Most American car buyers unwilling to pay up for electric vehicle

Buyers are interested in electro mobility (eMobility), but aren’t willing to pay for it, according to consulting firm Simon-Kucher & Partners. The company’s US Automotive Study 2020 polled more than 1,100 Americans who bought, leased, or financed a car.

The study found that 41% of Americans would consider a hybrid vehicle for their next car purchase. However, fully electric vehicles (EVs) were much less popular, with only 17% saying they would consider one for their next purchase.

“While there is an appetite for more environmentally-friendly vehicles, we still see that only a small portion of American consumers express a willingness to pay more for environmentally-friendly options,” said Matthias Riemer, director at Simon-Kucher. “The study shows that only 45 percent of current buyers of hybrids or electric engines are willing to pay more for these features. This means that eMobility penetration is still heavily dependent on government subsidies.”

Government policy and incentives are obviously a key lever to increase EV uptake, by either subsidizing EVs, increasing taxes on gas and internal-combustion-engine vehicles, or both. California has long offered strong financial incentives on EVs, and consumers in the state account for nearly half of EV purchases in the country.

Price is the most important purchase criteria for EV-considerers. According to the study, price determines 35% of the purchase decision, followed by travel range at 16%.

Car buyers outside the luxury segment are very price sensitive, so a median EV price of $55,600 (according to Cox Automotive) makes it unpalatable/unaffordable for many Americans.

“There is a wide disparity in the willingness to pay for EVs among customers. In the near term, the best strategy for profitable EV growth remains to ‘skim the market’ by offering well-equipped cars to well-off enthusiasts,” said Riemer.

Outside price, charging infrastructure and range are big obstacles. The report found that nearly 70% of consumer concerns outside of pricing are related to charging infrastructure, range, charging speed, and performance.

“All of these concerns can be addressed in the upcoming years, and they have to be if EVs are supposed to become fit for the mass-market,” said Peter Harms, partner at Simon-Kucher.