Electric vehicles in the market
Literature Review
There have been numerous attempts by the government to encourage the adoption of plug-in electric cars to reduce the dependence on oil and improve the quality of air. In line with these efforts, the global sales have been on the rise every year from just a few hundred in 2010 to a cumulative value of 1 million cars in September 2015 (Jin & Slowik, 2017). According to a survey carried out by the Consumer Federation of America (CFA) in 2016, there is a growing interest in electric cars among potential consumers and the general public. Additionally, there is a wide variety of these cars to meet the different tastes of the consumers, while at the same time, the prices are decreasing. These are the necessary factors for the widespread purchases of this brand of cars.
Similarly, the adoption rates of pure electric cars are higher than that of the hybrid vehicles in the years of their introduction. The US government, through the American Clean Energy and Security Act of 2009, encouraged their purchase of PEV by offering tax credits. According to the policy, the buyers of new brands of these cars could benefit from up to $7500 in tax credits. Both federal and state governments have been at the forefront in encouraging the purchase of these cars through tax credits, rebates, and discounted taxes, among others. These concessions are meant to cushion the buyers from the cost of purchases as well as the installation of necessary facilities to service the cars.
From the studies, it is evident that the adoption of PEV is increased when multiple policy actions are taken towards the achievement of the set goal. PEV- appropriate infrastructure investment, regulations, cost reductions, and other non-monetary benefits need to be presented to the potential clients to encourage their purchase decisions. Massive awareness campaigns in which the merits of the cars, the benefits, and infrastructure availability can help to enhance the appreciation of these brands of vehicles. Cities that have a high adoption of PEVs have a great combination of these essential factors.
According to Lutsey (2015), the high initial cost associated with purchasing PEV is the biggest hindrance to their acquisition. Therefore, incentives such as tax credits and rebates should be aimed at making the initial cost cheaper; such offers should also be made available to those who lease the cars. Consumers prefer discounts that are immediate compared to tax credits, which are sometimes uncertain and depend on the buyers’ tax liability compared to immediately available rebates. The other essential support factors for PEV are institutional-based factors such as exemptions from emission testing and policies on low-carbon fuel.
PEV charging infrastructure is a significant determinant of its adoption. Even with purchase incentives, potential customers are never motivated to make purchases without the necessary public and private charging installations in place. A case in point is Denmark, where there are significant financial incentives for the investment of PEVs, but with limited charging infrastructure, the adoption rates have been low. The other important factor is customer awareness of the particular places where these charging infrastructures are located.
Further, the availability of multiple PEV models is also a determinant of the rate of adoption (Lutsey, 2015). According to the study that focused on Denver, Colorado, the city had a relatively fewer variety of PEV compared to the other cities that were involved in the research. It also had fewer charging points per capita compared to the other regions involved in the study. Consequently, even though the state had significant financial incentives for the purchase of electric cars, it had a meager adoption rate even compared to the national average.
Even though several studies have not considered socio-economic factors in the analysis, a survey by Narassimhan and Johnson (2014) considered this parameter in the adoption of electric cars. Accordingly, this study found out that a percentage increase in gasoline prices led to increased demand for PHEV and BEV. Additionally, the research also shows that higher-income households are more likely to go for PEVS than low-income families. More average-income households will more easily access electric vehicles as they become available in the used-vehicle market.
As important as financial incentives are in the purchase of electric cars, studies have shown that they have little or no impact at all in the purchase of luxury electric car models. The survey which considered Tesla Model S and Model X determined no effect of financial incentives in the procurement of these luxury brands. Similarly, high net worth households easily purchases expensive internal combustion cars at the expense of PEVs.
Consumer awareness is the other important factor in the adoption of electric cars. The various stakeholders, including federal and state governments, car manufacturers and dealers, have taken several steps towards making the general public aware of the potential benefits of owning electric cars compared to the internal combustion engines. These have taken place through public events, workshops, print and online forums, car-sharing services, and public demonstration of technologies behind these cars. The National Drive Electric Week, which is organized by various NGOs and takes place annually in the US is one such event that enhances EV awareness nationally. The EV drivers and advocates organize events nationally which include consumer ride and drives, sight-seeing in electric buses, electric bikes and panels involving industry experts among others. These activities las a whole week and is very effective in enhancing awareness on the industry. There are also plans to introduce car rentals, car-sharing and service centers that enable the importation of EVs without going through cumbersome custom procedures. Other major cities in the world such as Shanghai and Tokyo have similar public events to increase the adoption of electric cars. These are necessary because the general public generally lacks sufficient information about the benefits, features and incentives available to enable the purchase of these cars.
Consumer education is imperative in overcoming the generally low information about electric cars. For example, less than half of US consumers can name a specific electric vehicle make and brand according to a survey. Many more are unable to mention any incentive offered for the purchase of this brand of cars. Some other surveys have determined that most people do not have an understanding of the basic characteristics of plug-in-electric vehicles. The study by Krause et al. (2013) determined that most of the surveyed respondents were misinformed about the basic characteristics of an electric car.
Further, according to the study about 95% of those who were surveyed are ignorant of the various policies put in place by the state and the federal government regarding electric cars. Other areas of misperceptions regarding electric cars include the fuel and maintenance costs of an electric car. Consumers who are more knowledgeable about electric cars and their benefits tend to be more inclined to purchase them. Another study conducted by the Consumer Federation of America (CFA) also corroborated these findings. It found that the knowledge of EV is positively correlated with positive attitude towards technology. The more they understand about the cars, the more the desire to purchase them.
Additionally, persons who have had an experience in driving electric cars tend to have positive attitude towards them and greater preferences. As such, the consumer awareness campaigns are necessary and effective for greater uptake of electric cars. Participants in a test drive are also very easily inclined to purchase electric cars. Those that are more knowledgeable about e-mobility tend are even willing to pay premium for the technology.
A study by Bailey et al. (2015) investigated the correlation between awareness of a public charging place and the interest in electric vehicles. In the study which took place in Canada, the investigators sought to determine whether or not the availability of public chargers can influence the public to demand plug-in-electric vehicles. The study found that there is no significant relationship between the perceived existence of a single charging station and the interest in electric cars. However, the study determined that there is a significant relationship between the existence of multiple charging points and the interest in the cars. The implication is that multiple charging points available in a given locality can influence their attitude towards the purchase of these cars.
A study by Bunce et al. (2014) sought to determine the willingness of drivers to adopt electric cars. The perceptions and attitudes of the drivers were measured before and after a three-month trial of electric cars. The study sought to determine whether or not the actual experience with an electric car changed their perception towards these cars. The study found that before the three-month trial, only 51% of them were willing to pay premium for a vehicle that used environmentally responsible technology. However, after their driving experience, the trials, 74% of them were willing to purchase the cars. The study also found out that advertising is more effective by mentioning the upfront savings rather than the long-term savings in terms of fuel and maintenance among others. Furthermore, advertising is more impactful if it is targeted at the progressive and environment-conscious segment of the population as opposed to the general audience. The study denotes the importance of public awareness; more people are willing to adopt these cars if they are exposed to them. By word of mouth and other channels, the conversions can bring in more referrals.
A surveys to determine the relative consumer experience between the users of traditional cars and the buyers of PEVs was conducted in California. The study which was conducted in 2014 interviewed dealers and automakers based on their internal customer satisfaction surveys. The surveys indicated that the consumer experience with internal combustion engines was better compared to the users of the electric cars. In line with these findings, it can be helpful to educate the dealers in new ways to engage the consumers to improve their experience. Similarly, different rating scales need to be used for the electric cars when determining the consumer experience to yield different outcomes possibly.
A study conducted by Egbue and Long (2012) in the United States sought to determine the consumer attitudes and perceptions of the electric cars. The major factor that the study found out were uncertainties about the battery technology and sustainability of the sources of fuel. These were determined to be the biggest hindrances towards the adoption of the cars. These perceptions could be rooted in the lack of proper understanding and familiarity with the technologies.
Increasing customer awareness is key to the increased uptake of electric vehicles. Some of the important areas of information include the general information, cost comparison with other brands of cars, public charger availability, incentives available and the varieties in the market. The advent of internet has made it easy to make some of these information available to the public through online forums such as websites and mobile applications among others. Location and public availability of charging spots can be made easily available through mobile applications and maps which are updated in real-time with the most recent information.
Public events such as ride and drives are also important in drawing the media attention to these cars. The hype that goes with these events arouse the interest, lead to trials and possible purchase decisions. An example of such an event is California Experience Electric campaign which was done in 2016. The publicity is necessary for increased acceptance of these cars. The Clean Cities project is also the other significant program in which more than a hundred organizations come together to enhance the environment of their cities through the reduced use of petroleum and petroleum products. The program enables funding to various local projects one of which is the development of electric vehicle readiness among the selected communities. Efforts to incorporate electric vehicles into fleets is also another effective measure to increase the uptake of electric cars. Incorporation into public and government fleets increase their exposure to prospective owners. Car-sharing and rental companies have made efforts to electrify their fleets to give the e-mobility experience to those that are interested in it. These companies become more appealing to the environment-conscious clients; they do this with or without the government support.
The right messaging and marketing of electric vehicles as an emerging technology is critical in enhancing its acceptance in different markets. Correct messaging on the right platforms is necessary because the electric car technology has not gone beyond the innovator and early adopter stages in many markets. Social media platforms such as Twitter, Pinterest and Instagram are effective in reaching out to younger drivers and segments of the population.
It is imperative to integrate electric vehicle technology in the tertiary education curriculum as a means to diffuse the technology and make it more accepted. Universities and colleges are offering dedicated degrees and certificates in related technology. For example, Sunderland University offers both degree and certificate courses in electric-vehicle technology, in addition, there is extensive research in this field for future industry leaders in the area of electric vehicles.
Awards and recognitions offered to individuals, organizations and businesses that enable the advancement of electric mobility is important. For example, environmental leadership awards have been put in place whereby points can be earned for installing electric chargers in given buildings and even offering preferential parking positions for electric cars. Similarly, critical activities by dealers related to electric cars continue to receive the necessary attention because they are important in the process of marketing the cars. These programs are critical for the purpose of educating and engaging the dealers and their salesforce to support the sales of these cars. Governments also need to cultivate relationships with dealers, conduct workshops, trainings and offer awards and recognitions to the players in the industry where this is necessary. Car dealers play a critical role in passing the right information to the consumers. Good customer experiences with the dealers while purchasing can help to imbue them with positive attitudes towards the cars. In same vein, it is also important to associate electric car promotions with target tourist destinations to reinforce the aspect of enjoyable driving experiences. A good example is South Korea’s Jeju Island. The leadership of the tourist destination has made a decision to go all-electric by the year 2030 and it is increasing its fleet of EV as well as installing the necessary infrastructure such as charging points (Tweed, 2014). The Oregon Tourism Commission has also decided to facilitate the rental of electric cars in this manner.
Overall, numerous challenges are facing the adoption of electric vehicles in the market. Governments and business organizations have devised several strategies to address these problems. They are variously yielding fruits going by the increased purchases of these cars and heightened awareness on aspects of electric cars include brand names, varieties and government policies regarding the industry. Public awareness need to be increased to achieve better outcomes in terms of adoption of the EV technology.