J.D. Powers and Associates’ 2012 Electric Vehicle Ownership Experience Study released last week says automakers must lower prices and show U.S. consumers the cost-savings benefits of electric vehicles before sales will increase.
According to the study, 44 percent of current EV owners point to zero tailpipe emissions as the leading benefit of having an electric car. But going green simply isn’t enough to persuade the majority of shoppers to plug in.
Of the consumers considering an EV as their next primary vehicle, only 11 percent list environmental concerns as a leading reason to buy, while 45 percent name the cost-savings benefit of an all-electric powertrain as their key reason to buy an EV.
The study says current EV owners report an average monthly increase of $18 in their utility bill as a result of recharging their vehicle’s battery, compared to the $147 they would typically pay for gasoline during the same period of time.
However, these figures may not fully represent what everyone in the country might expect.
As J.D. Powers informed us, these figures are not based on national averages for utility rates and costs at the pump, but instead are an average of what the study’s participants reported to the research firm.
The Big Holdback: EV Pricing
The study asserts that at the core of consumer push back to purchasing an EV is the premium most electric vehicles command over comparable internal combustion engine vehicles.
Neal Oddes, senior director of the green practice at J.D. Power and Associates, said “there still is a disconnect between the reality of the cost of an EV and the cost savings that consumers want to achieve.”
Compared with sales prices for a similar gasoline-powered vehicle, the study finds that owners of electric vehicles pay a premium of $10,000, on average, for their vehicle, while plug-in hybrid electric vehicle (PHEV) owners pay a $16,000 premium, on average.
Based on annual fuel savings it would take an average of six and a half years for EV owners to recoup the $10,000 premium they paid at the point of purchase, while the payoff point for PHEV ownership is 11 years. Again, these payback rates are based on participant-reported averages.
“The payback period is longer than most consumers keep their vehicle,” said Oddes.
Lowering the cost of ownership may help increase market share – electric vehicles currently account for less than 1 percent of new-vehicle sales in the United States, according to LMC Automotive – an automotive market forecasting firm working with J.D. Powers and Associates.
Oddes notes that lower costs for, and/or improvements in battery technology would possibly allow automakers to lower retail costs for EVs.
Range anxiety and the availability of charging stations are also top concerns among consumers considering an EV, but the study finds that the size of the vehicle is the second-most-frequently cited reason for rejecting an EV.
According to the study, consumers considering an EV look more frequently for a midsize sedan than any other size vehicle.
As Tesla continues to gain ground in public awareness with its award-winning Model S, and follows through on promises to release its SUV-type Model X, consumers may further embrace EVs as they see more products similar to Tesla’s from mainstream manufacturers.
In addition to price and vehicle size, concerns with reliability of EVs rounds out the top three rejection reasons, according to the firm’s research. But here again is the issue of perception versus reality.
Battery failure across the spectrum of currently available vehicles is an infrequently heard of symptom, with Toyota’s high-profile Prius models – for the most part – enjoying excellent reliability ratings.
Once Consumers Go EV They Stay EV
The one bright spot in the study is that EV owners appear fiercely loyal.
According to J.D. Powers, 82.5 percent of owners indicate they “definitely will” or “probably will” buy another EV from the same brand. The average retention among owners of all vehicle types is 49.8 percent, notes the report summary.
More Good Than Bad in EVs’ Future?
On the surface the findings in the J.D. Powers and Associates study may seem superficially supported by oft reported on lackluster sales for Nissan’s Leaf and the fact that of thousands of deposits made on Tesla’s Model S, only a matter of hundreds have been delivered.
But this, too, appears changing for the better, as Tesla recently stated in its most recent investor report that the company anticipates annual production of 20,000 units for 2013.
Additionally, Hybridcars.com monthly Dashboard report reflects an up tick in sales of electric vehicles, with the Chevy Volt and Toyota Prius PHEV having best-ever monthly sales.
The 2012 Electric Vehicle Ownership Experience Study is based on online responses from more than 7,600 vehicle owners and panelists who either currently own an EV, are considering an EV for their next vehicle purchase, or shopped for an EV but ultimately decided not to purchase one. The inaugural study was fielded in October 2012.