EV SALES – WIDESPREAD ADOPTION
While we aren’t fortune-tellers and often cannot predict the future of electric vehicles (EVs) with certainty, overall, EV sales do look bright. Based on current trends and developments, several potential EV trends could contribute to widespread electric vehicle adoption this year and beyond. These include industry investment, fleet electrification, increased spending on advertising, Big Tech involvement and increasing customer appeal.
AUTOMOTIVE INDUSTRY INVESTMENT
Automakers are not only committed to producing a significant proportion of EVs in the next decade, but they are also actively investing in EV production. Companies such as Ford, Volkswagen, and Honda have already announced significant investments to accelerate their transition to electric vehicles, and the automotive industry is estimated to invest more than £400 billion by 2030. While the variety of EV models was once limited and a barrier to adoption, this is changing rapidly as traditional automakers recognize the business opportunities and invest more in EV innovation and manufacturing facilities. As a result, the number of electric vehicle options for consumers is increasing quickly.
EV SALES – ELECTRIFICATION OF FLEETS
Hertz’s order of 100,000 vehicles from Tesla was a significant milestone, leading to Tesla’s market cap exceeding $1 trillion in Q4 2021. While most automaker agreements with car rental companies are unremarkable, Hertz’s order demonstrated the increasing mainstream acceptance of electrification. Amazon’s investment in Rivian and their order of 100,000 EVs, almost two years before the Hertz-Tesla deal, was even more impressive and signalled a massive move towards electric vehicles.
GM’s deals with Walmart and FedEx for large electric fleet orders are also notable examples of electrification. The adoption of electric trucks, among other vehicles, is a significant trend due to their impact on cost-savings and emissions reduction. As more companies recognize the advantages of electrifying their fleets, the trend towards electrification is expected to be inevitable.
SPENDING MORE TO MAKE MORE
Automakers recognize that consumer interest is critical for a successful transition to the EV market. However, until recently, mainstream media largely ignored the topic of electric vehicles, with few advertising campaigns or articles in mainstream publications. Although traditional automakers have a history of heavy advertising, they did not prioritize EVs, and even leading EV automaker Tesla is known for not advertising at all. As a result, electric vehicles were mostly absent from advertising until 2021.
However, in 2021, automakers increased their advertising spending on EVs to an unprecedented £200 million, up from £68 million in 2019 and £54 million in 2020. The trend continued in 2022, with several major automakers featuring EVs in their Super Bowl ads. Despite other automakers ‘ efforts, Tesla’s strong brand recognition in the EV category benefited from these ads.
As total advertising budgets for major car brands exceed £2.5 billion, EVs still have significant room to gain prominence. However, as automakers shift their focus to the EV revolution, a gradual decrease in advertising spend on gasoline cars is inevitable. The shift towards EV sales is evident, and major automakers are increasing their efforts to bring the public along with them.
BIG TECH BUYS IN
Three distinct groups are emerging in the electric vehicle market. The first group includes electric-only automakers like Tesla and Rivian. The second group comprises traditional automakers who have recently entered the market and are investing heavily in EVs. The third and most interesting group is made up of technology companies that are also exploring electric vehicles, with a particular focus on self-driving systems. Companies such as Apple, Google, Amazon, Huawei, Baidu, and Xiaomi have all shown interest in the EV market. The recent announcement by Sony of a prototype EV at CES 2022 is further proof that the market is poised for widespread adoption, and companies are eager to enter the fray. A Canadian survey revealed that 49% of respondents were willing to buy an electric car built by a technology company, indicating a significant interest from consumers.
EMBRACING THE FUTURE
More and more consumers are embracing the idea of an electric future. Although surveys on EV purchasing intentions vary, they generally suggest a high level of interest among the public. A 2022 survey showed that 49% of UK car owners would consider buying an EV when practical considerations were considered, up from 21% two years earlier. The survey of 13,000 people in 18 countries showed that car buyers in Italy (73%), China (69%) and South Korea (63%) were the most committed to buying an EV, while consumers in Australia (38%) and the US (29%) are no so keen on electrification. Rising penalties on internal combustion engine (ICE) vehicles were cited as a driving factor for EV sales in the UK (46%), followed by environmental concerns (45%).
THE EV REVOLUTION
The remarkable trend towards electrification in the UK represents a significant shift in public perception. Where once many people were sceptical of electric cars and thought they would fail, now there is growing curiosity and excitement around the idea of an electric future. People are beginning to ask questions like “what if all cars were electric?” and “why are EVs the future?”, and catchphrases like “the EV revolution” are becoming more popular. Importantly, this interest is translating into actual sales of electric vehicles. In terms of EV sales, more than 265,000 battery-electric vehicles (BEVs) were registered in the UK in 2022, a growth of 40% on 2021. With that growth in mind, EVs may soon corner the automotive market and become the future of road travel.
