Perception is reality, as they say. In the automotive world, that's never been more true than it is for electric vehicles. While the EV market has grown considerably over the past few years and countless great options are available at many (but certainly not all) price points, many prospective American electric buyers believe there aren't enough options yet that meet all of their needs.
Save for one, right now: the Hyundai Ioniq 6. Give Hyundai's electric "streamliner" its flowers, because it may be the spec king of the moment.
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The next wave of EV adoption
Nearly all automakers concede the future of cars is electric. But by when, and how? Amid a slowdown in the rate of EV adoption, automakers are figuring out how to roll out new electric models at the right prices while staying profitable with their current portfolios.
That's part of the findings in a new study from the Boston Consulting Group, "Can OEMs Catch the Next Wave of EV Adopters?", which was published last week. The firm surveyed 3,000 consumers to figure out what it would take for EVs to break into the mainstream—past the first- and second-wave adopters who have broken up with gasoline over the past decade and change.
The study's authors don't mince words about the challenge of perception vs. reality.
"A narrative has emerged lately that US demand for electric vehicles has hit a wall," the study said. "In reality, EV sales grew 50% in 2023; the problem was that the industry had forecast 70% growth. As a result, inventory piled up and a 'price war' ensued that dominated headlines."
All of that is true; 2023 was a record year for EV sales in America, and 2024 is expected to see even higher numbers, but at a slower rate of growth than auto executives predicted. (In 2023, electric vehicles made up 7.6% of the U.S. vehicle market, up from 5.9% in 2022.)
"I think what [automakers] were probably doing was taking the historical sales, because things really started to accelerate from 2018 forward into 2022 and 2023," Andrew Loh, Managing Director and Senior Partner at BCG, and an author of the study, told InsideEVs in an interview. "You saw them nearly doubling. It's not like they completely fell off a cliff. It just was lower than expected."
Gallery: 2023 Hyundai Ioniq 6 Review
The study said that slashed production targets, delayed product launches, concerns over resale value, continued charging frustrations and weather concerns have all contributed to a sense of short-term pessimism in the EV market.
But after surveying those consumers and asking them what it would take to go electric, BCG's report said some big jumps in range and charging times—and cheaper pricing—are needed for further adoption. None of that is surprising, but some of their exact requirements might be.
"To convert the next wave of adopters into buyers, OEMs must address these key median requirements: 20-minute charging times; 30-minute detour and wait times for fast-charging stations; a 350-mile driving range; and a price of $50,000," the study said. "They’ll also need to offer greater vehicle variety.
For now, BCG says only one car meets all of those requirements: the Ioniq 6. The Tesla Model 3 is close behind it.
Again, perception is reality; I would add that several other new EVs also excel at meeting mainstream customer needs, perhaps more than these survey respondents even realized. The Tesla Model Y, ostensibly the best-selling car in the world right now, is the best example of this. Even if the Model Y Long Range's EPA-estimated 310 miles of range is below the 350-mile target EV buyers have, Tesla's ubiquitous Supercharger network should offset any range anxiety.
Having said all of that, the BCG study leaves room for optimism in the EV market. While many automakers have slowed down their EV plans, they have not abandoned them entirely. And the next great segment for EVs, the affordable one, has options coming soon; Ford, Kia, Tesla and others are said to be working on cars in the $25,000 range in the coming years.
Moreover, advancements in battery technology seem sure to yield better ranges, more energy efficiency and quicker charging times; each new model hitting the market seems to improve on all of those things. But Loh said car companies have to keep pressing on with improvements to the customer experience and price for sales to hit the mainstream.
"I'd say by the time we're at 2027, 2028, if you have a full portfolio of second-generation vehicles out there, we'd see about 30% market share for EVs," Loh said. "If however, not all those things go right—either because the [automakers] delay some of these launches because they have profitability concerns, or if we start to see consumers falter a little bit and a price war ensues—that can get as low as 20%."
And that's right when the EV market should really start heating up, thanks to stricter regulations cemented by the Environmental Protection Agency just last week. Those take effect starting with the 2027 model year and get stricter over time through the 2032 model year. The question will be whether automakers, the charging industry and policy decisions can meet that moment.
"With 70% of U.S. consumers stating they would consider buying an EV, the market opportunity is there," the study said. "But will [automakers] and their shareholders overcome the profitability challenges and stay the course with the required investments? Will policymakers and the charging ecosystem step up to the plate? The answers to these questions will determine the pace of the U.S. EV transition."
Contact the author: patrick.george@insideevs.com
