As initial EV buzz subsides, practicality becomes key for wider consumer adoption

A slowdown in EV momentum

After years of swift growth, the demand for EVs has begun to slow down. In 2023, the growth rate of battery electric vehicles (BEVs) dropped sharply, going from 65% in 2022 to just 32%. Early projections for 2024 show growth slowing even further to 9,6%, with a slight recovery to 15% expected by the end of the year. It’s clear that the market is now at a crossroads. According to EY, this change is largely due to a mix of economic challenges, shifting government incentives, and a range of practical issues that are now on the minds of consumers.

For years, EV sales were bolstered by significant government subsidies and tax breaks, which made the switch from traditional internal combustion engines (ICE) more appealing. However, as these incentives are being phased out or altered, many potential buyers have been left uncertain. The inconsistency in policies—like moving deadlines for ICE phase-outs—has also created hesitation, particularly for those who might have been ready to buy their first electric vehicle.

A changing consumer mindset

The shift in EV demand signals a change in the type of consumer showing interest. It’s no longer just the tech-savvy early adopters driving sales, but rather mainstream consumers who have different priorities. These consumers are more likely to weigh practical factors, like cost and convenience, over the excitement of owning a new type of technology.

EY’s survey found that 58% of people who plan to buy a car within the next year are considering an electric vehicle—whether it’s fully electric, a plug-in hybrid, or a traditional hybrid. This is up slightly from 55% last year, but it masks regional differences. In countries like China and France, interest in EVs has grown, while in places like the US, Canada, and Japan, interest has waned. This discrepancy often comes down to government support and infrastructure—where these elements are strong, consumer interest tends to be higher.

The key reasons consumers remain hesitant to buy EVs are quite clear:

1. High costs: Despite recent advances, many still see EVs as expensive. The upfront cost, paired with uncertainty around long-term expenses like battery replacement, remains a major barrier for widespread adoption.
2. Lack of charging infrastructure: A lack of convenient charging options is the biggest hurdle for many would-be EV buyers. While the early adopters might have been willing to adapt, mainstream buyers want charging that’s as convenient as filling up at a gas station.
3. Range anxiety and charging times: Concerns about how far an EV can travel on a single charge and the time it takes to recharge are still top of mind. Without reliable access to fast charging, the perceived inconvenience discourages many consumers.

Divergent regional trends

The report also highlights how regional differences are becoming more pronounced in the EV market. The intention to buy a fully electric vehicle has fallen significantly in the US, South Korea, and Austria, while it has risen in China, Singapore, and France. This divergence largely reflects the role of national policies and market conditions. For instance, China’s ongoing price war and robust incentives have made EVs more accessible, while enhanced public charging infrastructure in Singapore has similarly helped boost interest.

The data suggests that consumer attitudes are closely tied to the consistency of government policies. In China, where EV policies have remained stable and supportive, consumer enthusiasm is growing. Meanwhile, in markets where policies have fluctuated, such as the US, there is greater skepticism and reluctance.

Understanding consumer profiles: From enthusiasts to skeptics

The EY report categorises potential EV buyers into five key personas: Enthusiasts, Considerers, Persuadables, Reluctants, and Skeptics. These personas help illustrate the diverse range of attitudes toward EV adoption. While the Enthusiast segment—those most eager to adopt—is largely tapped out, the next wave of growth hinges on persuading the Considerers and Persuadables. These consumers are on the verge of making the switch but are held back by concerns over cost and convenience.

Interestingly, hybrids and plug-in hybrids have become a popular stepping stone for many who are not yet ready to commit to a fully electric vehicle. This trend reflects a desire for the benefits of electrification without some of the perceived downsides, like limited charging options or long charging times. For automakers, this presents an opportunity to ease customers into the technology while building their confidence in electric powertrains.

Strategies for reinvigorating EV demand

To regain momentum in EV adoption, EY offers several practical recommendations for automakers and dealers:

1. Boost charging infrastructure: One of the most pressing needs is improving charging availability and reliability. More chargers, faster charging, and a seamless charging experience are essential if EVs are to become as convenient as ICE vehicles.
2. Affordable yet premium: Mainstream consumers are interested in EVs that offer a premium experience without the premium price tag. Automakers must provide affordable options that don’t skimp on features or quality.
3. Connected car services as a differentiator: Connected features—like advanced navigation, safety alerts, and remote diagnostics—are highly valued by consumers. By positioning EVs as the “connected choice,” manufacturers can make them more appealing to those considering both ICE and electric vehicles.
4. Flexible battery solutions: Offering battery-as-a-service models, where consumers can lease the battery instead of buying it outright, could help alleviate fears about long-term maintenance and reduce the upfront costs. This could be a game-changer for many middle-income buyers.
5. Enhanced test drive programs: Providing extended test drives—lasting 24 to 48 hours—could help potential buyers get more comfortable with the idea of owning an EV, addressing any doubts that might otherwise hold them back.

Looking ahead: A path forward for EV adoption

The EY Mobility Consumer Index makes it clear that EV adoption is no longer simply about excitement for new technology. The market is now influenced by diverse consumer needs, each group with its own specific concerns. While overall car buying intentions are high, the gap between intent and actual EV purchases remains, largely because the industry needs to address the specific pain points holding back mainstream buyers.

To regain growth, manufacturers need a dual strategy: one that strengthens consumer intentions to buy an EV, and another that turns those intentions into actual purchases. This means focusing on practical infrastructure improvements, offering value without sacrificing quality, and addressing the individual needs of hesitant consumers.

The next phase of growth won’t come from early adopters alone. Instead, the key to moving forward lies in appealing to a broader audience—by making EVs accessible, convenient, and a compelling choice over their ICE counterparts. The industry must meet consumers where they are, address their real-world concerns, and deliver on the promise of electric mobility. Only then can the momentum in the EV transition truly be recaptured.

Source: EY