Deloitte survey chart

Given the results of a survey released this month by Deloitte, it seems shocking that automakers are willing to risk it on the development of electric vehicles.

Deloitte's study, titled "Unplugged: Electric vehicle realities versus consumer expectations," suggests that consumers across the globe are unwilling to compromise when it comes to electric vehicles. Turns out, the vast majority of those surveyed weren't willing to accept an electric vehicle's limited range, high sticker price or the inconvenience of waiting for it to recharge.

Deloitte surveyed 13,000 consumers from 17 countries in Asia, Europe and North America. The most shocking bit of data, perhaps, is Deloitte's discovery that less than four percent of consumers would be satisfied with today's electric vehicles. Of course, companies selling electric vehicles would probably be very excited to have a four percent market share, but that's another issue.

The problem is that even though most drivers commute less than 50 miles a day, the majority of survey respondents illogically want electric vehicles that can go hundreds of miles. For example, Deloitte says that, in the U.S., 63 percent of the respondents would be satisfied with a range of 300 miles. Even more out of touch with reality is that respondents believe a 300-mile electric should carry a price tag that's right in line with today's fossil fuel vehicles.

But the demise of the electric vehicle might not even be related to its own inherent deficiencies. According to Deloitte, if the fuel efficiency of gasoline or diesel automobiles "consistently hits 75 mpg, interest in pure battery electric vehicles falls off the cliff."
Show full PR text
Global Consumers Not Plugging into Electric Vehicles: Deloitte Survey

No more than four percent of global consumers likely to be satisfied with today's electric vehicles


DETROIT, Oct. 4, 2011 - Consumers worldwide expect electric vehicles to travel farther, require less charge time and retail for a lower price than automakers are offering, according to a new survey from Deloitte.

In fact, consumers' expectations around performance and purchase price are so divergent from the actual offerings available today, that no more than 2 to 4 percent of consumers worldwide would have their expectations met, according to the survey.

The survey, "Unplugged: Electric vehicle realities versus consumer expectations," canvassed more than 13,000 consumers in 17 countries across the Americas, Asia and Europe - revealing a general desire among consumers to buy electric vehicles, but a strong unwillingness to compromise on key performance criteria and especially price.

In the United States, 12 percent of respondents indicate they would be a potential "first mover" when it comes to adopting an electric vehicle - with an additional 42 percent saying they "might be willing to consider" purchasing or leasing an electric vehicle. However, most global consumers, including those in the United States, would base their final decision on the greatest challenges associated with electric vehicles in the market today. These include range, convenience to charge and purchase price of the vehicle - all of which a vast majority (more than 85 percent) of survey respondents ranked as "extremely important" or "very important" considerations for buying or leasing an electric vehicle.

"Vehicle range is clearly an issue among consumers," says Craig Giffi, vice chairman and automotive practice leader, Deloitte LLP. "American consumers have the highest range expectations with only 63 percent satisfied with a range of 300 miles - despite the fact that 77 percent of American respondents said they drive only 50 miles or less per weekday.

"The paradox here," Giffi adds, "is that current technology targeted at the mass market can usually accomplish a range of 100 miles between charges, which is twice as far as the typical American drives each work day. Yet, for some reason, the 100-miles-a-day capability is still unacceptable to most consumers; they want at least 300 miles between charges."

The survey also shows consumers want faster battery charge times. The majority of American consumers surveyed (58 percent) expect an electric vehicle to recharge its battery in two hours or less, and nearly one in four Americans (23 percent) expect a 30-minute charge time. Overall, in all countries, only a minority viewed up to eight hours (the normal time it takes to recharge the typical battery in today's vehicles) as acceptable.

The more significant issue confronting automotive industry executives and policymakers around the world is unwillingness of consumers to pay much, if any, price premium for an electric vehicle. Specifically, consumers will not pay more for an electric vehicle than they currently pay for a comparable vehicle with a gasoline or diesel engine.

More than 50 percent of all consumers globally indicate they are unwilling to pay any kind of a price premium for an electric vehicle, which includes 65 percent of American respondents. Interestingly, Chinese consumers are most willing to pay a price premium, but even still, 44 percent indicate they will not pay anything extra. Consumers in the United Kingdom and Belgium are the most sensitive to paying a price premium with 71 percent opposing.

Complicating the price premium issue further is the low overall price expectations consumers have for an electric vehicle. In 11 of the 17 countries where the survey was conducted, 50 percent or more of consumers said they expect a price of $20,000 or less for an electric vehicle, far below actual costs. Consumers in the United States exhibit a good understanding of what electric vehicles will likely cost at the dealer with only 34 percent looking to purchase an electric vehicle for $20,000 or less. Nonetheless, 78 percent of American respondents expect to pay no more than $30,000 for an electric vehicle.

"Automotive executives and policymakers trying to encourage the adoption of 'green' personal mobility solutions face a dilemma: While current electric vehicle technology can satisfy a meaningful niche of consumers when it comes to range and charge time expectations, these consumers are unwilling to pay a price premium for this new and expensive electric vehicle technology," says Giffi.
X-factors: Fuel cost, conventional-vehicle efficiency

The survey also shows consumers in the United States continue to see high fuel prices as a motivating factor for purchasing an electric vehicle. In fact, this summer's national gasoline prices averaged around $4 per gallon, according to data from the U.S. Energy Information Agency; this price point was consistent with what survey respondents would consider their tipping point on buying an electric vehicle. More than half (53 percent) of American survey respondents said a price point of $4 per gallon (an increase of approximately 10 percent over today's gasoline prices) improves their likelihood of buying or leasing an electric vehicle. Around the world, on average, it would take nearly a 28 percent increase in local gasoline prices at the pump to result in a majority of consumers being more willing to purchase or lease an electric vehicle.

Conversely, the survey reveals that improvements in fuel efficiency for gasoline and diesel vehicles reduce the appetite for electric vehicles. Though the tipping points may vary slightly from country to country, the study found that more than half of consumers across the globe - 57 percent in China and 68 percent in the United States - will be much less likely to consider purchasing an electric vehicle if fuel efficiency standards approached the 50 miles-per-gallon benchmark.

"At 50 miles-per-gallon, the majority of consumers around the world lose interest in electric vehicles - and if today's gasoline or diesel vehicles consistently hit 75 miles-per-gallon, interest in pure battery electric vehicles falls off the cliff," says Joe Vitale, automotive sector leader for Deloitte Touche Tohmatsu Limited.

"The irony in the Unites States," says Giffi, "is the higher Corporate Average Fuel Economy (CAFE) standards become, and the closer auto manufacturers come to meeting them by using a combination of more fuel efficient gasoline engines and electrified technology, the less interested consumers become in pure battery electric vehicles that use no gasoline."

The study also suggested that as consumers become more experienced with electric vehicles, new considerations for adoption - beyond factors such as range, convenience to charge, and cost to charge - will likely emerge, especially operating costs to maintain and repair the vehicle and total cost of ownership including considerations on residual value of the vehicle.

"There is a clear disconnect between consumers' expectations for electric vehicles and the actual capabilities and costs of technologies available in the market today," says Giffi. "As consumers become more educated and as technology evolves, we certainly expect that gap to shrink, but neither will happen overnight.

"For the time being, the mass adoption of electric vehicles is more likely to occur in countries that are willing and able to take an aggressive policy approach that encourages and subsidizes the market. And in today's world, with so many sovereign debt challenges, that is very likely to be a road less traveled."

For a copy of the report, "Unplugged: Electric vehicle realities versus consumer expectations," please visit www.deloitte.com/us/electricvehicles.