Electric vehicle makers should address cost concerns to improve sales, says J.D Power survey

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Electric vehicle makers should address cost concerns to improve sales, says J.D Power survey

Greentech Lead U.S: The higher cost of electric vehicles
is preventing their mass adoption across the world. In order to succeed in
electric vehicles sales, automakers must address economic challenges, not just
tout environmental advantages.

Electric vehicles (EVs) will remain a very small part of
the U.S. market unless automakers can lower prices and demonstrate the economic
benefits to consumers, according to the J.D. Power and Associates 2012 Electric
Vehicle Ownership Experience Study(SM) released today.

Current EV owners most often cite environmental
friendliness as the most important benefit of owning an EV. Nearly one-half (44
percent) of these owners indicate the top benefit of their vehicle is lower
emissions, compared with emissions from gasoline- or diesel-powered vehicles.

However, consumers considering an EV for their next
vehicle primarily want to lower their fuel costs. While 11 percent of consumers
would consider an EV for its environmental benefits, 45 percent want to reap
the economic benefits of fuel savings.

For example, current EV owners report an average monthly
increase in their utility bill of just $18 to recharge their
vehicle’s battery–which is significantly less than the $147 that
they would typically pay for gasoline during the same period of time.

Compared with sales prices for a similar gasoline-powered
vehicle, the study finds that owners of all-electric vehicles (AEV) pay a
premium of $10,000, on average, for their vehicle, while plug-in hybrid
electric vehicle (PHEV) owners pay a $16,000 premium, on average.

Based on annual fuel savings, it would take an average of
6.5 years for AEV owners to recoup the $10,000 premium they paid at
the point of purchase, while the payoff point for PHEV ownership is 11

The study finds that virtually all EV owners charge their
vehicle at home. One-third of EV owners elect to use a standard 120-volt outlet
to charge their vehicle rather than install a special home-charging station,
which can recharge an electric vehicle in half the time that it takes when
using a standard 120-volt household outlet, and provides greater ability to
leverage lower off-peak electricity rates.

EV owners who elect to have a 240-volt charging station
placed in their home pay an average of $1,500 for equipment, installation
and inspection, plus a monthly amount for the electricity used. However, the
study finds that 43 percent of owners received their charging station for free.
Among those who do pay, the cost of the charging station, installation and
inspection are recouped through fuel savings in the first year of ownership.

The study finds that 31 percent of  EV owners are
either on a time-of-day plan through their utility company that offers
lower-priced charging during off-peak hours (entire household on same meter);
have a special EV plan with a separate meter; or pay a flat fee per month to
charge their EV (no separate meter required).

The study finds that nearly one-half (43 percent) of EV
owners indicate they also charge their vehicle away from home. Whether at work
or in public places, such as shopping malls and airports, when they charge
their vehicle away from home, 85 percent of the time EV owners don’t have to
pay for the service.

As battery technology improves, manufacturers are able to
produce more affordable EVs, which should also lower the current price
premiums. Lowering the cost of ownership may help increase market share —
electric vehicles currently account for less than 1 percent of new-vehicle
sales in the United States, according to LMC Automotive –but there are
also other hurdles to overcome.

Driving range and the availability of charging stations
are the top concerns among consumers considering an EV. The study finds 12
percent of EV intenders are concerned about the driving range. However, current
EV owners indicate an average daily commute of 34 miles – which is well within
the range of a fully charged EV. 

The size of the vehicle is the second-most-frequently
cited reason for rejecting an EV. Consumers considering an EV look more
frequently for a midsize sedan than any other size vehicle. Currently, most of
the EVs being produced are in the small vehicle segments, which should change
as new midsize models enter the market in 2013. In addition to price and
vehicle size, concerns with reliability of EVs rounds out the top three
rejection reasons.

The payoff for automakers is that once they get consumers
to buy an EV, they tend to retain them as customers. Overall, 82.5 percent of
owners indicate they “definitely will” or “probably will” buy
another EV from the same brand. The average retention among owners of all
vehicle types is 49.8 percent. 

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