A global study by Tata Consultancy Services reveals that consumer enthusiasm for EVs is offset by … [+]
The road to the adoption of battery electric vehicles is a two-way street where the minds of consumers and manufacturers are set in different directions, according to a global study released this week by Tata Consultancy Services.
However, this study comes after sales of electric vehicles in the US increased in 2024 with other organizations predicting that the trend will continue this year.
The Tata study surveyed more than 1,300 people in 18 nations representing consumers, along with key related industries including EV manufacturers, charging infrastructure builders, EV fleet adopters and influencers such as policy makers, researchers, urban planners and advocacy groups. advocacy.
Consumers show enthusiasm for EVs
Consumers appeared to be more positive about EV adoption with 64% saying they were likely or very likely to consider purchasing an EV as their next vehicle.
This enthusiasm for electric vehicles is not consistent across countries, the study found. While 72% of American consumers said they would likely or very likely consider an EV as their next purchase, only 31% of Japanese consumers expressed the same intentions.
Panel presenting Tata Consulting Services’ global EV study at the Global Mobility Forum as part of … [+]
The authors of the study reveal the difference in the use of public transport. With a less developed public transportation system and anxiety easing, American consumers seem more eager to buy an EV.
In Japan, however, more than a quarter, 26%, said they rely more on public transport or ride-sharing than buying a new vehicle compared to just 4% in the US.
In the US in particular, despite the relative lack of public transportation, a key factor prevents many consumers from purchasing an EV, according to the study. Indeed, while a high percentage responded that they are “likely” to consider an EV, the reality is that they may not be able to afford one.
Anupam Singhal, president, Tata Consulting Services
“The reason is affordability. The study also said, up to 40,000, about 72% of people we talked to in the US, would go for an EV, but still, people see $70,000, $80,000, $100,000 and they say, hey, I can buy $70,000, $80,000 dollars BMW or some of the top luxury brands instead of having a bone of naked, EV, which is, like, without any blemishes,” Anupam Singhal, president of Tata Consultancy Services, said in an interview.
Indeed, the majority of consumers in the study, 56%, said they would be willing to pay up to $40,000 for an EV.
However, US electric vehicle sales continued to grow in 2024, rising 7.3% from 2023 to 1.3 million units, powered by “strong incentives from automakers, excellent lease deals and federal and state incentive programs.” , according to Cox Automotive.
In the top five states for electric vehicle sales, the numbers were even more dramatic, according to a study by consultants Urban Science, showing a 12.9% increase last year compared to 2023, representing a 9.1% share of the retail market.
The five states measured were California, Florida, Texas, New York and New Jersey.
Optimism tempered by producers
Despite the apparent positive momentum for electric vehicle sales, these results are offset by tempered optimism on the part of manufacturers, according to Tata’s study.
More than half, 54%, said they see demand for electric vehicles “cooling” with 26% expecting this trend to last beyond 24 months.
“The biggest pain point for manufacturers is the battery, both in range and charging speed,” Singhal explained. “90% of them said there should be innovation in battery range and charging speed.”
But EV makers had a number of other concerns when asked what factors are most likely to limit overall market demand and industry growth.
By far, charging infrastructure was the top concern with 74% citing the issue, followed by high production costs at 54%.
On that note, Singhal believes there will be a consolidation among EV charging companies making their stations compatible with every brand of EV. While many automakers are offering adapters for their electric vehicles to use Tesla Superchargers that are considered faster and more reliable, a separate standard still exists.
Singhal’s views are informed by a consensus among survey respondents in the electric vehicle charging industry, of whom 72% said they think significant consolidation is likely or very likely.
The top three reasons cited for that expected consolidation were economic viability, ability to scale, and high profitability or return on investment.
One study participant admits that the march to an EV transition is coming, but not without pain.
Bumpy road ahead
“We believe the electrification journey will be more difficult than we originally anticipated,” said Earl Newsome, global chief information officer at diesel and alternative fuel engine company Cummins Inc., during a presentation of the study at the Global Forum Last week’s Mobility. during the Detroit Auto Show. “It will take longer than originally anticipated. Then there will be a real and significant need for transition technologies to move us from a fossil-based fuel system to a carbon-free fuel system and mobility platform.”
However, optimism abounds, as noted in the Cox Automotive Forecast, which predicted, “With more than 15 new products scheduled to enter the market, improving charging infrastructure and ongoing support (ie, generous incentives) from automakers, EV sales are likely to account for close to 10% of total sales this year.”
Indeed, despite the bumpy road to EV adoption, MS Krishnan, professor and faculty director, Ross School of Business, University of Michigan stated during the presentation of the Tata study, “You may have some bumps, but it’s coming. It’s coming fast.”
