Demand for Electric Vehicles (EVs) has never been particularly high. In fact, I’ve often shared my concerns regarding the way EVs are marketed. Rather than focus on what makes EVs good vehicles, automakers have frequently resorted to sharing what makes EVs less bad than traditional gasoline vehicles—particularly from an environmental perspective. Such an approach is likely to score major points with early adopters and environmentalists but is certain to leave the broader consumer base—who we know will be slower to consider or buy into electrification—wondering why they should bother.
Additionally, people are naturally wary of “taking the plunge” to adopt new technology they’re not familiar with even in the best of times. That pitch becomes even more difficult for EV manufacturers during a global pandemic and recession. Within just a handful of weeks of the coronavirus reaching the United States, consumers had already begun seriously reevaluating their financial situations. Among the first line items up for review? Investments, vacations and… you guessed it: vehicle purchases. According to recent Escalent research, 55% of new vehicle buyers looking to purchase in the next year will delay their purchase—and those that still plan to buy expect to spend around $15,000 less. With an overall reduction in demand for new cars comes an even more serious hit to the interest in EVs as uncertainty translates to dependence on safe, comfortable and familiar options.
Another major hurdle facing EVs—and many other innovations in the automotive space—as a result of COVID-19 is the likely attrition and consolidation of startups developing these technologies. Economic uncertainty typically constrains funding as investors pull purse strings tighter and make “safe plays” to mitigate losses wherever possible. Many companies sinking unfathomable resources into developing these technologies are likely to face extremely tough choices in the coming weeks and months as those resources dry up. Such decisions could have long-term consequences for the advancement of EV technology and, as a result, broader adoption.
However, because COVID-19 will only exacerbate existing challenges to EV adoption, rather than introduce new ones, legislative bodies are unlikely to relax regulations driving automakers to develop EVs. This unyielding progress will ensure the technology eventually reaches a critical mass of adoption and becomes increasingly attractive to consumers who see and interact with EVs more frequently. The journey to adoption may look considerably different thanks to COVID-19, but so long as regulators stay their course, the outcome is likely the same.
To learn more about our research on the impact of COVID-19 on the automotive and mobility industry or to speak to one of our experts on how we can help you navigate this disruption, click the button below to send us a note.