This is not about electric vehicle demand. Every EV produced of any brand will be sold for many years to come. There are fluctuations between brands, but none of the manufacturers will go broke because of lack of demand.
Profits Matter Most
In my opinion, the only reason any vehicle manufacturer would go bankrupt is due to lack of profit per vehicle produced. This poses a very serious problem for those enjoying reasonable profits from gas-powered vehicles up till now while transitioning to electric-powered vehicles from now on. Those who have only ever manufactured EVs, with a healthy profit, will have less of a problem.
It seems obvious at this point that the whole auto industry is pivoting to EVs in the short term. Short term being less than a decade in my opinion. When all cars sold are electric, only then will demand per brand again be interesting, and crucial. However, some of the numbers below also hint at when the ICE vehicle demand will fall off a cliff.
Sentiment Matter Less
Nevertheless, sentiments about quality and brand loyalty are much more fun than cold operating margin numbers, so that’s what we will look at here. And while Tesla may be leading the pack in sheer production and margins, it still has work to do in the customer satisfaction department, at least in Denmark — for now. I touched on this a while back, and Tesla still does not seem to care much. I wonder why?
Scandinavian Autoindex
Loyalty Group International conducts a survey in Scandinavia on brand sentiments each year. It is called Autoindex. The Danish Motorist Association (FDM) has gone through the details that touch on user opinions regarding EVs in particular. The Danish portion of the survey is based on 22,000 car owners’ answers. (The survey totals 52,000 for Scandinavia.) This is my selection of what the FDM report says the Danes think:
What is the reason for not buying an EV?
These answers are from car owners who have stated their next car will not be an EV. More answers than one was allowed.
67.6% — Not enough range.
52.0% — Not enough charging options.
46.7% — Too complicated (charging hassle, range anxiety, etc.).
45.3% — Charging takes too long.
28.5% — Price too high.
14.9% — No models suit my needs.
4.9% — Delivery times are too long.
2.4% — My favorite brand has no EV options.
1.9% — EVs have poor handling.
Well, right off the bat, this is very interesting. It’s obvious that trying a new technology as opposed to just reading about it will change these sentiments. Not enough range? Yes, I remember that. What is the golden range limit? Let me know in the comments below.
Owners of EVs are the least satisfied car owners!
Owners asses their satisfaction on a scale of 1 to 7. Answers are recalculated to an index scale of 1,000 points.
Hybrid: 891 points
Plug-in hybrid: 864 points
Diesel: 857 points
Gasoline: 851 points
Electric: 839 points
This one surprised me. But there might be a first-mover bias here. After all, the pure EV market share is still so low that it makes for a proportionally skewed experience to the negative side. Personally, I might have been more forgiving, mostly, but the average car owner’s expectations are probably quite high. I kind of get the hybrids winning here, because you have sort of an EV experience but without any “charging hassle.” Still, I do believe any kind of hybrid is a stepping stone to pure EV. What do you think?
The most satisfied EV owners
Autoindex totals 23 brands, but since not all brands offer EV models, only the brands with enough statistical answers are included here. The same index scale as before is used.
BMW: 916 points
Hyundai: 899 points
Skoda: 896 points
Kia: 894 points
Audi: 893 points
Mercedes-Benz: 893 points
Tesla: 885 points
VW: 852
Now, before any of my fellow Tesla owners get all wound up here, let’s remember this is Europe, swamped with German-built cars, and even though Tesla builds its Model Y in Berlin now, it remains a fact that high build quality is a proud tradition among the legacy brands. But again, is prioritizing door slam sounds and leather stitchings not a risky proposition when the whole industry is turning on its head? Is the crucial strategy not trying to bring costs down focusing on motors, batteries, thermal management, and extreme efficiency?
If scale and profits will determine who will win and who will lose the EV game, are you not obliged to laser focus on innovation as a manufacturer? Does the story of a certain Model T ring a bell? I’m curious, would you rather have your favorite brand compete head on in terms of scale, or on quality? I love good build quality, and even the Škodas not built in Germany I’ve tried seem rock solid compared to my 2019 Model 3, which is not at all bad, but granted, it’s no German premium. It will be very interesting to see who is even on this list at the end of the decade. And what’s up with Mercedes-Benz? How did it end up below the Koreans?
Oh, and just to be crystal clear here: I believe that in order to maximize margins, and thus maximize pricing power (aka not go bankrupt in a ruthless innovation paradigm shift), manufacturers should aim for sufficient non-structural build quality (interior materials, paint, panel fit, etc.) and superior structural build quality (crashworthiness, body-in-white, motors, batteries, electronics, software, etc.). Shout-out to Sandy Munro and his associates’ very informative teardowns in this regard.
Why would you choose to buy an EV?
Answers are from car owners who have stated their next car will be an EV. More answers than one was allowed.
62.0% — For the sake of the environment.
52.3% — The option to charge at home.
49.1% — Less noise.
44.7% — Fits my driving needs.
26.0% — Has good handling.
25.3% — Fits my green mindset.
19.8% — I already drive an EV.
16.6% — Compelling price.
6.9% — Other reasons.
I won’t pretend I don’t like gas cars. I collect classic gas guzzlers. So, I often find myself in crowds at meetups where even the mention of EVs is a sin. I try whole heartedly to provide rational arguments in favor of EVs to hardcore motorheads in line with statements like “EVs are great for daily commute, while the old classics are great as a hobby,” and this healthy exercise has made me realize that if you really want to use the environment argument, you should just ride your bicycle instead — and only if that’s not possible, drive an EV. What I’m trying to say is to be careful, or rather, tactful, when talking about “saving the environment.” Make sure you have your numbers in order, and think on a global scale. In my experience, this is very difficult in the heat of the moment.
When will an EV be a realistic alternative for you?
These answers are from car owners who have stated their immediate next car will not be an EV.
1.7% — Within 1 year.
4.4% — In 1 to 2 years.
30.1% — In 3 to 5 years.
34.2% — More than 5 years from now.
10.4% — Never.
19.2% — Not sure.
This is really interesting, and legacy automakers should pay very close attention to this. If we assume that the “More than 5 years from now” answer is also a “No more than 10 years from now” sentiment and that just half of the “Not sure” crowd ends up buying an EV, we could be looking at 80% of the customer base buying EVs within 10 years. This is what disruption looks like.
And what will you be willing to pay for an EV?
10% are willing to pay up to 30% more for an EV compared to an ICEV.
20% are willing pay up to 15% more for an EV compared to an ICEV.
45% will only buy at price parity.
14% will only buy an EV if it’s cheaper than a comparable ICEV.
Considering price parity will probably be within reach next year or the year after, 75% of buyers are soon to be in the EV market. That’s insane. The market will simply not be able to keep up. Many will be forced to wait a long time for their EV, and how many of them will buy a new ICE vehicle in the meantime, as opposed to just driving their current cars into the ground? I believe the term is “Valley of death.” Please give your thoughts in the comment section, but remember, these are Danish car owners, and even though EV sales are exploding, we are far from the EV-dominant situation of our neighbouring country Norway.
By the way, the survey reveals that 47% of Danish car owners think EVs are cleaner than ICEV, and 29% do not….
Getting warmer. My 2019 Model 3 RWD at 75,000 miles, 40 cents/mile TCO. The EV market is heating up, and even though Tesla may not hit the first spot in the Autoindex satisfaction survey, it certainly has a head start in the disruptive EV market. Photo by Jesper Berggreen.
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