A world where everyone drives an electric vehicle might be inevitable. But for now, a range of factors are driving consumers back to internal-combustion-engine (ICE) vehicles.
Despite price cuts and government incentives, EV adoption faces a multitude of challenges, including higher interest rates and sticker prices; range anxiety; charging time; and availability of charging infrastructure, all of which are contributing to softening EV demand in some markets.
That’s one of the key takeaways from Deloitte’s “2024 Global Automotive Consumer Study,” which indicates a notable shift in consumer preferences toward EVs.
In the United States, intent to purchase ICE vehicles is up nine percentage points from 2023 (to 67%), signaling significant near-term challenges in the shift toward electrification, according to the Deloitte study.
Globally, consumer interest in ICE vehicles also rebounded in Germany, Japan and the Republic of Korea (up 4% in each market).
“The automotive industry continues to face several challenges regarding the future of EV adoption,” said Masa Hasegawa, principal, global automotive, and strategy and operations practices, Deloitte Consulting LLP. “As a result of current sticker prices and apprehension around range anxiety, some consumers are steering back towards ICE platforms. This presents a challenge for a wide variety of ecosystem stakeholders, including government regulators, that are making generational investments to achieve ambitious EV adoption targets on an aggressive timeline.”
Consumer interest in battery electric vehicles (BEVs) is highest in China (33%), while Japanese consumers continue to show the highest preference toward hybrid electric vehicles (HEV/PHEV) (41%).
Amid moderating inflation, time required to charge has taken over as the top concern hindering EV adoption in the United States (50%), Japan (48%), Republic of Korea (48%), Southeast Asia (45%), India (43%) and China (42%). Driving range is top of mind in Germany (55%).
Overall, affordability remains a critical issue for the U.S. automotive industry, as most consumers surveyed still expect to pay less than $50,000 for their next vehicle, including 81% of those planning to purchase an ICE vehicle and 74% of those planning to purchase an EV.
“Against the backdrop of continued economic uncertainty, U.S. consumers are becoming increasingly concerned with their forward financial capacity and the share of wallet that meeting their mobility requirements represents,” said Karen Bowman, vice chair and U.S. automotive leader, Deloitte LLP. “As a result, interest in vehicle subscriptions and other mobility-as-a-service solutions that focus on creating an effective balance between affordability and convenience will be an interesting trend to observe, especially among younger, urban demographics.”
Despite ongoing concerns about climate change and reducing emissions, a desire to lower fuel costs is the main reason consumers choose EVs in the United States, Southeast Asia, Republic of Korea, Japan and Germany, according to the survey results. Only in India is concern for the environment the top motivator for purchasing an EV; in China, it’s the driving experience.
Deloitte’s “2024 Global Automotive Consumer Study” is based on a survey of more than 27,000 consumers from 26 countries conducted between September and October 2023.
