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- Car buyers warming up to EVs, but confusion is holding back sales
Car buyers warming up to EVs, but confusion is holding back sales
Buyers are most confused over depreciation rates, maintenance costs and leasing. (3 min. read)
Consumers continue to warm up to electric vehicles, despite lower-than-expected adoption rates amidst the industry’s transition away from gas-powered cars.
Driving the news: While EV sales have been disappointing for most automakers, data from CDK Global suggests that more consumers, especially those who purchased a hybrid or plug-in hybrid, are planning to ditch the internal combustion engine in the near future.
Fifty-eight percent of owners who bought a plug-in hybrid car in 2024 plan to purchase an electric model for their next vehicle (prior-year data is not available for plug-ins).
Meanwhile, the number of ICE and (non-plug-in) hybrid buyers who say they’ll buy an EV down the road has dramatically increased, rising from 18% to 31% among the former and 38% to 54% among the latter.
In a previous CDK Global study, the overwhelming majority of EV drivers (73%) said they planned to only purchase electric in the future.
Zooming in: Still, many factors are keeping buyers from making the switch, suppressing EV sales in the U.S.
While EVs come with lower maintenance costs due to their comparative lack of moving parts, most consumers believe electric cars are more expensive to maintain than other vehicles. This is even true among those who own an EV.
Properly explaining the long-term costs of EV ownership to buyer will be crucial to boosting adoption.
Buyers are also woefully undereducated on the depreciation of EVs. When comparing EVs to ICE and hybrids, 84% of EV owners think their vehicle will hold the most value.
Leasing challenges: The confusion surrounding resale values is causing EV buyers to shift away from leasing. While leasing has become a popular way for dealers to boost EV deliveries, 91% of electric car shoppers say they want to purchase rather than lease their next vehicle.
A key driver of this mentality is that manufacturers do not offer buyouts for EVs at the end of the lease term.
Since buyers are overly optimistic about the depreciation rates of electric cars, they believe they would get a better deal from a full purchase, and eventual trade-in, rather than a lease.
To boost leasing for EVs, dealers may need to teach consumers that even if buyouts were available they would likely pay much more than the vehicle’s actual market value at the end of their term.
Bottom line: While consumers are warming up to EVs, confusion about ownership costs and other factors are withholding sales. However, with the overwhelming majority of electric car buyers still preferring to shop at dealerships, this gives retailers a chance to effectively educate customers on the pros (and cons) of EVs, allowing them to move more inventory.
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