Study: Global Recession Negatively Impacting EV Sales (Duh)
Today’s study comes straight from the memoirs of Captain Obvious. Apparently, an economic recession isn’t what you want when you’re vying to sell factory fresh automobiles beyond the confines of rock-bottom prices. There might even be a correlation between being broke and lacking the ability to purchase items in general. At least, that was the takeaway from a cutting-edge assessment recently conducted by Auto Trader in the United Kingdom.
In an attempt to keep tabs on the public’s level of interest in reference to electric vehicles, the outlet has been surveying people at semi-regular intervals. Back in January, it asked 2,300 consumers ‘waddya buying,’ only to learn that 17 percent had their hearts set on a battery electric vehicle. That’s impressive considering less than 10 percent of automobiles in the UK utilize electricity for propulsion and most of those happen to be hybrid models. But the trend toward BEVs has shifted rather dramatically since the COVID pandemic took hold.
A follow-up questionnaire from August (this time with 2,700 respondents) shows demand has waned immensely. Only 4 percent of respondents said they were planning on getting themselves a battery electric vehicle.
While the obvious explanation has everything to with the financial fallout stemming from pandemic-related lockdowns, some amount of faith seems to have been shaken in the usefulness of EVs specifically. People are going to be less likely to purchase a new vehicle as the economic situation worsens, but electrics seem to be taking a larger hit.
“At a time of economic uncertainty car buyers are reverting to the type of vehicles they are more familiar with, and what they consider to be the most affordable choice, namely petrol and diesel cars,” The Financial Times’ quoted Ian Plummer, Auto Trader’s commercial director, as saying. “Since cost is the primary consideration for most car buyers, the upfront retail price of EVs [electric vehicles] is somewhat off-putting.”
The prevailing assumption among “experts” is that electric vehicles are easier on the pocketbook on a longer timeline, making it look as though these customers are playing themselves. But we’re inclined to believe it’s more complicated than that. While EVs are cheaper to run (so long as electricity remains more affordable than gasoline), they’re usually priced several thousand dollars higher than their internal-combustion equivalents. Initial maintenance costs are also significantly lower (depending on your warranty) on EVs, but swapping in a new battery much further down the line will be an extremely expensive item. Then we have depreciation, which currently has electrics losing their value at higher rates — though this is frequently offset by environmental subsidies designed to spur adoption rates.
All told, that makes it seem as if consumers aren’t just factoring “familiarity” into their purchasing decisions. They know that electric affordability is highly conditional. Combine that with EVs being slightly less practical when utilized as a household’s only vehicle and it’s not surprising they’d second guess themselves in a time of crisis.
However, the survey seems to indicate the biggest issue isn’t looking at the big picture, but the upfront cost of buying an electric car. Nearly half of the respondents opting against an EV in August said their personal finances wouldn’t allow for the initial expense. One-fifth claimed they were simply concerned with spending money while the economy looked so sickly.
The Society of Motor Manufacturers and Traders has reported that electric vehicle sales have continued to rise through 2020, though. FT cited the organization as confirming 40,000 new EV sales in the UK between January and July versus roughly 14,000 sales in the same period from 2019. Unfortunately, deprecation has accelerated, with used models seeing prices drop by 5.2 percent in August.
“Over the past year, consumer demand has outweighed supply,” Plummer explained. “However, since the emergence of COVID-19, we have seen this trend reverse; whilst supply levels have remained relatively constant, consumer demand has eased, which has been a contributing factor to over six months of consecutive year-on-year price decline for hybrid and electric cars.”
Meanwhile, the pandemic has caused general vehicle pricing to spike in North America. Following production stoppages and a total lack of demand from earlier in the year, the automotive industry claims it’s struggling to meet demand as supply chains normalize. People are also shunning public transportation in large numbers, fearful that they may be infected by the Wuhan Wheeze, La Rona, The Coof, etc. — which is also believed to be ramping up demand unexpectedly.