be interested in trading in their ICE for a BEV if presented with messaging on the reliability of electric vehicles and the convenience of over-the-air updates. According to a recent study by the University of Michigan’s Transportation Research Institute, the average cost to operate an EV in the United States is just $485 per year, while the average cost of a gasoline-powered vehicle is $1,117.
Multi-vehicle homes are another example of “low-hanging fruit.” Targeting households with two or more vehicles in the garage gives EV buyers the option to use their ICE for long-distances or overnight trips. This helps overcome any objections about charging speed or potential range anxiety.
Finally, don’t forget about fleet sales. Consider targeting small business owners who could benefit from the cost reductions and operational efficiencies offered by EVs and who rely on strong branding. This includes businesses like real estate agents, food delivery services and more.
While EV sales were once considered niche, the segment has emerged into one that is defining the future of the automotive industry.
“The automotive industry is on the verge of a ‘step change’; a personal transportation evolution the likes of which has not been seen since internal combustion engines replaced the horse and buggy,” wrote IHS Markit when describing electrification.