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The top 7 reasons Electric vehicles are not selling as quickly as hoped

The top 7 reasons Electric vehicles are not selling as quickly as hoped

1.      Apathy/Indifference: People simply don’t care or are not looking at the pros or cons of an electric vehicle. After all the purchase price and range restrictions are irrelevant if you don’t care. It will of course change at some point, that the way emerging markets work, you have the early adopters, the tipping point, and the early majority. When this happens though no one knows for sure.

2.      Misinformation: I talk to people on a daily basis who don’t get electric vehicles, they think they take hours to charge rather than minutes they think they are small, terrible to drive and second only to Noddy’s car. The sources of this misinformation are varied but it does not do the industry any favours. There are of course a small army of us changing these preconceptions but it takes time and some people won’t listen (see point 1)

3.      The manufacturers and the dealer groups (not all of them of course): Many automotive manufacturers have been making vehicles with Internal Combustion Engines (ICE) for nearly 100 years and they have become pretty good at it. The dealerships that sell their product have had long and fruitful relationship selling these same vehicles and they too have become pretty good at it. For many the change is as welcome as a fart in lift and it’s much easier to carry on doing what you do well than going off on a tangent. In other words, it’s often easier to make and sell an ICE vehicle than the electric equivalent.

4.      The governments: The global governments are all over the place when it comes to EV. They give out often vast amounts of money to support one part of an industry while other parts of the same government have policies that contradict those efforts. In the UK for example, we have organisations like OLEV doing a cracking job to support the industry and helping support home charging and vehicle purchases with subsidies and grants, while at the same time HMRC launch policies create confusion around simple areas such as a mileage rate and company car tax. The UK government could make a monumental change overnight if HMRC quickly got its act together on mileage rates and company car taxation. This subject is an article in itself, watch this space.

5.      Range: plain and simple, for some people the driving range of the current stock of EV’s is perfect especially if as part of a two-car family. For others, however, it’s just not practical for every day usage. Also, see misinformation about range.

6.      Price: For me, this is right down the list but then I understand that the purchase price of a vehicle is just a small part of the overall picture. Buyers should actually consider the whole life cost of running the car i.e. the purchase price, minus the future residual value plus the running costs and any taxation. When compared with many similar ICE vehicles the WLC of an electric is often very favourable. The problem is most consumers don’t consider WLC they look at the purchase price and see its 20% higher and look elsewhere.

7.      The finance companies: The funders and leasing companies who underwrite the monthly payments on a new EV are in the business of risk. IE they want to earn money from funding a depreciating asset with as little risk as possible. When they work out the funding rate they look at the purchase price and the look at a future sales price in say 36 months and 60k miles and work out the level of depreciation, then chuck on some interest and an admin fee. The art in this game is working out the future value, you want it to be high enough that your pricing is keen compared to your competition, but low enough to reduce any risk if the market shifts. Right now there are no 4-year-old Tesla Model S with 60,000 miles so it’s difficult to know with absolute certainty the future sale value of a car purchased today, so the finance companies hedge their bets and go in low until they have some historic data to work from. Right now none of them mind as they are all doing the same hence the finance costs seem high compared to similar ICE vehicles.

I know this is not an exhaustive list, it’s not supposed to be, but please feel free to add in your ideas in the comments.

Thanks for reading.

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About the Author

Alex Baker

“The reasonable man adapts himself to the conditions that surround him… The unreasonable man adapts surrounding conditions to himself… All progress depends on the unreasonable man.”

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