Back to podcast

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 Advanced Manufacturing and Mobility Business Minute, are Gaurav Batra, EY Global Advanced Manufacturing and Mobility Lead Analyst, and Menaka Samant, EY Global Advanced Manufacturing and Mobility Analyst. Today's topic is around the newly released findings of the 2023 EY Mobility Lens Consumer Index, otherwise known as MCI. Gaurav and Menaka, thanks for joining us today.

Gaurav Batra

Thank you for having us, Ed.

Moderator

Gaurav, let's start with some background for the audience. What is the Mobility Consumer Index?

Batra

The MCI is our annual study that looks to understand the shifts in travel patterns and mobility mix. It also looks to assess the car-buying intent and analyze the pace of shift toward the adoption of electric vehicles (EVs). And in some sense, the MCI also looks to assess the consumer's car-buying journey process.

The survey has consistently offered valuable insights into consumer attitudes and behaviors toward mobility travel, and also around model choices and EVs over the last four years. So, the latest iteration of our research survey has expanded to include 20 countries, with over 15,000 consumers surveyed across Americas, Europe and Asia-Pacific.

For this year’s study, we’ve also added a new wrinkle. We conducted a consumer segmentation analysis, where we looked to map the consumer's mindset toward EV acceptance and adoption.

Moderator

Great. Well, let's dig into what the study uncovered. Let's start with the current trends around EV. What were some of the headline findings that emerged from the mobility consumer research around consumer thinking about EVs?

Batra

There were several broad themes that emerged from the latest study. When we look at the overall trend, more than half, so about 55%, of those intending to buy a car globally plan to purchase a fully electric, hybrid or a plug-in hybrid vehicle over the next two years. Our latest study also shows that consumer confidence in EVs has increased significantly.

With EV-buying intention rising across several markets, and these include the US, which grew about 19% from the previous year, followed by Sweden up by 12% and Japan up by 11%, as the countries that witnessed the most significant rise.

Given all the geopolitical developments, we also saw high fuel costs emerge as the top motivator, driving consumers toward purchasing an EV, with 38% respondents calling that as the most significant factor. And this was followed by environmental concerns and increasing penalties on internal combustion engine (ICE) vehicles.

In a while, worries about upfront purchase costs have diminished, as more affordable models have become available. Approximately 31% respondents said that the lack of charging stations is their biggest concern, when considering or choosing any EV. Interestingly, around 88% of respondents indicated their willingness to pay a premium for EVs and this compares with about 80% in 2022.

Some of the other findings include that SUVs emerged as the most preferred body type for potential EV buyers across geographies and that's not a surprise, commanding a share of 43% from the respondents.

Overall, we feel we may have reached a tipping point regarding winning the consumer over to at least consider an EV for the next vehicle.

Moderator

Gaurav, you mentioned earlier that part of the EY analysis included a new wrinkle around consumer segmentation analysis that mapped the consumer's mindset toward EVs’ acceptance and adoption. What can you tell us about this analysis?

Batra

We thought it was important to look beyond just the numbers and dig into what the current consumer mindset is, with respect to EVs. Through this year's analysis, we identified five consumer personas. These include the Enthusiasts, Considerers, Persuadables, Reluctants and the Skeptics.

Now, these names are self-explanatory, and you can view them as a spectrum, with the Enthusiasts as the evangelists for EVs on one end and the Skeptics as the “never evers” on the other.

We shared our analysis and in-depth in our recently published report titled How mapping the evolving consumer mindset is key to EV mass market appeal. This is available on ey.com.

Moderator

Interesting. Menaka, what more can you tell us about these consumer persona groups?

Menaka Samant

Sure. As mentioned by Gaurav, our study found that consumer mindsets range across the spectrum of attitudes and traits, forming a bell curve, where on the one end, you have what you call the EV Skeptics and on the other end, you have the EV Enthusiast.

If I do a double click, these Skeptics comprise for about 11% of the consumers surveyed and the Enthusiasts make up for about 13%. In the middle of the bell curve, we have the other 76% of consumers, which are further divided into three segments, and which we have identified, moving from left to right on curve, as Reluctants, Persuadables and Considerers.

The two largest segments, Persuadables and Considerers, make up 57% of the survey participants. And our analysis indicates that these are two open to becoming more EV-minded and the most likely to buy an EV for their next car.

Moderator

So, the two largest persona segments, making up 57% of those surveyed, are open to the idea of an EV as their next vehicle. That sounds like great news for the original equipment manufacturers (OEMs).

Samant

Definitely. We think this is very positive news. However, there is some downside and caution in the report as well. Our analysis also suggests that there is a core group of conservative and risk-averse consumers, what we call the EV Skeptics, who make up 11% of the survey participants. So, their attitudes toward EVs are tied into the wider views of society and thus likely to prove harder to shift.

Actually, for this group, EVs are not even a consideration. Unfortunately, this group of Skeptics has grown, witnessing a 2% increase in size compared with the 2022 study. So, this is a sizable portion of potential car buyers who remain unconvinced of the benefits of EVs or their compatibility with some of their wider social and environmental views.

Moderator

So, Menaka, what's driving the hesitancy and doubt?

Samant

Unfortunately, there are some persistent concerns and questions about EVs, and not just with Skeptics and Reluctants consumer segments. So, range continues to be a major worry, reflecting both an innate preference for what they're used to and a lack of real-world experience of EV use.

We also see lack of charging infrastructure, upfront purchase costs, inadequate home and work charging stations, and also, concerns about expensive battery packs featured in the top five concerns with regards to EVs.

Moderator

So, despite these continuing challenges, the MCI report seems to strike an optimistic tone, as you view what you call the middle fertile ground made up of the Persuadables and Considerers, as representing a great opportunity for OEMs to convince consumers to move to an EV.

Samant

We do think there's a great opportunity in the middle group of consumers. As I said earlier, Persuadables and Considerers are the largest segments, accounting for 57% of the market between them. Our analysis indicates that Persuadables are open-minded and are willing to be talked into buying an EV, while Considerers are already actively weighing the pros and cons, and also researching their options.

We see consumers in both these segments value the environment. Environmental concerns are at the top of the list of reasons for Considerers to go electric. Around 37% of Considerers ranked it as the top motivator, while for Persuadables, it stands second at 28%. So, strong environmental message would be helpful with these segments.

Also, their attitudes toward EVs are strongly influenced by financial considerations, and while both these segments are attracted by the lower cost of ownership associated with EVs, they do put affordability first. The value proposition of EV is going to be an important aspect of the decision-making process.

So, bottom line, while neither group is fully committed to EVs, their attitudes and positions on environment and value make them inherently more open to influence.

Moderator

Gaurav, you mentioned earlier that we seem to be at a tipping point with consumers and EV. What is your message for OEMs and dealers looking to encourage more buyers into an EV?

Batra

In our report, we outlined three “no regret” moves that we believe will help convince consumers to move from one end of the EV mindset spectrum to the other.

Firstly, we need to continue to build awareness around EVs on the day-to-day practicality of an EV in really addressing concerns, such as usability, around reliability and comfort, which essentially holds back many consumers.

Ideally, raising awareness should include providing clear, accurate and impartial information about life within EV and its usage.

The second one would include around expanding access. The perception of high upfront purchase costs and potentially large battery replacement expenses make EVs seem like a high-risk choice to Skeptics, Reluctants and Persuadables.

OEMs and dealers can help address these concerns by offering greater certainty over the cost and affordability. I think, soon, we should also see alternate ownership models emerge. Things, such as subscription and swapping, that will allow access to anybody with reduced ownership constraints.

And finally, educating the customer on what to expect is really important. All five segments, to a greater or lesser extent, are uncertain as to what to expect from the life with an EV. Managing these expectations by providing transparent, realistic and granular information on the performance of all models is important. What kind of ranges and charging times can owners realistically expect to achieve and under what conditions?

I think all of these would be essential in nudging consumers in the right direction across the spectrum.

Moderator

Gaurav and Menaka, thanks for sharing these great insights into the consumer EV mindset. I look forward to having you back to share more insights about the Mobility Consumer Index in the near future.

Batra

Again, thank you so much for having us, Ed.

Samant

Thanks for having us today, Ed.

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.

Back to podcast