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Price: The $36,000 challenge

How can the industry overcome the number one critical challenge for consumers when it comes to making the switch to electric vehicles?

THE PURCHASE PRICE OF EVS IS THE MOST IMPORTANT ‘CRITICAL CHALLENGE’ FOR CONSUMERS IN OUR RESEARCH.

Our report, Accelerating the EVolution, shows that the average tipping point for mainstream adoption is $36,000*, equivalent to the average price of an internal combustion engine car in the United States.
 

Attitudes to price vary significantly across markets, with expectations in our survey averaging between $30,000 and $43,000. By working to bring the purchase price of EVs in line with internal combustion engine (ICE) equivalents, manufacturers have an opportunity to accelerate mainstream adoption and capture market share.

 

For consumers, purchase price is more influential than any other critical challenge, including charge time and range. Our economic model (head to page 43 of the report to read about the methodology), developed as part of this research, shows that reaching a price tag of $36,000 will mean a significant boost to EV sales, with electric vehicles representing a market of $268 billion per year by 2025 across the eight markets in our study if this tipping point is achieved. Globally, this could represent 12% of all new cars sold across by 2025.

The most important critical challenges as ranked by consumers; 38% price, 27% charge time, 20% range, 11% infrastructure, 4% vehicle size/type.
The initial purchase price is not at all attractive for the customer, it needs to come down. The financial benefits of transitioning to an EV are not yet substantial enough or well enough understood, which makes the overall initial price a key negative issue.Deputy General ManagerOEM, Shanghai
According to our study, nearly two thirds (63%) of consumers believe that EVs are beyond their price range, despite there being a number of EV models currently on the market that achieve the desired price point. It’s likely that high-profile luxury brands influence this perception, but there is also an opportunity for consumer education about the lifetime savings of EV ownership, as EVs are typically cheaper to refuel and maintain than ICE vehicles.
Three-fifths of consumers told us that mainstream adoption relies on EVs costing the same as equivalent ICE vehicles. This means there is still a pressure on manufacturers to reduce the initial price of EVs to the same level as comparable ICE cars. This is no easy task, with barriers that include high manufacturing and R&D costs (particularly with crucial battery technology), intense international competition and supply chain pressures. Our research shows that the automotive industry is fully aware of these constraints, and are already investing heavily to resolve this critical challenge.
For more insights on EV adoption, download the Accelerating the EVolution report or view the infographic.
The issue with EVs is the initial pricing really: we need to get the volumes up to bring the overall build prices down. We need to develop new components from new suppliers. If we can get the volumes up, overall production prices will reduce and quality will also increase. At the moment, the need for new products is driving up the overall price.Senior Design EngineerOEM, Beijing, China

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*Tipping points and supporting figures on this page are based on our 2020 survey. More information can be found in the Accelerating the EVolution report and infographic.