Podcast transcript: How environmental concern became the top driver for purchasing an EV

11 min approx | 18 August 2021

Announcer

Welcome to the EY Advanced Manufacturing and Mobility Business Minute podcast series, where EY professionals explore the critical business issues impacting our industry today.

Moderator

Here with us for this episode of the Business Minute is Gaurav Batra, EY Global AM&M Analyst Team Leader.

Today’s topic is on the newly released findings of EY Mobility Lens Consumer Index (MCI) wave 2 research.

So, let’s get started. Gaurav, thanks for joining us today to share your insights on what are some very interesting findings from the EY Mobility Consumer Index research.

Gaurav Batra

Thank you for having me.

Moderator

So, let’s start with the basics – what is the EY Mobility Lens Consumer Index and what is the purpose of the research?

Batra

The genesis of the research started last summer, and it was driven by our interest to get a better understanding of the impact of COVID-19 pandemic on the mobility sector. Anecdotally, within the personal mobility space, we were seeing a shift both in the type of travel that was being undertaken and also the modal choices. We also witnessed how the car-buying behaviors were also being altered amidst the pandemic. So, last September we conducted the first iteration of the Mobility Lens Consumer Index, focused on the changing travel patterns and preferences, and essentially centered around the rise of working from home, reduced time on entertainment and socializing, and an increasingly digital consumer behavior. We had surveyed more than 3,300 consumers across 9 countries in that exercise.

So, our research confirmed that dramatic changes to consumer’s attitudes and behaviors toward mobility had actually taken place as a result of COVID-19 pandemic. Interestingly, we saw the overall number of journeys drop by 49%, with work travel showing the biggest decline at 61%, which was followed by leisure and entertainment, and household and social travel.

When it comes to modes, understandably the usage of taxi and public transport witnessed the biggest drops across travel categories, while journeys made by personal vehicles and micromobility were the least impacted, quite understandably.

And finally, we saw some indications of increased car-buying activity. In fact, the survey results had also provided some early signs of transitioning toward a greener car choice as about 30% of both car owners and non-car owners stated they would prefer to make a non-ICE purchase.

And as the world began to emerge from the pandemic, using the Wave 1 research as a guide, we decided to follow up and conduct a wave 2 consumer research survey this spring. In the Wave 2 research, we looked at what changes that happened in mobility and which of them were likely to become a lasting trend. For example, we looked at how had the journey patterns and modal choices changed? How has the vehicle buying experience changed? And what is the outlook toward car buying and the transition toward electric mobility in the post-COVID-19 world?

The second survey was based on around 9,000 consumers across 13 markets and these would include Australia, Canada, China, Germany, India, Italy, Japan, New Zealand, Singapore, South Korea, Sweden, the UK and the US. The Mobility Consumer index would also assess consumers’ car buying journey while offering insights around their attitudes toward mobility choices and sustainability. 

Moderator

So, let’s discuss some of the key findings; what stood out is that there seems to be an increased demand for purchasing new vehicles, especially EVs. What did the findings reveal? 

Batra

Interestingly, we found that 50% of those surveyed stated that they expect to buy a car, and this was up 17 percentage points from the September findings, with about 65% of them saying that they would buy one in the next 12 months.  

Then, around 41% of those looking to buy a car next year indicated that they are looking to buy an EV, which was an increase of 11 percentage points from the previous survey. Interestingly, we also noticed that for the first time, environmental concerns topped the reasons for considering an EV across all age groups. In fact, 53% of those looking to buy an EV feel that it is their responsibility to reduce the environmental impact, and 54% feel that buying an EV is one of the ways to achieve it. What was also surprising for us was that around 66% of consumers said that they were willing to pay a premium for an EV, increasing to about 91% among those who are looking to buy an EV as their next car. 

Moderator

Interesting, the pandemic has moved environmental concerns to the top of mind for consumers along with an increased demand for EVs. So, can we expect an EV boom? 

Batra

Yes, I think the pandemic has crystallized the attitudes toward the environment. Overall levels of concern have risen. We have about 78% of potential non-ICE car buyers who said that COVID-19 pandemic has heightened their level of environmental awareness, and crucially, these concerns are now reflected in their intentions to purchase more sustainable vehicles.

So, this essentially represents a breakthrough moment in consumer attitudes that could accelerate demand for EVs and the alternate powertrain vehicles — previously, many consumers expressed generalized concerns over sustainability, but those concerns did not necessarily translate into actions when it came to buying their next car.

Moderator

You mentioned one of the goals of the wave 2 study was to better understand changes to mobility choices. Now that we’re emerging fron the pandemic, what changes are sticking and which trends are you seeing returning back to pre-COVID-19 levels?

Batra

There has been a bounce-back in patterns of mobility from the first pandemic wave last year, but it is an uneven one. So, across the globe, non-work-related travel is set to recover more than work travel, quite understandbly. The number of non-work journeys that consumers intend to take in the future — for leisure, shopping, or visiting family and friends — is almost back at the pre-pandemic levels. Work travel intentions, however, remain in the slow lane, down by about 14% across the board on the same basis.

Working from home has become the norm for millions of reformed commuters across the world during the pandemic, and the survey suggests it is here to stay.

People intend to take fewer work-related journeys, but the ones they will take are longer in duration. Average future weekly travel time is up slightly from 9.0 hours to 9.2 hours. With less time spent in the workplace, some people may have chosen to move further out of town and accept an infrequent journey to work in exchange for lifestyle benefits such as more living space.

With the number of journeys taken across the board expected to decline compared with pre-COVID-19 levels, public transport remains the biggest loser when it comes to modal choice, down by about 11%. While the car in various forms is the clear winner. 

Moderator

What’s the future of shared mobility and public transport? The MCI survey shows a strong preference toward individual car uses?

Batra

I think the car is getting cemented as the safest and most convenient mode of choice even as the immediate pandemic risk declines in many countries. Public transport loses out to the car as expected, despite widespread government efforts to get people walking and cycling more — we’ve seen many new bike lanes created in cities such as New York, London and Paris during the pandemic — people’s stated intention is to use their cars more than they did pre-COVID-19 pandemic and to walk and cycle less.

For our cities, a lot depends on whether, and how quickly, people will lose their fear of public transport and are willing once again to board buses, trams, trains and subway networks. A permanent decline in the popularity of public transport would be a major headache for city planners everywhere.

Moderator

The pandemic certainly changed the car buying experience particularly the digital experience when it comes to the car shopping and buying experience. Will consumers looking to switch to EVs want a new buying experience and not just a new car?

Batra

The prospect of a boom in car sales, however — especially EVs — looks on the face of it to be a good news for OEMs and dealers. But the question then becomes, who wins the battle for the green consumer? Next-generation products entering the market will have greater range and other desirable benefits. Now, overcoming concerns over cost and range will be a challenge for OEMs and dealers. While the total cost of ownership already makes EVs look like a much better financial prospect than ICEs, but this will require some creative thinking from an industry that has spent years persuading consumers to buy new cars on the basis of low monthly lease payments.

So, we believe that the information gap extends beyond finance, as confusion over the challenges of charging and even the perceived performance of EVs shows. Both the industry and the government might be well advised to learn from the effectiveness of the vaccine-hesitancy programs during the pandemic and put more effort into EV education messaging that resonate to help reassure potential buyers that they are making a sensible — as well as a planet-positive — choice.

Moderator

Gaurav, thanks for joining us today and sharing your valuable insights with our audience, and we look forward to having you back soon.

Batra

Thank you for having me today. We have two more points of view in the works taking a closer look at the EVs and the automotive retail experience, and I look forward to being back on another future podcast to share those insights.

Announcer

Thanks for listening to today’s EY Advanced Manufacturing and Mobility Business Minute podcast. We hope you found it engaging and informative. To listen to other Business Minute podcasts, you can find them at ey.com/ammpodcasts.