How the Electric Vehicle Market Changes Affects Consumers
As the push for greater electric vehicle (EV) adoption heightens, car manufacturers need to rethink their marketing approach. Now with California mandating that 100% of car sales in 2035 are EVs, manufacturers need to make EVs appealing to lower income consumers and provide better incentives to gain consumer interest and loyalty.
- The new bills are reducing incentive availability for EVs
- Companies will be forced to either move their supply chain or leave the market
- Brands can market better benefits and insurances to increase adoption
How Will All These New Bills Affect EV Circulation?
A key issue with EVs is accessibility – they’re seen as luxury cars only the wealthy can afford, which is true. The least expensive EV on the market is the Nissan Leaf, starting at $27,800 with the average being $36,685. For middle to low-income buyers, this cost is much greater than a comparable fuel-efficient sedan like the Nissan Versa. But you’ll often hear about the federal tax credit of $7,500 that should shave off part of the cost.
Prior to the new Inflation Reduction Act, the full credit was applied when the buyer or leaser filed their taxes, but now there are more limitations. The full tax credit only qualifies if: the buyer makes less than $150,000 (or $300,000 dual household income), the sedan is under $55,000, the SUV/truck is under $80,000, at least 40% of the battery was made using North American or U.S. free trade minerals, and the car must have a final assembly in the U.S. As of now, there is not a single car on the market that qualifies for the full tax credit.
For a bill that was supposed to increase EV adoption and make it easier on consumers, it sure seems like the complete opposite. Essentially the bill is forcing companies to build a supply chain in the U.S., which they have been investing in but will still take time to be fully available. Ford, Tesla, and GM are some of the few car brands that find relief in the bill, whereas Hyundai and Toyota, who released uber popular EVs, will be forced out. We have to wonder which companies will keep to their pledge of fully adopting EVs and which will toss the towel.
Low-income buyers will always go for the cheapest, most reliable car. EVs are out of this requirement. Since they have only been around for a few years, owning an EV is a gamble. We don’t know exactly how long the battery will last, what replacing it would look like, and what the savings will be. With gas prices in constant fluctuation, buyers can be assured that the cost of using an EV is much cheaper than a fuel car, with savings equating to roughly $800-$1,000 a year on gas and maintenance. In the long term, these savings add up, but lower-income buyers who live paycheck to paycheck would unlikely be as influenced by these savings in comparison to a middle-income buyer.
What Can Car Brands Do To Increase Buyers?
Because there’s so much uncertainty around EVs, they cost an average of 25% more to insure. They’re unproven new cars from old brands, so insurance companies don’t know how to evaluate them. If you want more adoption, market insurance. Market a service that justifies the massive increase most cars are now experiencing in the past six months. Hyundai, for example, already offers a 10-year battery warranty, and if they were to bundle with an insurance company to lower their insurance costs, buyers could go in with more certainty.
While car brands can’t apologize for the market uptick that’s affecting every new car on the market, they can market services and packages that will increase consumer loyalty. Car buyers are extremely loyal to their brand choices and will often be repeat buyers of the same brand, so by offering better trade-in incentives and providing service packages, companies will ensure the buyer will feel confident in their new EVs.
As of now, it’s a good time to hold off on purchasing an EV in the United States until the supply chains are adjusted, and hopefully, in the near future, we’ll see more affordable cars, insurances, and benefits.