Nothing is more persuasive than consumer expectations for determining planning and investment. To help with that Pike Research conducted a web-based survey of 1,051 U.S. consumers in the fall of 2011 using a nationally representative and demographically balanced sample to consumer demand, preferences, and price sensitivity for plug-in electric vehicles (PEVs) and electric vehicle charging infrastructure.
With no great surprise, price sensitivity about buying a plug in type of vehicle remains a significant issue. Survey participants’ willingness to pay for a vehicle purchase is much lower than the prices currently planned by automakers. That’s a certain klaxon kind of wake up call. Electric vehicles would sell well and range is not the first concern, it’s the battery cost.
All is not lost, survey respondents indicated strong fundamental interest in PEVs, with 40% of participants stating that they would be “extremely” or “very” interested in a plug-in hybrid or all-electric vehicle with a range of 40 to 100 miles and an electricity cost equivalent of $0.75 per gallon. That price metric on energy is a strong indicator of the sensitivity of gasoline prices.
The Pike research isn’t some slap happy poll, the Pike Research price sensitivity analysis, utilizes the Van Westendorp Price Sensitivity Meter methodology, a widely-used market technique for determining consumer price preferences, introduced in 1976 by Dutch economist Peter van Westendorp. The Westendrop methodology indicates that for a traditional gasoline internal combustion engine vehicle that would ordinarily cost $20,000, the optimal price point for consumers of a comparable PEV would be $23,750, a significant price premium of 18.75%, meaning about a sixth more cash would come to the table.
That premium isn’t enough to buy today’s battery sets. The gap between actual pricing and consumer willingness to pay will be a problem for creating demand for PEVs.
There is still more education to do. A 500-gallon year gasoline buyer might have a better idea of value comparing an annual $1,750 fuel bill vs. a $375 charging bill. It would be better to compare $145.83 for gasoline each month vs. $31.25 to charge up, freeing $114.58 back to disposable income. $110 will usually buy more than a $3,750 upgrade.
The inside of the survey offers some curious details. Of the 1,051 respondents interviewed, 4% currently own or lease a hybrid, a figure higher than the current overall hybrid market share in the US. 81% of respondents stated that improved fuel efficiency would be an important factor when purchasing their next vehicle.
Pike noted that consumers under age 30 are somewhat more likely to demonstrate interest in PEVs, as are people with higher levels of education. But the level of interest in PEVs is not dramatically different between demographic segments such as age, gender, income, and level of education. That observation leads Pike to conclude that PEVs should have solid mass-market appeal.
Now for the shock. When asked which vehicle brands they would consider for an EV, respondents were most likely to choose Toyota (51%) and Ford (46%), two automakers that did not have PEVs on the market at the time of the survey. Chevrolet (42%) and Nissan (33%), the two manufacturers that launched models in North America in 2010, ranked fourth and fifth, respectively. Its not looking like advertising is getting the job done.
In the broader view when asked to choose between five different plugin hybrid EV and straight plug in EV range/price options, respondents did not state a clear preference for any one configuration. Of the choices offered, the electric-only model with a 100-mile range had the greatest number of respondents showing interest with 24%. Another 25% of respondents stated that they would not purchase any of the options provided.
Still with those 25 % not making a choice, 80% indicated that they would be “extremely” or “very” interested in upgrading to a residential “fast-charging” EV charging unit that would utilize the same amount of electricity but reduce charging times from 8 to 12 hours to 2 to 4 hours. It looks like people have thought this out.
Again the money comes up. The results also indicate that pricing is once again an issue with fast-charging equipment. Pike’s analysis suggests that the first generation of residential fast-charging equipment will cost between $500 and $800, but only 28% of panelists stated that they would be willing to pay $500 or more for this capability. The average price consumers were willing to pay was $408. $400 should buy an impressive battery charger, and people know it. Fast charge doesn’t look like an exploitable idea, it better be standard equipment.
Here’s a sound bit of insight to wind up. Those respondents likely to get in the market expressed strong interest in workplace, private, and public charging stations. The most popular choices for charging stations were the workplace (74%) and roadside charging stations (82%).
Pike does a great job of looking into things. While the pricing points for Pike studies are astronomical for regular folks, the press releases and interview tidbits are well worth the attention.
Electric vehicles have a good foundation for massive growth. A lot could be done to nurse them along, but in the end, it’s the price that will matter. That $3,750 noted might be a goal for a 400-mile range battery set. Get to anywhere close and your batteries could not be built fast enough.
That’s the gauntlet, who will get to pick it up first?