• Green consciousness and environmental issues are now ranked as the clear number one influence on electric vehicle buyers.
  • Any electric vehicle sales boom will be part of a wider resurgence in car buying, driven by changing mobility patterns and perceived COVID-19 risk.
  • Across the world, non-work-related travel is set to recover more than work travel.

What strenuous efforts by OEMs and governments alike have struggled to achieve for years, the pandemic may have finally catalyzed in months: the long-awaited electric vehicle (EV) sales boom may be upon us.

The latest EY Mobility Lens Consumer Index records some of the biggest shifts seen in both buying intentions and motivations among consumers across 13 major international markets. No less than 41% of those who say they intend to purchase a new car are considering an EV — 66% of them in the next 12 months. That’s an 11% increase on the figure recorded during the initial wave of the pandemic last year, in the EY Mobility Lens Consumer Index wave 1 research. Moreover, for the first time, environmental concerns top the list of reasons for considering an EV across all age groups.

Powertrain preference of consumers planning to buy a car
Though cars powered by fossil fuels still dominate new purchases, electric cars are gaining popularity.
Image: Ernst & Young

With millions of home workers spending more time in their local areas and discovering the pleasures of cleaner air and lower pollution levels, the pandemic has crystallized attitudes toward the environment. Overall levels of concern have risen — 78% of potential non-ICE car buyers say that COVID-19 has heightened their level of environmental awareness — and crucially, these concerns are now reflected in intentions to purchase more sustainable vehicles.

This represents a breakthrough moment in consumer attitudes that could hugely accelerate demand for EVs and alternative powertrain vehicles — previously, many consumers expressed generalized concerns over sustainability, but those concerns did not translate into action when it came to buying their next car.

Any EV boom, however, will be a part of a wider resurgence in car buying regardless of powertrain, catalyzed by changing patterns of mobility as well as perceived COVID-19 risk. Fewer, longer work journeys coupled with lingering concerns over the safety of public transport are cementing the car as a low-infection-risk “safe space” for travel.

As a result, the demand for cars of all types seems set to grow. The challenge for OEMs and dealers alike will be to capitalize on consumer interest in alternative powertrains and persuade even more potential new car buyers to go green and make an EV rather than an ICE car their next purchase.

In this article, we look at some of the key trends highlighted by the survey and what their implications might be for OEMs and dealers in the post-pandemic market.

Chapter 1 - Caution — secular mobility shift ahead?

Non-work-related travel is expected to be almost back to pre-pandemic levels, but work travel remains down.

There has been a bounce-back in patterns of mobility from the depths of the first pandemic wave last year, but it is an uneven one. Across the globe, non-work-related travel is set to recover more than work travel. The number of monthly non-work journeys that consumers intend to take in the future — for leisure, shopping, or visiting friends and family — is almost back at pre-pandemic levels. Work travel intentions, however, remain in the slow lane, down by around 14% across the board on the same basis.

Decline in monthly travel journeys: before COVID-19 and future intention
The COVID-19 pandemic has a huge impact on the amount of travelling workers did each day.
Image: Ernst & Young
Shift in respondents frequency to work from home or remote
Remote working looks set to continue post COVID-19.
Image: Ernst & Young

Could this indicate a secular change in work-related mobility? Working from home has become the norm for millions of reformed commuters all over the world during the pandemic, and the survey suggests it is here to stay.

People intend to take fewer work-related journeys, but the ones they will take are longer in duration. Average future weekly travel time is up slightly from 9.0 hours to 9.2 hours. With less time spent in the workplace, some people may have made the choice to move farther out of town and accept an infrequent longer journey to work in exchange for lifestyle benefits such as more living space.

Although the number of journeys taken across the board is expected to decline compared to pre-COVID-19 levels, public transport remains the big loser when it comes to modal choice, down 11%. And the car in various forms is the clear winner.

Shift in work journeys before COVID-19 vs future intention
COVID-19 has changed how many people wish to travel to work.
Image: Ernst & Young

The car is becoming cemented as the COVID-19 safe and most convenient mode of choice even as the immediate pandemic risk declines in many markets. Public transport loses out to the car much as expected, but despite widespread government efforts to get people walking and cycling more — many new bike lanes have been created in cities such as New York, London and Paris during the pandemic — people’s stated intention is to use their cars more than they did pre-COVID-19 and to walk and cycle less.

Chapter 2 - A buying boom beckons

Half of all respondents intend to buy a car in the near future, with nearly two-thirds planning to do so in the next year.

Accordingly, a remarkable 50% of all respondents say they intend to buy a car, new or used, in the near future, up 17% from the figure recorded at the end of the first wave of the pandemic in the EY Mobility Consumer Index study — with over a third of those who do not own a vehicle now intending to buy one, up 7% on the first wave study.

Shift in car ownership
Car ownership looks set to increase across households.
Image: Ernst & Young

These are figures with the potential to spark a substantial boom — 65% of those intending to buy say they will do so in the next 12 months.

Sales of alternative powertrain vehicles are also poised to take off — 42% would prefer to buy an electric or hydrogen-powered vehicle, a rise of 12% from the first wave study. And 90% of those say they will do so within two years. Figures from the IEA 2021 study show that global EV registrations bucked the recent general downward trend, rising by 41% in 2020 — albeit from a low base — just as overall car sales headed in the opposite direction and fell by 16%. In addition, this upward demand for EV aligns with new research and analysis using the EY Mobility Lens Forecaster, a proprietary neural network model that uses AI to analyze over 25 supply and demand variables to forecast mobility demand. The model predicts that by 2028, EV sales in Europe will surpass those of ICE vehicles (including hybrids). The same is expected to happen in China by 2033, and in the US by 2036.

A dramatic surge in sustainability

Perhaps the most significant findings in the survey are the factors influencing potential EV purchasers. A tipping point has been reached in green consciousness and environmental issues — for many years a peripheral concern that lagged behind more practical matters such as cost and range — are now ranked as the clear number-one influence on EV buyers, more than 10% ahead of any other issue across all age and income brackets.

Such is the impact of this shift that, far from requiring subsidies and financial support to take the EV plunge, many potential buyers are now prepared to pay a premium to join the green drivers club. No less than 66% of all car buyers would pay a premium of up to 10% for an EV, rising to 90% for those who already intend to buy an EV.

What’s behind this dramatic sustainability surge? Are consumers simply starting to act on long-held global concerns, or are they attempting to compensate for preferring the car over public transport during the pandemic, by making more environmentally friendly buying decisions?

It may be a case of enlightened self-interest — EV buyers are more environmentally motivated, with 53% of them saying it is their personal responsibility to reduce their environmental impact, and 55% are using more eco-friendly transport already. But the top factors influencing the choice of transport mode for both current and future car buyers are hygiene and infection safety.

Chapter 3 - The cost — and charging — conundrum

Cost, range and charging infrastructure are factors that inhibit buyers from making EV purchases.

Sustainability may increasingly be seen as the key “soft” upside benefit of EV ownership. But that doesn’t mean the old “hard” EV bugbears — cost, range, charging infrastructure — have been entirely vanquished. Consumers seem confused; when asked to name the factors that inhibit potential EV buyers from making a purchase, cost comes out top at 50%, closely followed by — you guessed it — range (33%) and charging infrastructure (32%). Yet over a quarter regard these same three factors as an incentive to buy an EV.

Top 5 motivations and concerns when purchasing an EV
Though many people wish to buy an EV for the positive environmental impact, the cost is the most pressing concern for most people.
Image: Ernst & Young

How to square these apparently contradictory findings? For one thing, they suggest that — like the willingness to pay a premium — a systemic shift in attitudes is underway. Some consumers are simply farther along in their journey toward embracing the advantages of the EV than others. And for another, they hint at an information gap that needs closing. EVs may have higher up-front costs than ICE vehicles, but they have much lower running and maintenance liabilities: on a total cost of ownership (TCO) basis, they are cheaper. But as the ubiquity of leasing and personal contract purchase deals demonstrates, TCO is not well understood by consumer buyers.

Chapter 4 - Where next for mobility – and for dealers and OEMs?

The prospect of increasing car sales, especially EVs, is good news for OEMs and dealers, but it also brings challenges.

Although it is too soon to draw firm conclusions from the huge changes we have witnessed over the course of the pandemic, it’s equally clear that at least some of the ways in which we live, work and travel will likely change permanently as a result of recent experience. It is hard to believe, for example, that the whole world is quietly going to return to the daily routine of the commute and office life, having spent a year or more working — usually pretty successfully — from home.

For our cities, a lot depends on whether, and how quickly, people lose their fear of public transport and are willing once again to board buses, trams, trains and subway networks. A permanent decline in the popularity of public transport would be a major headache for city planners everywhere.

The prospect of a boom in car sales, however — especially if it is centered on increasingly mainstream EVs — looks on the face of it to be good news for OEMs and dealers. But the question then becomes, who wins the battle for the green consumer? Next-generation products entering the market, with greater range and other more desirable features, will play a part. Overcoming those lingering concerns over cost and range will be a challenge for OEMs and dealers: total cost of ownership makes EVs look like a much better financial prospect than ICEs, but will require some creative thinking from an industry that has spent years persuading consumers to buy new cars on the basis of low monthly lease payments.

The information gap extends beyond finance, as confusion over the challenges of charging and even the perceived performance of EVs shows. Both industry and government might be well advised to learn from the effectiveness of vaccine hesitancy programs during the pandemic and put more effort into EV education messaging that really lands to help reassure potential buyers they are making the sensible — as well as planet-positive — choice.

More EVs also means greater competition from new entrants, many of whom do not have — and do not need — large dealer networks to service the customer. Direct sales, online purchasing and new ownership models will become increasingly the norm to keep cost of sales down and market share up for established players, developments we will cover in more detail in a forthcoming article.

But the overall message from the survey is clear: more consumers than ever are now sold on the sustainability benefits of EV ownership and are ready to join the club. The winners will be those who can offer them membership on the most affordable, user-friendly and reassuring terms.