Winning over the next wave of EV buyers brings fresh challenges

Electric vehicles sped past a major milestone last year as one in 10 new-vehicle buyers opted for battery power, but the road ahead presents new obstacles for both policy-makers and the auto industry.

Zero-emissions vehicles – or ZEVs, which include both battery-electric vehicles (BEVs) and plug-in hybrid vehicles (PHEVs) – accounted for 10.8 per cent of new vehicle registrations in 2023, according to Statistics Canada.

By now, the early adopters have bought into the shift away from gas-powered vehicles. However, industry experts expect the next group of buyers will be more cost conscious and have more questions and concerns.

The next wave

Cara Clairman recently noticed a shift in the demographics of people coming to test drive ZEVs though her non-profit Plug’n Drive; they’re not as wealthy as earlier test drivers, there are more women coming in and there’s a greater diversity in age.

“The next wave of adopters will be more like, ‘I’m going to save money [switching to a ZEV],’ and they’re not doing it so much for the environment or because it’s cool tech, which I think was more the first wave,” Ms. Clairman said.

Dan Guatto, director of business consulting and energy transition at consulting firm Ernst & Young LLP (EY Canada), expressed a similar sentiment. “The industry kind of expected the first early adopters would be quick and accept the technology readily. And then there’s a middle group that may be a little more reticent, or a little less informed and a little slower to pick up the technology,” he said.

The initial part of that middle group of adopters is often labelled the early majority, according to the diffusion of innovations theory, first popularized by Everett Rogers in 1962. It looks at the rate new ideas and technology spread. It pegs the first group of adopters, innovators, at 2.5 per cent. The next group, the early adopters, make up 13.5 per cent. After that, you’ve got the early majority (34 per cent), late majority (34 per cent) and finally, the laggards (16 per cent). Those latecomers tend to be skeptical of new technology.

Ford Motor Co. of Canada Ltd. chief executive officer Bev Goodman said at the Automotive News Canada Retail Forum in Toronto that the country is out of early adopters and is changing tack to focus on mass-market consumers who want better charging infrastructure and lower prices.

If saving money can convince drivers to switch, the industry will have to get more shoppers to consider the total cost of ownership – which can be lower for BEVs – and not just the usual purchase price or monthly payments.

“That’s not the way people have traditionally purchased vehicles,” Mr. Guatto said. “Nobody really thinks about it [in terms of total cost of ownership].”

But giving consumers a little bit more information on ZEVs can go a long way. In a survey of 1,500 people conducted last year on behalf of Electric Mobility Canada, a non-profit that advocates for ZEV ownership, the percentage of people inclined to buy a ZEV jumped to 63 per cent from 43 after they received factual information on potential cost savings, driving range, charging and more.

The hard part is yet to come

Make no mistake: with a 10-per-cent market share, these are still early days for ZEVs. “There still is some [relatively] low-hanging fruit in regard to ZEV sales,” Andrew King, managing partner of DesRosiers Automotive Consultants, wrote in an e-mail. “No other province [besides B.C. and Quebec] even reached 8-per-cent market share. Getting some more provinces (especially Ontario) up to 20 per cent is not even getting into the difficult part of the ZEV sales process that will come later,” he wrote.

The “low-hanging fruit” include people who can afford ZEVs and have a place to charge them overnight, he added. As market share requirements rise, sales will become more difficult, Mr. King predicted.

There are, of course, many other challenges on the road to making 100 per cent of new-car sales ZEVs by 2035, as called for by federal targets. But there’s evidence of progress. For example, Tesla is opening up its proprietary Supercharger network to other brands, which will widen the fast-charging options for other EV drivers.

Each year, car makers offer up more competitive, more affordable models. And the federal ZEV standard is intended to put a greater number of more affordable ZEVs on dealership lots across the country, even if it has some within the industry, including Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, calling on the federal government to do more to prevent an influx of cheap Chinese BEVs.

Electrified vehicles have already overcome big challenges just to get as far as they have: back in 2019, ZEV sales accounted for just 2.9 per cent of overall sales. And last year’s 10-per-cent milestone came despite high interest rates and a slowing economy. Sales are growing, although perhaps not as rapidly as some manufacturers would like. The rate of growth has slowed, but whether the fault lies with uncompetitive products or with consumers is up for debate. Plans are moving ahead for at least four major automotive battery-manufacturing plants across the country. And, this summer, the first all-electric passenger car made in Canada, the Dodge Charger Daytona, will roll off the production line in Windsor, Ont.

The big picture here is worth remembering. While electric vehicles are far from a silver bullet for climate change, transportation remains the second-largest source of climate-change-causing pollution, and getting consumers into ZEVs remains central to Canada’s effort to avoid the worst effects of global warming.