When it comes to the mass adoption of electric vehicles, it seems history is repeating itself. Recently, I came across this line while doing some research: “The popularity of the electric car was hampered by a lack of battery-charging infrastructure.” While electric-vehicle infrastructure remains a challenge today, this is not a recent quote. It is not from the early 1990s, when General Motors tried to launch the EV1. This line was used in an article on Britanica.com to describe the state of electric vehicles in 1910.
Since we still haven’t solved the electric-vehicle infrastructure issue in more than 100 years, it’s no small wonder that electric vehicles account for just more than 2 percent of all alternative powertrain vehicles on the road today. Gas-electric hybrids, on the other hand, account for nearly 98 percent of all alternative-powertrain vehicles.
There are, however, positive signs of growth for both electric vehicles and hybrids. According to our recent analysis, electric vehicles grew their sales by 245 percent in 2013, while hybrids grew by 19 percent. For electric vehicles, growth was spurred primarily by the Nissan Leaf and the Tesla Model S, which are currently the top-two selling all-electric vehicles on the market. For hybrids, the Toyota Prius remains an immensely popular vehicle and is the top selling hybrid today. Other top-five hybrid models include the Toyota Camry, Honda Civic, Toyota Highlander and Ford Fusion.
In addition to infrastructure, one of the biggest hurdles for electric vehicles is affordability. The average amount borrowed to purchase a new electric vehicle in 2013 was $28,838. The average monthly payment was $549. In contrast, the average loan for all new vehicles in the fourth quarter of 2013 was $27,430, with an average payment of $471.
Given that the average monthly payment for an electric vehicle is 16.6 percent higher than the average vehicle, it makes sense that the typical electric vehicle customer is affluent. In 2013, 21 percent of electric-vehicle customers had incomes of more than $175,000. Hybrid customers also are affluent, but not at the same level as electric-vehicle customers. Just 12 percent of hybrid owners have incomes of more than $175,000.
One trend bodes well for electric vehicles. Their owners tend to be relatively young in comparison to hybrid owners. More than 45 percent of hybrid owners are 55 years old or older, compared to just 26 percent of EV owners who are 55 year old and older. More than half (55 percent) of all electric vehicle customers are between the ages of 36 and 54. This demographic group will be purchasing vehicles for the next 20 to 30 years. With so many supporters in this age group, there certainly are possibilities for more electric vehicle sales, especially since many of these customers should hit their peak earning years during the next decade.
What does it all mean for the automotive aftermarket? It is highly likely that alternative-powertrain vehicles will continue to gain market share in the coming years. In the foreseeable future, gas-powered vehicles obviously will hold market share. But, if gas prices stay high and electric vehicle infrastructure improves, there is no reason why the aftermarket won’t be doing robust business with alternative powertrains in the decades to come.
Subscribe to Aftermarket Business World and receive articles like this every month….absolutely free. Click here.
