EUROTAXGLASS S WHITEPAPER SERIES ELECTRIC VEHICLES THE END OF THE HYPE? RESULTS OF THE 2012 CUSTOMER SURVEY MAINTAL JANUARY 2013
INTRODUCTION Electric vehicles are a phenomenon. Customers and automotive experts alike are showing great interest in this relatively new technology. Still, EVs 1 are very rarely seen on the roads and few people, as yet, have driven one. This whitepaper performs an acid test and investigates what customers really think about EV technology, and in particular whether they are ready for a change. Are they willing to accept some of the limitations of EVs or are there crucial barriers that have to be eliminated first? EurotaxGlass s has addressed this question working together with TNS Global. Answers were presented during the Business Intelligence Forum Moving on - or not? hosted by EurotaxGlass s in Paris end of 2012. In preparation for this conference, TNS conducted a survey to understand today s consumer view on EVs. To back this up, in total 3.175 consumers 2 were interviewed in France, Germany and the United Kingdom. For more information on this whitepaper please contact: INGO AHOLT Senior Market Analyst & the paper s author EurotaxSchwacke GmbH Global Services Division Wilhelm-Roentgen-Strasse 7 D-63477 Maintal Phone +49 (0) 6181 405 218 Email ingo.aholt@eurotaxglass.com 1 EVs in this study mean battery only electric vehicles, i.e. excluding hybrids/ plug-in hybrids 2 The research was conducted by TNS between 14th and 18 th June 2012; all interviews were with adults aged 18-64 2
SUMMARY THE FINDINGS: 1. Consumers expect EVs to be competitive both in terms of cost and suitability for daily use 2. The retail customer s attitude towards EVs is very positive 3. A test drive has a positive impact on concept evaluation, economic viability and purchase considerations 4. Consumers expect long warranty periods of at least 5 years, but 8 years would be better 5. Consumers prefer the traditional business model buy car and battery but many accept the alternative scenario buy car/rent battery 6. Status can be an important personal benefit associated with driving an EV 7. A powerful label/branding can boost an EV s attractiveness 3
THE CONSUMER PERSPECTIVE 2012 FINDING 1: CONSUMERS EXPECT EVS TO BE COMPETITIVE BOTH IN TERMS OF COST AND SUITABILITY FOR DAILY USE The industry has identified three major challenges for the current generation of EVs: Cost competitiveness, suitability for daily use and charging infrastructure. Our customer research confirms that customers are not willing to make compromises regarding costs, comfort or safety (see fig. 1). If they want to be successful in the EV sector, manufacturers need to address all of these aspects. Fig. 1 Importance of criteria when deciding whether or not to have a BEV: Base: All respondents who can imagine driving a battery only electric car Weighted average of France (n=494), Germany (n=445) and UK (n=274); in % of those who answered agree/quite agree Note: Question asked: How important are the following criteria when deciding whether or not to have a BEV? ; No significant deviations between countries The most important aspect and the most challenging is Total Cost of Ownership (TCO). An EV s TCO is a major concern as battery technology is still very expensive, which leads to high EV list prices. 4
Fig. 2 Usage of EV for trips of less than 100km Note: Question asked: How would you want to use the EV? ; Results combine answers Drive to work, Small trips <10km and Medium trips between 10 and 100km Another challenge for EVs concerns their suitability for everyday use. Are EVs able to transport people as far and as safely as they want to drive? The maximum driving distance of an EV is typically around 150km under good weather conditions. The range can reduce rapidly depending on, e.g. the outside temperature, power used for air conditioning or driving behaviour, and it can be significantly below 100km. When looking at actual commuting distances, EVs seem suitable for the majority of customers. Our survey shows that almost three quarters of the pro EV customers questioned would use their EVs for trips not exceeding 100km (fig. 2). On average, people make three trips per day of 30-40km (fig. 3). While these figures confirm that even current EV ranges are sufficient for most purposes, they also reveal their inflexibility. People have to think carefully whether they can make an unplanned trip or diversion, and in many cases they will need to schedule charging times before they can start the next trip. 5
Fig. 3 Average trips and trip range per person per day Source: PwC (2012) The extended fueling periods of EVs (typically 5-8 hours for a full charging period) require access to charging points besides public ones. A mix of charging options makes EV driving as convenient as possible (fig. 4). Customers attach high importance to home charging as well as public charging. Also the possibility of office charging is an important prerequisite for commuters. Fig. 4 Importance of several charging options Base: Base: All respondents who can imagine driving a battery only electric car Weighted average of France (n=494), Germany (n=445) and UK (n=274) as % of those who answered agree/quite agree Note: Question asked: How important are the following means of recharging? ; possible answers Strongly agree, Quite agree, Disagree a little and Strongly disagree ; No significant country specific deviations 6
FINDING 2: THE RETAIL CUSTOMER S ATTITUDE TOWARDS EVS IS VERY POSITIVE Despite the above-mentioned challenges (in particular economics and range), consumers attitudes towards EV technology are highly positive. Almost 50% of customers (fig. 5) across the survey markets France, Germany and the UK could imagine regularly driving a battery only electric car within the next 3-5 years. The level of interest differs between markets. Renault was the first European OEM to launch a range of EVs, hence it is no surprise that at the moment France is the most developed market in this respect. In Germany as well, interest in EVs is relatively high half of respondents can imagine driving one in the next 3-5 years. Customers in the UK are the most sceptical of the three markets. The result for the UK is also different in terms of usage: While the majority of UK customers would only accept EVs as a company car, in France and Germany there is a higher positive response for exclusively private use. Fig. 5 Interest in Battery Electric Vehicles 2012 Base: 3.175 interviews conducted in France (1.044), Germany (1.064), UK (1.067) Note: Question asked: Could you imagine yourself regularly driving a battery only electric car of your own within the next 3-5 years? 7
FINDING 3: A TEST DRIVE HAS A POSITIVE IMPACT ON CONCEPT EVALUATION, ECONOMIC VIABILITY AND PURCHASE CONSIDERATIONS A test drive is important to get to know any car to feel the ride and NVH (Noise, Vibration, Harshness), to experience the handling and to get acquainted with all the functions the car offers. Fig. 6 Share of people who have already driven a BEV Base: All respondents who can imagine driving a battery only electric car Note: Question asked: Have you already driven a pure EV? Few people have already driven an EV less than one in ten survey participants has had the chance to date (fig. 6). We are convinced that driving an EV will be crucial to get people into EVs. The EV driving experience is quite different from conventional cars with internal combustion engines, which makes a test drive even more decisive when it comes to forming a valid opinion. Our research confirms that those who have tested the EV have an even more positive opinion of electric driving (fig. 7). The fun factor of EVs becomes evident during a test drive when the fast acceleration, direct torque and absence of any delay when changing gear can all be apparent. This is particularly important since many people do not expect EVs to be fun to drive (59% before, 80% after test drive). Cost is extremely relevant. A test drive significantly boosts the good-value-for-money perception (+74%). Even if the scores for this aspect are not yet at the right levels and prices remain a particular concern, this improvement shows that those who have tested an EV feel that it offers good value for money (64% of respondents). 8
Fig. 7 Consumer attitude towards EVs before/after test drive Base: All respondents who can imagine driving a battery only electric car Weighted average of France (n=494), Germany (n=445) and UK (n=274) as % of those who answered agree/quite agree Note: Question asked: To what extend do you agree with the following statements? ; possible answers Strongly agree, Quite agree, Disagree a little and Strongly disagree A study conducted on the purchase considerations for EVs and Hybrids provides further insights. The purchase intent for these models substantially improves after a combination of a test drive and an explanation of charging options (from 25% to 38%, fig. 8). This result shows that test drives are actually very successful in changing attitudes towards EVs. Fig. 8 Purchase Consideration for EVs or Hybrids Note: Survey setup: 226 test drivers participating in a 30 minutes test drive and an introduction to charging options Source: GfK Mobility Monitor (2012); CAR Center, University of Duisburg-Essen (2012) 9
FINDING 4: CONSUMERS EXPECT LONG WARRANTY PERIODS OF AT LEAST 5 YEARS, BUT 8 YEARS WOULD BE BETTER The electric powertrain and battery are the two crucial components in an EV: They are expensive (in particular the battery) and consumers have no track record of their reliability to go on. In addition, consumers attach a particular concern over durability to batteries, i.e. loss of capacity and memory effects in consumer electronic battery packs. To offer peace of mind to EV customers, our research shows that extended warranties are not merely an appropriate measure; they are a prerequisite for the purchase decision. Fig. 9 Importance of different warranty periods Base: All respondents who can imagine driving a battery only electric car Note: Question asked: How important would the following warranty levels be for an EV? ; possible answers: Very important, Quite important, Not very important, Not important at all For EVs, the standard warranty duration of two years is not sufficient for the majority of potential EV buyers. A clear majority (86%) attaches importance to a warranty period of 5 years. The preference for 8 years is only 1%-point higher though the share of respondents who consider this very important rises by 38% (from 39% to 54%). It is a signal that it is not sufficient to offer minimum warranties and that longer periods demonstrate the OEM s trust in their own technology (or from third-party powertrain/ battery providers). From a used car perspective, extended warranties should be transferable to subsequent owners, possibly via optional used car warranties. Warranty preferences are similar for the battery and electric powertrain. According to these results, warranty periods for these components should be the same, not least to keep complexity as low as possible. 10
FINDING 5: CONSUMERS PREFER THE TRADITIONAL BUSINESS MODEL BUY CAR AND BATTERY BUT MANY ACCEPT THE ALTERNATIVE SCENARIO BUY CAR/RENT BATTERY Renting instead of purchasing the battery is another way to lessen durability and capacity concerns. In addition, this strategy helps to reduce the relatively high list price of an EV. Our survey shows that customers have a preference towards the business models they already know, i.e. buying or renting both components. The level of acceptance of buying the car and renting the battery is not insignificant though: 11% can imagine opting for this scenario. The innovative vehicle concept lends itself to a more innovative ownership scheme. Customers even become more receptive of mixing buying and renting (rises to 19%) after a test drive has taken place. Fig. 10 Preferred ownership models for EVs Base: Base: All respondents who can imagine driving a battery only electric car Note: Question asked: If you wanted to own a pure EV, which option would you prefer? 11
FINDING 6: STATUS CAN BE AN IMPORTANT PERSONAL BENEFIT ASSOCIATED WITH DRIVING AN EV Despite low sales volumes at the moment, EVs are fashionable. More and more upcoming EV launches, including models from Audi, BMW and Volkswagen, are likely to create a second wave of EV hype in the months to come. In spite of all their practical shortcomings, EVs are modern, quiet, innovative cars that offer state-of-the-art technology and very importantly they are environmentally friendly in the sense that they are emission-free (particulates and noise). Almost 50% of respondents say that driving an EV is prestigious, i.e. they see an electric vehicle as a status symbol. The high price of current EVs may contribute to this perceived prestige. Of the 3 markets, French customers, who are more exposed to EVs than others, consider EVs as least prestigious. This is a sign that in all markets EVs are likely to lose prestige, once they become more common and widespread. Fig. 11 Prestige of battery only EVs: Base: Base: All respondents who can imagine driving a battery only electric car Note: Question asked: To what extend do you agree with the following statements? ; answer Pure EVs are prestigious! ; possible answers Strongly agree, Quite agree, Disagree a little and Strongly disagree 12
FINDING 7: A POWERFUL LABEL/BRANDING CAN BOOST AN EV S ATTRACTIVENESS The concept of an EV potentially allows for new body shapes and ways of using space. For instance, neither a fuel tank or front air intakes are required, the battery can be integrated underneath the seating areas and no traditional middle tunnel is needed. However, only about 15% of respondents expect EVs to a have a distinctive design vs. existing cars (fig. 12). Most customers expect EVs to keep the design of conventional cars like they are used to. This does not mean that an EV should not reveal its innovative technology. Branding is key. To transfer the personal benefit, a clear EV indication via a powerful EV label, sub-brand or distinctive design elements will help. Fig. 12 Design-importance of an EV Base: Base: All respondents who can imagine driving a battery only electric car Note: Question asked: How should an EV look like from your point of view? 13
CONCLUSION Nowadays, EVs are an attraction on the streets since you rarely get to see them. Nevertheless, our research shows that end consumers remain very open-minded towards this promising technology and are highly positive about the new concept. However, consumer expectations are high towards this new technology. The suitability for everyday use and the cost challenge need to be addressed by OEMs to make EVs more attractive as an alternative to the internal combustion engine. OEMs and suppliers are working hard to improve battery technology, with increasing driving ranges and reducing costs being the most crucial challenges. If these challenges are successfully tackled and based on the overall positive consumer responses in our research we remain confident that EVs can have a prosperous future. 14
For more information on this whitepaper please contact: INGO AHOLT Senior Analyst & the paper s author EurotaxSchwacke GmbH Global Services Division Wilhelm-Roentgen-Strasse 7 D-63477 Maintal Phone +49 (0) 6181 405 218 Email ingo.aholt@eurotaxglass.com ABOUT EUROTAXGLASS S: Europe s leading provider of data, solutions and business intelligence services for the automotive industry with over 75 years experience. The company is based in Freienbach, near Zurich, Switzerland and operates in 30 countries with more than 400 employees. For more information please visit our website www.eurotaxglass.com. ABOUT EUROTAXGLASS S GLOBAL SERVICES DIVISION: Global Services advises manufacturers with the aim of establishing a sustainable residual value policy and offers studies, analyses and consulting services on a broad range of automotive subjects. The Global Services Division has many years of experience gained from over 400 CarToMarket analyses for almost all manufacturers, and from numerous Consulting Projects. Dedicated Global Services employees work in the European automotive core markets France, Spain, Italy, UK and Germany; in the other countries there are experts from the respective country offices involved in our projects. ABOUT TNS GLOBAL: TNS is a world leader in market research, global market information and business analysis. With a presence in over 80 countries, TNS has more conversations with the world s consumers than anyone else and understands individual human behaviours and attitudes across every cultural, economic and political region of the world. TNS is part of Kantar, one of the world's largest insight, information and consultancy groups. 15