The auto industry is undergoing revolutionary changes driven by a combination of government and regulatory pressures, environmental concerns and growing consumer sentiment. Although electric vehicle sales remain in low numbers, the inevitability of an electrified automotive future is fast approaching.
How will automakers cash in on the significant investments needed to change the makeup of their vehicle lines from ICE to EV? By ensuring that consumers are both enthusiastic and informed about the possibilities of electric vehicles, and by increasing the sales process through alternative retail formats.
Turning interest in electric vehicles into consideration for the next purchase
Consumer interest in electric vehicles is on the rise. In a nationally representative survey of American adults with a valid driver’s license, 71% said they had at least some interest in acquiring an electric vehicle at some point, and 31% said they had at least some interest in acquiring an electric vehicle at some point. ‘they would consider an EV for their next purchase or rental.1
The challenge of turning that interest into consideration received major impetus in early August when President Biden signed an executive order with a non-binding target for zero-emission vehicles – electric batteries, plug-in hybrids and fuel cells – to represent half of all new passenger vehicles sold in 2030.2
The obstacles to switching from ICE to EV have been well documented: cost, range and lack of fast charging station infrastructure. The pandemic, however, has added a fourth variable to the mix: the impact of remote working on consumers’ driving habits and the implications for the adoption of electric vehicles in the future.
In a recent FlexJobs survey, 3 38% of workers estimate that they would save at least $ 5,000 per year by working remotely. While remote working is a small factor helping to pave the way for an electrified future, many attitudes and infrastructure barriers remain. Overcoming these obstacles and turning interest into consideration begins with education.
EV Education – The transition from sales to communication
Consumers are leveraging information from online and offline resources in their decision-making process and, according to a recent Urban Science Harris survey4 survey – 84% trust car manufacturers who provide this information. This same survey, however, reports that consumers demand a low-pressure sales experience when buying a car. It is not trust, but rather difficult sales methods that keep consumers away during the early stages of the investigation, regardless of the type of new vehicle purchased.
A recent poll published in Nature Energy reports that consumers believe sellers – two-thirds of the time – have strongly turned potential customers away from EVs (even at dealerships with EVs in stock).5 That same survey found that in 71% of dealer visits, salespeople had little or no knowledge of electric vehicles.
Dealers who are reluctant to embrace the future of electric vehicles have clearly missed out. According to a recent JD Power study, one in three respondents say that the reason buyers don’t consider buying an EV is lack of knowledge. 6 This same study reveals that once a customer gains first-hand experience with an EV, their consideration almost triples: from 7% to 20%.
Alternative Retail Formats – Transaction Transformation Starts Here
Auto manufacturers across the country are realizing that education is just the beginning. Alternative retail formats take electric vehicle purchasing to the next level, where OEMs can better control the experience with well-trained, knowledgeable and motivated sales advisers. They provide an educational space which at best is a pressure-free environment including experience centers, boutiques and pop-up stores, etc.
There are, however, two realities that face even the most forward-thinking automakers: 1) It takes time to change customer engagement tactics; and 2) regardless of all other factors, the demand for vehicle sales is continuous. So how do you get to where you need to be?
Using strategic planning tools specially designed to analyze consumer demands, geography, and demographics, you can meet potential customers where they are – in the format they want.
Considering the investment costs required for alternative retail formats, it is essential to consider the factors that accompany the decision to go ahead, including a clear definition of the mission, smart placement and an initial determination of how success will be measured.
What can be done in the meantime to help people interested in electric vehicles consider them for their next purchase? According to the aforementioned Urban Science Harris poll, the answer lies in test drives, which buyers of all but one age group rank as the preferred method of brand engagement. And the only group that does not give it first place – the 25-34 year olds – still ranks it second. Dealers who make sure the electric vehicles they have available for test drives are loaded and ready may be pleasantly surprised at the results.
- Consumer Reports Electric Vehicle and Fuel Economy Survey, https://article.images.consumerreports.org/prod/content/dam/surveys/Consumer_Reports_Electric_Vehicles_Fuel_Economy_National_August_2020
- Biden EV Target sets the destination for industry,https://www.autonews.com/regulation-safety/biden-ev-target-sets-destination-industry
- The future of work: what the post-pandemic workplace has in store for the careers of remote workers, https://www.forbes.com/sites/bryanrobinson/2021/05/02/future-of-work-what-the-post-pandemic-workplace-holds-for-remote-workers-careers/?sh=471f25b97f5b
- Urban Science Online Consumer Study, June 2021. This survey was conducted by The Harris Poll on behalf of Urban Science among 2,067 US adults aged 18 and over.
- Zarazua de Rubens, G., Noel, L. & Sovacool, BK Scornful and deceptive car dealerships create barriers to the adoption of electric vehicles at the point of sale. Nat Energy 3, 501-507 (2018).https://doi.org/10.1038/s41560-018-0152-x
- JD Power suggests awareness and education activities to strengthen the demand for electric vehicles, https://insideevs.com/news/504167/jd-power-ev-demand-education/