March 24, 2021—The electric vehicle (EV) market seems to have a bright future. Competition among automakers is heating up as plans for new models designed to rival Tesla or the Mustang Mach-E are unveiled at a steady clip, and pockets of charging stations are slowly rolled out. Yet, present day consumers seem to have put their EV plans on pause.
According to Deloitte's 2021 Global Automotive Consumer Study, 74 percent of U.S. consumers are currently looking for a traditional internal combustion engine (ICE) in their next vehicle, while just 26 percent are considering alternative engine solutions—a figure that’s dropped 15 percent since last year, when 41 percent of U.S. consumers said they had been eyeing an EV as their next ride.
So, why exactly are U.S. consumers hesitating to invest in EVs and what could that mean for the emerging market down the road? In this interview, Ryan Robinson, Deloitte’s global director of automotive research, offered insight into the broader trends.
What are consumers’ top concerns when it comes to investing in ICE alternatives like EVs?
Obviously price is big when it comes to investing in anything and you’re facing financial uncertainty, but there were some factors in this study that really illustrated that point.
When we look at the data by age group, one thing that jumped out was the number of younger consumers in established markets like the U.S. that have requested a vehicle payment deferment. One in 10 Americans opted to defer their automotive payment in 2020, but that rises to 23 percent for consumers between the ages of 18 and 34, which is well above the range we’ve come to expect. Naturally, feeling the need for more financial flexibility when it comes to your current payments is going to impact your near-future spending as well.
We also found that of the U.S. consumers who intend to buy an EV as their next vehicle, 73 percent expect or hope to pay less than $50,000 for that vehicle.
Looking at the market, this is where we have to start making distinctions between the hype in the headlines for EVs and the reality facing consumers. There are a plethora of new EV options underway that could potentially sit at the intersection price-wise between ICEs and EVs, but right now there aren’t many options that fall in that price range allowing consumers to get in at that threshold.
So, right now a pivot away from alternatives like EVs is really a reaction to the affordability concerns that the pandemic has created, and the fact that we're still waiting for a lot of those new EV launches that could open things up to consumers still need to hit the market.