The European Union aims to be carbon neutral by 2050. Additionally, it wants to achieve a 55% reduction on 1990 emissions by 2030. In order to meet these targets, passenger cars will have to rapidly decarbonise. This means there is no time to lose in taking the actions required to increase the uptake of zero-emission vehicles. This study focuses on the purchase behaviour of new car buyers.
In June 2021, Element Energy conducted a survey of 14,052 new car buyers in seven European markets (Figure 1) covering 80% of new car registrations across Europe (EU + EFTA + UK) to provide insights into the purchase decisions of survey respondents. Four key conclusions can be drawn from this survey.
1. The transition to e-mobility is inevitable
Based on the responses of new car buyers to the choice experiment, the projection is that BEVs will become the most demanded powertrains across Europe from 2025 (Figure 2).
As production costs of lithium-ion batteries drop, BEV purchase prices will fall, leading to a rapid growth in demand for BEVs. Moreover, manufacturing plants will scale up and more affordable BEVs will be introduced to the market.
The most influential factor in consumer powertrain decision is upfront cost, along with running cost, driving range, and access to charging. A critical element to achieving a rapid transition to zero-emission powertrains is purchase price parity. The projection is that consumers will overwhelmingly choose BEVs over the alternatives if the upfront costs are similar.
By encouraging and supporting vehicle manufacturers to produce low cost BEVs, governments can stimulate the transition, as well as by applying higher registration taxes to ICE vehicles. Policies designed to reduce the upfront cost of BEVs should ensure purchase price parity is achieved across the price spectrum and for the lowest income consumers. With a sufficient, available supply of BEVs, the transition to e-mobility is inevitable.
2. E-fuels are not a compelling alternative to BEVs
By now, consumers have already embraced the transition to electrified mobility and, for the same price, would preferably choose an electric vehicle over an ICE alternative. Moreover, the running costs of an e-fuel powered ICE are not the same as a BEV. In 2030, the total cost of owning an ICE using e-fuel will be 23% higher than an equivalent BEV.
A consequence of these high costs is that consumers overwhelmingly opt for BEVs (Figure 3). E-fuels do not benefit consumers and hit the poorest in society the hardest. Therefore, governments should focus investment towards achieving the near-term purchase price parity of mass-market BEVs.
3. Deployment of public charging infrastructure should keep up with sales
Charge point deployment will need to keep pace with EV uptake to prevent perceived access to charging impact purchase decisions. People without access to home charging are on average 12% less likely to purchase a BEV than those with home charging.
Improving access to public charging ahead of demand does not unlock significant additional BEV demand. However, in markets where both access to off-street parking and access to public charging is low, deployment of public charging infrastructure is key to unlocking latent BEV demand.
4. Today’s consumers prefer BEVs
If all else were equal, all of the six consumer groups identified from the 14,052 survey respondents would preferably choose an EV over an ICE, with 73% of private consumers choosing a BEV as their preferred powertrain (Figure 6). Compared to the results of similar studies conducted by Element Energy in the UK in 2015 and 2011, there is a profound change in the preferences of consumers. It has shifted from the dominant powertrain of choice being an ICE vehicle to a mix of plug-in hybrids (PHEVs) and BEVs. As governments stimulate actions to phase out ICE vehicles and EV technology improves and becomes more widespread, this trend towards EVs will only continue.
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