ElectricvehiclesSettingacoursefor2030Deloitte’sGlobalAutomotiveteamhelpsautomotivecompaniesexecuteinnovativeideasinexceptionalways.Weofferaglobal,integratedapproachcombinedwithbusinessandindustryknowledgetohelpourclientsexcelanywhereintheworld.ContacttheauthorsformoreinformationorreadmoreaboutourservicesonDeloitte.com.ContentsIntroduction2Part1:Globalprogressandforecast3EVsinregionalmarkets42030salesforecast6Fourfactorsdrivinggrowth7Part2:Newlandscape,newapproach12Segmentingthemarket12Checklistforthejourneyahead21Endnotes232ElectricvehiclesSINCEDELOITTELASTpresentedaforecastforelectricvehicle(EV)sales,inJanuary2019,theEVmarkethasmadegreatstrides,andnotjustintermsofsales.Originalequipmentmanufacturers(OEMS)haveinvestedbillionstodelivernewelectrifiedmodels,fromR&Dtofactoryredesign.Consumerattitudeshaveevolved.Governmentinterventionshavepushedforwardandpulledback.ButthenCOVID-19completelydisruptedglobalsalesandmanufacturing.Inthiscontext,arevisedforecastbasedonupdateddataisneeded.ByexaminingthecurrentstateoftheEVmarketworldwideandnotingthemanyfactorsfosteringgrowthinvariousdirections(Part1ofthisreport),wehaveformedconclusionsabouthowthemarketwilltakeshapeoverthenextdecade.ThesignificantgrowthofEVsleadingupto2030willpresentmajoropportunitiesandchallengesfortraditionalOEMs,new-entrantOEMs,captivefinancecompaniesanddealerships.Inparticular,traditionalOEMswillfindinsightsinthisreportthatcanhelpthemre-prioritisetheircustomersandstrategiesinavolatilecompetitivelandscape.Paramounttoseizingopportunitiesandman-agingrisksistakinganewapproachtomarketsegmentation.WedetailonesuchapproachinPart2andapplyitasausecasetoonemajormarket,theUnitedKingdom,toinformandinspireOEMsandotherstakeholdersglobally.Bylettingtoday’sinsightsfuelthejourneyforthenexttenyears,wecanacceleratebeyondtheobstaclesthepandemichasbroughtandtowardafuturewhereEVstakecentrestage.IntroductionBeforetheCOVID-19pandemicshookuptheautomotiveindustry–alongwitheveryotherindustry–electricvehiclesweremovingsteadilyintothespotlight.Thecombinedannualsalesofbatteryelectricvehiclesandplug-inhybridelectricvehiclestippedoverthetwo-million-vehiclemarkforthefirsttimein2019.Thismuch-anticipatedmilestonemayhavebecomeovershadowedbyeconomicuncertaintyandchangedconsumerpriorities,butthereisvalueintakingstockoftheelectricvehiclemarketevennow.Inthisreport,weusethetermelectricvehicles(EVs)torefertobatteryelectricvehicles(BEVs),aswellasplug-inhybridelectricvehicles(PHEVs).1Unlessspecificallystated,ouranalysishasconsideredbothformsofdrivetrain.•BEVsarepoweredsolelybybatteries.Theyuseanelectricmotortoturnthewheelsandproducezeroemissions.•PHEVsarecapableofzero-emissiondriving,typicallybetween20and30miles,andcanrunonpetrolordieselforlongertrips.Asthenamesuggests,theyneedtobepluggedintoanelectricitysupplytomaximisetheirzero-emissioncapability.3Settingacoursefor2030Part1:GlobalprogressandforecastTHEEVMARKET’Scollectiveaccomplishmentsoverthepasttwoyearsofferhope,despitetheshort-termimpactofCOVID-19:apatternofcontinuedgrowth,whichisexpectedtobesustainedthroughoutthe2020s.AsBEVandPHEVsalessurpassedtwomillionvehiclesin2019(seefigure1),EVsstakedtheirclaimona2.5percentshareofallnewcarsaleslastyear.LookingbackatBEVsin2019,theyaccountedfor74percentofglobalEVsales:anincreaseofsixpercentagepointssince2018.Thisrisewaspartlystimulatedbynew,stricterEuropeanemissionsstandardsthatpersuadedmanufacturerstofavourtheproductionandsaleofzero-emissionvehicles.AnotherfactoristheadvancedstateoftheBEVmarketinChina,comparedtotherestoftheworld.AlthoughBEVsarestillthedominantEVtechnologyintheUnitedStatesandEurope,theycommandasmallershareofthemarketthaninChina.SincethelasttimeDeloittereportedonEVsales,significantregionaldisparitiesingrowthhavesur-faced.Forexample,salesofEVsgrewby15percentin2019comparedto2018,drivenbythegrowthofBEVsinEurope(+93percent),China(+17percent)and‘other’regions(+22percent).Incon-trast,theUnitedStatesmarketforBEVsfell2percent(seefigure1).Then,inthefirsthalfof2020,COVID-19sloweddownthegrowthrateofEVsales,orsentitintodecline,acrossvariousregions.Thespeedofrecoveryisexpectedtovarybyregion.Source:Deloitteanalysis,IHSMarkit,EV-volumes.com2DeloitteInsightsdeloitte.com/insights2010201120122013201420152016201720182019FIGURE1EVs:annualpassenger-carandlight-dutyvehiclesalesinmajorregionsChinaBEVEVshareChinaPHEVEuropeBEVEuropePHEVUSBEVUSPHEVOtherBEVOtherPHEV050010001500200025000.0%0.5%1.0%1.5%2.0%2.5%3.0%EVssold(inthousands)Marketshare4ElectricvehiclesButgenerallyspeaking,thecourseseemsclearforgrowthoverthenextdecade,despitethepotentiallastingimpactofCOVID-19ontotalcarsalesoverthenextthreeyears.Tounder-standhowthingsmightcontinue,weneedtounderstandwhat’sbeentakingplaceacrossthevariousregionalmarketsoverthepastyear.EVsinregionalmarketsEUROPEEurope’sEVsectorsawsignificantlymoregrowththanotherregionsin2019.TheNordicsandtheNetherlandscontinuedtoleadtheway;Norwayachieved56percentmarketshare,andtwoofthetoptenbest-sellingcarsinHollandwereBEVs.3TheUnitedKingdomandsomeothercountriesreportedtriple-digitgrowthfortheyear.Favour-ablegovernmentpoliciesandachangeinconsumerattitudeswerethecatalysts,drivenprimarilybygrowingconcernsaboutclimatechange.ClimatechangerosetothetopofmanyEuropeangovernments’agendas.TheUnitedKingdomcommittedtoatargetofnetzeroemissionsby2050,andproposedabanonthesaleofallpollutingvehiclesby2035.4Germanyplanstocutgreenhousegasemissionsby40percentbytheendof2020,by55percentbytheendof2030andupto95percentbytheendof2050,comparedto1990levels.5Despitethegrowthseenin2019,mainstreamadop-tionofEVshasbeen,sofar,hinderedbythelimitednumberofmodelsavailabletotheEuropeanmarketandconsumerperceptionsregardinginsufficientcharginginfrastructureinsomeregions.6TheoutbreakofCOVID-19andnationallockdownmeasuresimpactedtotalcarsalesinEurope,asshowroomsclosedtheirdoorsandmanufacturershaltedproduction,butEVsaleshaveheldupwellincomparisontotheirinternalcombustionengine(ICE)equivalents.Inthefirstfourmonthsof2020,intheEuropeanUnion(EU),demandfornewpas-sengercarscontractedby38.5percent,butinApril2020–thefirstfullmonthwithCOVID-19restric-tionsinplace–registrationsofnewpassengercarsintheEUpostedayear-on-yeardeclineof76.3percent,withsomemajormarketsreportingdeclinesofover95percentyear-on-year.7ButEVsalesinWesternEuropeonlyfellby31percentinApril,withsomecountriesactuallyreportingmodestyear-on-yeargrowth–albeitagainstalowbase.8CHINAChinacontinuestodominatetheEVmarket,accountingforhalfofallvehiclesales.Salesinthesecondhalfof2019turnedoutlowerthanprevi-ouslyexpectedaftersomesubsidiesavailabletoChineseconsumerswerehalved.9ThisconsiderablyerodedtheconsumerdemandforEVs,andtotalyearlysalesdropped:PHEVsalesfellby9percentandBEVsalesfelltoa17percentgrowthratefrom2018to2019.10Onapositivenote,aslowdowninthesalesofICEvehiclesintheregionmeansthattheEVmarketshareinChinaactuallyincreased.ChinacontinuestodominatetheEVmarket,accountingforhalfofallvehiclesales.5Settingacoursefor2030China’sslowdowninthesecondhalfof2019affectedglobalEVsalesfigures,butneithertheslashedsubsidiesnortheimpactofCOVID-19shouldimpactEVsalessignificantlyinthelongterm.Chineseauthoritiesannouncedtheywouldrefrainfrommoresubsidycutsin2020.11Mean-while,otherincentives(forexample,number-plateprivilegesinTier1cities)remain,investmentisbeingmadeinChina’scharginginfrastructureandthereisacontinuedfocusonencouragingChinesemanufacturerstoproduceandmarketEVs.AsaresultoftheCOVID-19pandemicandlockdownmeasuresinplace,Chinasawa45percentdeclineinpassengercarsalesinQ12020.12EVsalesfellatafasterratethanthetotalmarket(by56percent),asconsumersstayedhomeandshowroomsclosedtheirdoors.13Buttherateofrecoveryhasbeenswift.ByMarch2020,Chinesefactorieshadrecoveredtoachieveaproductionrateof75percent,with86percentofemployeesreturningtowork.ByApril2020,productionhadbasicallybeenrestoredtopre-pandemiclevels.AlthoughsaleshaveremaineddepressedincertainChineseprovinces,recoveryhasbeenacceleratedbypent-updemand,favourablepoliciesputinplacebyChineseauthoritiesandtheabilitytopurchasecarsonline;totalsalesactuallyreflectedyear-on-yeargrowthinApril.Thisbringshopefora‘V-shaped’recoveryinChina,withmanyindividualEVmanufacturersalreadybenefittingfromthereleaseofnewmodels.14UNITEDSTATESAfteranencouragingstartto2019,fallingfuelpricesintheUnitedStates(amarketthatalreadyenjoyscomparativelycheapprivatetransportation)ledtoadisappointingsecondhalfoftheyearforEVsales.TheUnitedStatesEVmarketisalmostsinglehandedlybeingcarriedbythesuccessoftheTeslaModel3–aloneresponsibleforalmosthalfofallEVsales.15AsinEuropeandChina,UnitedStatescarsalesfellsharplyinthefirstthreemonthsof2020asthepan-demictookatollondemand;joblossesincreasedandlargeswathesofthepopulationwereorderedtostayhome.TherecoveryinEVsalesislikelytobeslowerintheUnitedStatesthaninothermajorregions,asmanufacturersdelaythelaunchofnewcarsandconsumerstakeadvantageoflowoilprices.RESTOFTHEWORLDTheworldoutsideEurope,ChinaandtheUnitedStatesislaggingbehindintermsofEVsales,forvariousreasons:alackofgovernmentcommit-menttoEVs,insufficientorunsuitablecharginginfrastructure,unavailabilityofEVsandculturaldifferencesregardingmobilitymodels.Forexample,Japanisamajorglobalcarmarket,butnewcarsalesaredominatedbydomesticOEMsthathavenotyetdevelopedthesamerangeofEVsastheirEuropeanandChinesecompetitors.Meanwhile,India,likemanymarkets,isdominatedbymass-andlow-costmobilitymodels:anareathatOEMshaven’tbeenabletopenetratesofar,becauseofEVs’comparativehigherprice.TheworldoutsideEurope,ChinaandtheUnitedStatesislaggingbehindintermsofelectricvehiclessales.6Electricvehicles2030salesforecastWithoneeyefirmlyonprogresssofar,Deloittehasanalysedthemostrecentindicatorstodevelopanup-to-datepredictionoftheEVmarketforthenexttenyears.WeknowthatBEVsalreadyoutperformPHEVsglobally,andpredictthatby2030,BEVswilllikelyaccountfor81percent(25.3million)ofallnewEVssold.Bycontrast,PHEVsalesareexpectedtoreach5.8millionby2030.ArecoveryfromCOVID-19willseeICEvehiclesreturntogrowth,upto2025(81.7million),thenexperienceadeclineinmarketpenetrationthereafter.OurglobalEVforecastisforacompoundannualgrowthrateof29percentachievedoverthenexttenyears:TotalEVsalesgrowingfrom2.5millionin2020to11.2millionin2025,thenreaching31.1millionby2030.EVswouldsecureapproximately32percentofthetotalmarketsharefornewcarsales(seefigure2).Annualcarsalesareunlikelytoreachpre-COVID-19levelsuntil2024.However,thepaceofrecoveryisforecastedtobearesultofaslowdowninICEsales;EVswillcontinuetohaveapositivetrajectoryduringtheCOVID-19recoveryperiodandmaywellendupcapturingadispro-portionateshareofthemarketintheshortterm.Deloitteexpectsthatby2030Chinawillhold49percentoftheglobalEVmarket,Europewillaccountfor27percent,andtheUnitedStateswillhold14percent.TheshareofnewcarsalestakenupbyEVswillvaryconsiderablyacrossmarkets(seefigure3).WeforecastChinatoachieveadomesticmarketshareofaround48percentby2030–almostdoublethatoftheUnitedStates(27percent),andEuropeshouldachieve42percent.Butthisdoesn’ttellthewholestory.GrowthinNorthernandWesternEuropeisexpectedtooutstripthatinSouthernandEasternEuropeaswealthiercountries(suchastheUnitedKingdom,Germany,France,theNetherlands,Nordiccountries)likelyinvestmoreininfrastructureandoffergreatercashandtaxincentivestoaccelerateinitialgrowth.Source:Deloitteanalysis,IHSMarkit,EV-Volumes.com16DeloitteInsightsdeloitte.com/insights201020112012201320142015201620172018201920202021202220232024202520262027202820292030FIGURE2Outlookforannualglobalpassenger-carandlight-dutyvehiclesales,to2030GlobalICEGlobalBEVGlobalPHEV0255075100EVshareGlobalpassengercarandlightdutyvehiclesales(inmillions)Globalmarketshare0%25%50%75%100%7Settingacoursefor2030FourfactorsdrivinggrowthDespitethepressureexertedonthemarketbytheCOVID-19pandemic,thelong-termoutlookforEVsisstrong.ThesignificantshiftinexpectedvolumeofBEVsandPHEVsby2030isbasedonfourfactors:consumersentiment,policyandregulation,OEMstrategyandtheroleofcorporatecompanies.Allfourofthesefactorssawmajorchangesindirectionoverthelastyear,priortotheemergenceofCOVID-19,andhavesincebeenshapedfurtherbythepandemic.FACTOR1–CHANGINGCONSUMERSENTIMENTConsumerdemandwillfuelthegrowthofEVsbut,atthemoment,thereareseveralreasonsconsumershaven’tswappedtheirICEvehiclesforequivalentEVs.However,asthebarrierstoadoptionarerapidlyremoved,EVsareincreasinglybecomingarealisticandviableoption.Figure4showshowconsumerconcernsregardingBEVshavechanged,andinmanyinstancesdiminished,since2018.Source:Deloitteanalysis,IHSMarkit,EV-Volumes.com17DeloitteInsightsdeloitte.com/insights201020112012201320142015201620172018201920202021202220232024202520262027202820292030FIGURE3OutlookforEVmarketsharebymajorregionUS-EVmarketshare0%10%20%30%40%50%Europe-EVmarketshareChina-EVmarketshareEVGlobalshareofsalesEVGROWTHBEYOND2030Beyond2030,weexpecttherateofgrowthinEVsalestoslow.SomemarketswillbeunabletosupportthetransitiontoEVsinthesamewaythatwealthiernationswilloverthenextdecade.Considerthat,beyond2030,oneofthekeyfactorsinsustaininggrowthwillbetheimplementationofsuitablecharginginfrastructure.Thisrequiresmulti-billion-dollarcapitalinvestments–achievableinsomemarketsthroughacombinationofpublicandprivateinvestment,butunlikelytobeachieveduniformlyaroundtheworld.Incountriesthatcannotinvestincharginginfrastructure,weexpectthemarketforICEvehiclestoremainforsometime.8ElectricvehiclesFrom2018to2020,thereweresomenoticeablechangesinconsumerattitudestowardEVs.Concernsoverthecost/pricepremiumhavediminishedineverycountryapartfromChina(+twopercentagepoints),whichhasseencutsinEVsubsidies.DrivingrangehasremainedthenumberoneconcerninGermany,andbecamenumberoneinFrance,buttherearenowfewerconsumerscitingitasaconcerninthosetwomarkets.Elsewhere,thelackofcharginginfrastructurehasbecomethetoppriorityforconsumers,reflectingthepossibilitythattheyarestartingtoseeEVsasarealisticoptionandareconsideringthepracticalitiesofownership.Overthenextfewyears,weexpectsomebarrierstobecompletelyremoved.EVs’drivingrangeisalreadycomparabletothatofICEvehicles;pricehasalreadyreachedparity,ifyouconsidersubsidiesinvariousmarketsandtotalcostofownership;andthenumberofmodelsavailableisincreasing.AsEVsalescontinuetogrowandconsumersseemoreofthemontheroads,ortravelinEVsownedbyfamilyorfriends,weexpectpersonalexperiencestotrumpconcerns.TheexpectedproliferationofcommercialEVs(suchasvans,trucks,lorries)shouldalsoplayapartinreassurance,aswilltheriseofmass-transitoptions(suchaselectricbuses).MeasuresthatgovernmentstakeintheirCOVID-19recoveryplanscouldalsoaffectconsumersenti-ment.Aspartofa$146billioneconomicrecoveryplan,Germanyhasdesignated$2.8billiontoEVcharginginfrastructureandannouncednewlegislationthatwillobligeallfuelstationstohaveanEVchargingpoint.19Thisissignificantprogressinacountrywheredrivingrangeandlackofcharginginfrastructurearethetwobiggestbarriersforconsumers.Chinahasmadesimilarcommitments,announcinganadditional$378millioninvestmentincharginginfrastructureaspartofaCOVID-19recoveryplan.20Source:DeloitteGlobalAutoConsumerStudy18DeloitteInsightsdeloitte.com/insights2020GlobalAutoConsumerStudyInyouropinion,whatisthegreatestconcernregardingallbattery-poweredelectricvehicles?DrivingrangeCost/pricepremiumTimerequiredtochargeLackofelectricvehiclecharginginfrastructureSafetyconcernswithbatterytechnologyOthersTotalSamplesize31%28%35%33%4%27%26%22%25%22%24%25%32%22%22%15%19%13%24%16%9%12%26%18%11%15%11%14%18%16%13%16%12%15%10%14%16%22%20%25%44%32%22%33%18%20%22%29%4%11%5%10%7%10%6%12%22%31%8%13%6%2%7%3%8%2%9%1%14%0%10%1%100%100%100%100%100%100%100%100%100%100%100%100%1,0831,2661,2873,0021,0481,2749651,2641,6063,0191,5133,006FRANCEGERMANYITALYUKCHINAUS201820202018202020182020201820202018202020182020FIGURE4ConsumerprioritiesforEVadoption,2018and2020Greaterconcernsareshowninorange.9Settingacoursefor2030FACTOR2–POLICYANDLEGISLATIONGovernmentinterventioncontinuestoplayanimportantroleindrivingEVsales,asshownbythesuccessesinNorway,fluctuatingsalesintheNetherlandsandchangingfortunesoftheChineseEVmarket.21Notonlyarethereeconomicbenefitsforstatesthatsupportatransitiontoelectric,butthepositiveenvironmentalimpacthasmadethewidespreadadoptionofEVsanecessarysteptowardachievingclimate-changegoals,suchasthoseofthe2015ParisAgree-ment.SeveralpoliciesandregulationsarehelpingencouragethegrowthofEVadoption:FueleconomyandemissiontargetsThesedifferacrossmarketsandareunderconstantreviewandconsultationbygovernments.RecentDeloitteanalysisshowsthatwiththephasing-inofnewEuropeanCO2emissiontargets,whichwillbefullyimplementedin2021andbringpunitivefines,22halfofcarmanufacturersarefacingrelatedpenaltypayments.They’lloweatotalof$0.5billionin2020and$3.7billionin2021,23whichcouldcosttheindustryapproximately$39billion,basedonrecentemissionlevels.24SuchgovernmentinterventionisshapingOEMstrategy:toavoidfinesandreputationalfallout,OEMsareseekingwaystoreduceemissionsthroughincreasedelectrification.CityaccessrestrictionsCitygovernmentshaveledthewayonimposingbans,orpunitivetaxes,onusersofoldercom-bustionengines,addressingincreasingconcernsabouttoxicairpollution.pollution.In2019morecitiesfollowedthepathalreadytakeninMadrid,MexicoCity,RomeandSeattle:Am-sterdam,BrusselsandBarcelonaalltookactiontoreducethenumberofICEvehiclesontheroad.SeveralUnitedKingdomcitiesalsobroughtforwardplansforbansandzero-/low-emissionzones.Throughout2020weexpectthistrendtocontinueascitiesworldwidegrapplewithairpollutionandconfronttheirrelationshipswithcombustionengines–andprivatecarsingeneral.FinancialincentivesManygovernmentshaveofferedcompellingfinancialincentivestomaketheelectricswitch,suchasprovidingcashsubsidiestoconsumersbuyinglow-emissionvehicles,reducingtaxesonEVsandincreasingormaintainingtaxesonICEvehicles.ButasEVsreachpriceparitywithICEvehicles,somegovernmentshaveexploredrollingbacksuchincentives;thiscanhaveadramaticandimmediateeffectonEVsales,asseenbytherecentfluctuationsinsalesinChinaandtheNetherlands.Instead,inlightofCOVID-19,theneedtostimulatetotalnewcarpurchaseshaspromptedarangeofnewfinancialincentivesintroducedacrossmajormarkets,someofwhichclearlyfavourEVs.Forexample,inGermanythegovernmenthastemporarilyloweredVATfrom19percentto16percentonlow-emissionvehiclesanddoubledexistingsubsidiestoalmost$7,000onEVscostinglessthan$45,000.25InFrance,privateconsumerswhobuyelectriccars(thatcostupto$50,000)nowreceiveanalmost$8,000incentive,upfromaround$7,000;thoselookingtogetridoftheiroldcarsnowreceivedoublethepreviousvalueofferedbyascrappagescheme,whichwasdesignedtogetless-efficientmodelsofftheroad.26Underbothschemes,aconsumerreplacinganoldercarforanewEVcouldbeeligibleforupto$13,500.Meanwhile,inChina,EVsubsidiesandtaxbreakpoliciessettoexpirein2020wereextendedto2022inadirectresponsetotheeconomicimpactofCOVID-19.27Inthelongterm,theviabilityoffinancialincentiveswillneedtobereconsideredastheeconomicrecoveryfromthepandemicbecomesclearerandgovernmentstrytomanageotherconcerns,suchaspotentiallostfuel-taxrevenues.10ElectricvehiclesFACTOR3–OEMVEHICLESTRATEGYInthepastyear,someprominentOEMshaveannouncedstrategiccommitmentstoEVs(seefigure5).Newmodelshavebeenannounced,productiontargetsincreasedandsalestargetsmovedforwardandmultiplied.Intheshortterm,COVID-19mayhindersomeOEMsintheirreachforthesetargets,astheyconservecashanddivertinvestmentselsewhereinthebusiness.Butinthelongterm,weexpectthesetargetstocontinueasprioritiesforOEMs.Theimpactoftheinvestmentandtargetsshowninfigure5willrepresentaseismicmarketshiftoverthenextdecade,intermsofavailabilityandaffordabilityofmodels.AvailabilityofmodelsRecentcompanyannouncementshavemadeitclearthattherewillbesubstantiallymoreEVmodelscommerciallyavailableoverthenextdecadethanpreviouslythought.AccordingtostatisticscitedbytheEuropeanFederationforTransportandEnvi-ronment,Europeshouldexpect33newmodelsin2020,22in2021,30in2022and33in2023.29ThismeansthatBEVmodelsavailableintheEUwillsurpass100in2022andreach172in2025.IntheUnitedStates,IHSMarkitpredictstherewillbe130availablemodelsby2026,offeredby43brands.30Source:Deloitteanalysis28DeloitteInsightsdeloitte.com/insightsFIGURE5TimelineofstrategicOEMtargetsforEVsTesla:Chinaplantproductionbeginswithcapacityof.5mEV’sayearJLR:Toinvest£1bntobuildelectriccarsintheUKSAIC/VW:Invest$2.33bnintwoseparateChineseelectricvehicleplayersFiatChrysler:30newbattery-poweredorhybridvehiclesby202260%ofcarsinEuropetobehybridorfullyelectricRenault-Nissan-Mitsubishi:12electrifiedand8pureEVsinrange;42%ofEuropeansalestobeEVsby2022(Nissan)BMW:25EVsinrangeby2023GM:~1mglobalEVsalesby2025Honda:2/3rdofglobalsalesEVsVWGroup:25%globalsalestobeelectric;Upto3mBEVsannuallyby2025,including1.5mbytheVWbrandVolvo:Reach1mtotalEVsalesby2025EV’storepresent50%ofglobalsalesVWGroup:70newelectricmodelsby2028insteadofthe50previouslyplanned;40%globalsalestobeelectricby2030Daimler:EV’stomakeupmorethan50%ofsalesGM:CadillactobemajorityEVHyundai:Toinvest$87bninvehicleelectrificationby2025;EVrangetoexpandto44modelsby2025;Targetof670kannualEVsalesby2025BMW:ElectrifyEuropeanmarket–33%by2025Mazda:AllmodelsEVs/hybridsbyearly2030sBMW:ElectrifyEuropeanmarket–50%by2030Toyota:Targetof5.5mtotalEVsalesand.5msalesin2025BMW:ElectrifyEuropeanmarket–25%by2021;1mEVsonroadby2021Toyota/BYD:JointventuretodeveloppureEVsToyota:targets30kEVsalesMazda:releasesfirstEVBYDandHinosignastrategicbusinessallianceagreementforcommercialBEVsdevelopmentHonda:AllEuropeanmainstreammodelstobeelectrifiedby2022(insteadof2025)GM:‘Ontrack’tomeet20EVmodelstargetby2023VWGroup:1mEVsalesFord:40EVsin‘globalportfolio’;Toinvest$11.5bnonEVmodelsby202220202030202120232025202211Settingacoursefor2030AffordabilityofmodelsAchievingpriceparitywith,orevensavingsover,ICEvehicleswillplayabigroleinspeedingupEVadoption,especiallyasmodelrangesandmarketingprioritiesadapttomanufactureremissiontargets.Akeytakeawayfrommonthlysalesfiguresin2019isjusthowsensitiveconsumersaretotherelativetotalcostofownershipwhenitcomestoEVsversusICEvehicles.Thisincludesupfrontcosts(asseenintheChineseEVsalesdropwhensubsidieswerecut)andshort-termcosts,likefuel(asseenintheUnitedStates,whereEVsalesdippedrightalongwithfuelprices).Basedonrecentcompanyan-nouncements,overthenextdecadeweexpecttoseeEVs–particularlyBEVs–becomeavailableatthelow-costendofthemarket,buttheroll-outofEVsacrossallpartsofthemarketislikelytobeuneven.EvenwithmoreOEMsofferingaffordableEVmodels,consumersarestillunwillingtopayapremiumforanEVinsteadofitsICEequiv-alent.However,weexpecttheexistingpricepremiumassociatedwithEVstobeconsignedtohistorysoonerratherthanlater.Insomecases,thetotalcostofowningaBEVorPHEVforprivatebuyersisalreadylessthanfortheICEequivalent,andtheannualcostofownershipisalsobalancingout.Meanwhile,forbusinessesandcustomersthatusecompanycarschemes,favourabletaxschemeshavealreadycreatedanenvironmentwhereEVscanoffersavings.FACTOR4–THEROLEOFCORPORATECOMPANIESWeareseeinganincreasinglyimportantroleforcorporatestosupportthetransitiontoEVs,usingthethreefactorshighlightedabovetotheiradvantage.Salesofnewcarstobusinessesrepresentsasignificantproportionofallcarssold.Forinstance,Deloittepreviouslypredictedthatcorporateswouldaccountfor63percentoftotalnewcarsalesacrossWesternEuropeby2021.31Inthepastyear,purposehascontinuedrisingtothetopofthecorporateagenda,withanincreasingnumberofcompaniesseekingtodifferentiatethemselvesbyactingasaforceforpositivechange.Becausetravelisamajoravenueforbusinessestoalleviateemissions,moreandmorecompaniesareconsideringhowtheycansupportashifttoEVs.Traditionalcompanycarschemesareripeforreinvention:Byexploringbroadermobilityoptions,businessesarefindingvaluenotjustinemissionsreduction,butincostsavingsandimprovedemployeesatisfaction.GovernmenttaxschemesthattargetcompanycarsputtheemphasisfirmlyonbusinessestoleadthewayintheshifttoEVs.InlightofCOVID-19,investmentinfleetshasstalleddramaticallyascorporatesreducetheirexpenditureandprioritiseotherinvestments.BeforeacomprehensivetransitiontoEVscantakeplace,businessconfidenceneedstoberestoredandfundsmadeavailableagain.Cor-poratesalsoneedtoconsiderhowfundamentalchangestohowandwhereworkisdonewillaffectthestructureoftheirmobilityschemes.WeexpecttheexistingpricepremiumassociatedwithEVstobeconsignedtohistorysoonerratherthanlater.12ElectricvehiclesPart2:Newlandscape,newapproachINOURPREVIOUSreport,weidentifiedunprece-dentedlevelsofcompetitionthatthreatenedincumbentOEMsastheshifttoEVsbegantakingshape.32ThatthreathasreducedsomewhatoverthepastyearasthoseOEMsdoubleddownontheirinvestmentinthesector,andastherealityofcom-petingintheautomotiveindustryhithomefornewmarketentrants.InChina,forinstance,486registeredEVmanufac-turershaveraisedover$18billioninfundingsince2011,buttheircollectivemanufacturingcapacityisunsustainable–consideringallreasonablesalesforecasts.34Asaresult,weexpecttoseeconsoli-dationofthemarket;somenewentrantswillfail,andthenumberofpartnershipsandjointventuresbetweenChinesemanufacturersandWesternOEMswillrise.OutsideChina,manyestablishedOEMsareactuallyinvestinginstart-upstotakeadvantageofthecapabilitiesthey’vebuilt.34Despitethemarginaldeclineinthethreatfromnewentrantsandstart-ups,therehasn’tbeenaconsistentspeedatwhichincumbentOEMshavereactedto,andplannedfor,thegrowthofEVs.TheabilityofsomemanufacturerstoswiftlyaccommodatethefutureofEVs,andtradeintheirtraditionalapproachesforcreativethinking,meansthatthecompetitivelandscapewilllikelyre-arrangeitselfaccordingly.SegmentingthemarketInanincreasinglycompetitivemarketplace,allau-tomotiveindustrystakeholders–establishedOEMs,newentrants,captivefinancehousesanddealer-ships,forexample–shouldconsiderhowtheycanconvinceconsumerstopurchaseanEV–or,specif-ically,theirEV.Theobviouschoicesaretoensurecurrentcustomersremainloyalduringthetransi-tionfromICEtoEV,ortoconvertnewcustomerstoanEVbrandorproduct.Avaluableexercisetoachieveeitherobjective(orboth)isthrougharefreshedcustomersegmentationapproach:Targetingconsumersbytheirbehaviourandneeds.Inthesectionsthatfollow,we’veusedtheUnitedKingdomasausecaseformarketsegmentation,basedonMonitorDeloitte’sGrowthPath®ActionSegmentation®.35Althoughtherearesignificantdifferencesworldwidewhenitcomestothestructureoftheautomotiveindustry,theretailmarket,thereadinessforEVadoptionandcon-sumerattitudesandbehaviours,theprinciplesofsegmentationoutlinedbelowcanbeappliedtomanymajormarkets.Forthosewheretheycannot,thecentraltenetremainstrue:RefreshingyourconsumersegmentationapproachcanbenefitEVsales,stimulatingtheoverallgrowthofthemarket.13Settingacoursefor2030USECASE:UNITEDKINGDOMInNovember2019Deloitteconductedasurveyof1,496UnitedKingdomresidentswhoarethinkingofbuyingacarinthenextthreeyears.MorethanhalfofrespondentswereconsideringanEV–sig-nificantlymorethanthoseconsideringapetrolordieselcar(35percent).Buttheirintentiondoesn’tmeananautomaticconversionintopurchases.AlthoughsalesofEVsintheUnitedKingdomarerising,BEVsandPHEVscombinedstillonlycom-mandeda3.1percentshareofthemarketin2019.It’sclearthatthereisanopportunityheretoputconsumersunderthemicroscope,discerningcertaincharacteristicsthatwillaidinmarketsegmentationandboostEVconversion.Ourgoalofmeaningfulandactionablesegmenta-tionbeginswiththeUnitedKingdomsurveyresults:Basedontheopinionsofthesebuyers,wecancreateasegmentationframeworkbasedondrivingbehaviourandamixofconsumeranddemographicvariables(seefigure6).IntheUnitedKingdom,themostprominentdifferencesinbehaviourandattitudesidentifiedinoursurveyweredeterminedbyhowoldaconsumeris,howmuchtheyspendeachmonthandwhethertheycurrentlyownacarornot.Behaviourandattitudesalsovariedsignificantly,basedonhowrespondentsplanonusingtheirnextcarandthedistancestheyregularlytravel.Fromtheframework,wecanseeninepotentialsegmentsthatcancategorisefuturecarbuyers,allwithvariousmeaningfulcharacteristics,be-havioursandneedstotargetandaddress(seefigure7).Tocalculateanapproximatemarketsizeforeachsegment,arecentindustrystudyoffersinsight:56percentofadults(17yearsandolder)believetheywilldefinitelyorprobablypurchaseacarinthenextthreeyears–atotaladdressablemarketofabout30millionpeople.38Commute=Point-to-pointjourneystypicallyfromhometoplaceofworkandbackagain.Travel=Morevariedthanastandardcommute,journeysarefromhometoanumberofdifferentlocations.Source:Deloitteanalysis37DeloitteInsightsdeloitte.com/insightsCurrentcarownershipDon’townacarWorkRegularlydrivelongdistancesRarelydrivelongdistancesRarelydrivelongdistancesCommutePersonalTravel51+Boughtoutrightorspend<£299/monthBoughtoutrightorspend<£299/month+£300/month+£300/monthCurrentlyownacar<3031-50AgeCurrentmonthlyspendoncar,orifboughtoutrightPrimaryuseofnextcarFurtherbreakdownonusewithinworkHowthecarisusedfortrips>100milesFIGURE6Automotiveconsumersegmentationframework14ElectricvehiclesSource:Deloitteanalysis40DeloitteInsightsdeloitte.com/insightsSEGMENTAPotentialaddressablemarketofcirca3millionpeople:Allages;donotownacar;willuseitformultiplepurposesSEGMENTBCirca5.25millionpeople:Point-to-pointcommuters;rarelytravellongdistances;ages17–50;thoseaged31–50willbuyoutrightorspendlessthan£299/month($382/month)SEGMENTCCirca1.75millionpeople:Long-distancecommuters;ages17–50;thoseaged31–50willbuyoutrightorspendlessthan£299/month($382/month)SEGMENTDCirca2.5millionpeople:Underage30;willspendlessthan£299/month($382/month)orbuyoutrightforworktravelorpersonaluseSEGMENTECirca2.75millionpeople:Underage30;willspend£300+/month($383+/month)orbuyoutrightforworktravelorpersonaluseSEGMENTFCirca5millionpeople:Ages31–50;willspendlessthan£299/month($382/month)orbuyoutrightforlimitedworktravelorpersonaluseSEGMENTGCirca2millionpeople:Ages31–50,regularlytravellongdistancesorcommuteforwork;willspend£300+/month($383+/month)SEGMENTHCirca2.5millionpeople:Ages31–50;willspend£300+/month($383+/month);willuseforshortworktravelorpersonaluseSEGMENTICirca5millionpeople:Ages51+;willuseformultiplepurposesFIGURE8ConsumersegmentdescriptionsoftheUnitedKingdomautomotivemarketUsingtheannualaverageGBP/USDexchangeratefor2019,<£299/month=<$382/monthand+£300/month=+$383/monthSource:Deloitteanalysis39DeloitteInsightsdeloitte.com/insightsDon’townacarWorkRegularlydrivelongdistancesRarelydrivelongdistancesRarelydrivelongdistancesCommutePersonalTravel51+Boughtoutrightorspend<£299/monthBoughtoutrightorspend<£299/month+£300/month+£300/monthCurrentlyownacar<3031-50A10%D9%E9%G7%H9%F17%B18%C6%I17%FIGURE7ThenineconsumersegmentsoftheUnitedKingdomautomotivemarket%reflectoverallsizeofthesegment15Settingacoursefor2030KeybehaviouraldifferencesThiskindofsegmentationprovidesadetailedunderstandingofmodernautomotiveconsumers’needs,wantsandbehaviours.BeforedefiningthenuancesofeachUnitedKingdomsegmentbycreatingCustomerPortraits,let’sconsidertheobviousdifferencesinkeybehavioursandattitudes:•Brandloyalty:SegmentsEandGarethemostbrandloyal,usuallybuyingthesamebrand(47percentand46percent,respectively,versustheaverage27percent);thistranslatestotheirintendedpurchasingbehaviour–bothtypesofconsumerbelievetheywouldbuyanEVfromtheircurrentbrand(48percentand64percent,respectively,versustheaverage37percent).SegmentsFandIaremostlikelytoconsiderswitchingbrandstofindamoresuitableEV(47percentand49percent,respectively,versustheaverage36percent).SegmentAismostlikelytoconsiderchoosingeitheranEVstart-upbrand(42percentversustheaverage25percent)oranexistingbrandnotcurrentlyassoci-atedwithautomotiveproducts(12percentversustheaverage5percent).•Research:SegmentEismostlikelytoalreadyknowwhatcartheyintendtobuypriortoresearching(50percentversustheaverage28percent).SegmentAandSegmentIaretheleastlikelytoknow(40percenteachversustheaverage26percent).•Ownershipbenefits:SegmentBisthemostlikelytothinkenvironmentalreasonsarethebiggestadvantagetoEVs(22percentversustheaverage17percent).SegmentAconsidersdriv-ingexperiencetobethebiggestadvantage(36percentversustheaverage27percent).•Pricesensitivity:MostsegmentswouldpaymoreforanEV.SegmentEisthemostlikelytopay£100($128)ormorepermonth(15percentversustheaverage5percent).SegmentsFandIaretheleastlikelytopaymoreforanEV(28percentand35percent,respectively,versustheaverage23percent).Thesecharacteristicsareworthyofcarefulconsiderationinthenextstepofthesegmen-tationexercise:buildingCustomerPortraits.CustomerPortraits:DrivingachangeinbehaviourBuildingaCustomerPortraitforeachtargetsegmentinvitesinsightsintokeyaspectsofaconsumerthat,whenviewedcollectively,explaintheirbehaviour.Itoutlineswhattheydoandwhytheydoit,identifyingthemotivesfor,andbarriersto,behaviouralchange–orlackthereof.Ultimately,thisallowsanOEM,captivefinancecompanyordealershiptoeffectivelytargetandencouragedesiredbehavioursbyrevisingmarketingandactivationstrategies.Adetailedanalysisofsurveyresponsesandaddi-tionalqualitativeresearchinformstheindividualprofiles.Eachillustratesatypicalconsumerinasegment,definestheirkeycharacteristics,andthenusesthedistilledinformationtopresentwaysthatpersonacanbespecificallytargeted.Asanexample,webuiltthreeCustomerPortraitsforsegmentsofUnitedKingdom–basedconsumers,completewithsuggestedactionsforOEMs.16ElectricvehiclesSource:Deloitteanalysis.DeloitteInsightsdeloitte.com/insightsFIGURE9SegmentBCustomerPortraitTypicalpersonaMyhusbandandIboughtourlatestcarfromourlocaldealer,onagreatfinanceplantheyorganised,whichhasreallybroughtdownourmonthlyspend.It’sasmallpetrolcar,similartoourpreviousone,justadifferentbrand.Primarily,weusethecartogettoandfromwork,whichisn’tfar,somostofthetimeit’seithersittingonourdrivewayorintheworkcarpark,butthat’sallwereallyneeditfor.Attheweekend,weuseitforshortpersonaltripstotheshops,butrarelydoweuseitforlongdistances.We’renotlookingforluxury–justsomethingthatwecantrusttogetusfromAtoB.I’mnotsureourcurrentbrandoffersanelectriccartosuitourneedsatthemoment,sowewouldprobablylooktoanotherestablishedmanufacturerwhenweswitch.IthinkEVsaremuchbetterfortheenvironment,butjustnotsureiftheyarepracticalforourday-to-dayuseatthemoment.SARAH31,Husband,NochildrenHouseholdincome:£25k–50k($32k-$64k)Currentlyowns:Smallpetrolcar•DevelopacompellingpropositionforbuyingausedEV,withalowerpricepointandadditionalinformationontheimplicationsforbatteryrangeandperformance.•Conductsignificantmarketingeffortstomakenon-customersawareoftherangeofsmaller,cheapermodelsyouarebringingtomarket.•Investinajoined-up,omnichannelpurchasingjourney,offeringengagingandaccessibleinformationonlineaboutthepracticalitiesofowninganEV,howthisisdifferentfromtraditionalvehicles,andenvironmentalbenefits;ensurethiscustomerinformationiscascadedtolocaldealerssotheycanconverttoasalewhenthecustomerdecidestotest-drive/purchase.Significantlymorelikelytobuyfromatraditionaldealer90%78%vs.SlightlylesswillingtopaymoreforaBEVthanaverage66%69%vs.Mostlikelysegmenttoresearchonlinepriortopurchase27%21%vs.Donotusuallybuyfromthesamebrand17%27%vs.80%67%Chargingtimevs.67%60%Batteryrangevs.MOSTINTERESTEDINKNOWINGMOREABOUT…Resalevaluevs.17%23%LEASTINTERESTEDINKNOWINGMOREABOUT…KEYCHARACTERISTICSHOWCANOEMSWININTHISSEGMENT?SegmentBAverage17Settingacoursefor2030Source:Deloitteanalysis.DeloitteInsightsdeloitte.com/insightsFIGURE10SegmentDCustomerPortraitTypicalpersonaI’mexcitedtohavefinisheduniversityandstartedworkinginmyfirstjob.Ireallycareabouttheenvironmentandsustainabilitybut,withoutabigbudget,EVsseemwaybeyondmyreach.I’dlovetoownanEVsportscaroneday–I’veseencarsinretailstoreswhenI’moutshoppingandthey’rereallycool.Ican’twaittoseemorestart-upsbringingoutEVs!Unlikemyparents,Iwouldn’treallyworryabouttherange.Thetechnologyisimprovingallthetime,andIreadalotaboutEVssoIknowwhatthey’reallabout.Idriveunder400milesamonth,sofornowI’vesettledonsomethingused,smallandeconomical.I’mnotreallytoofussedaboutbrandandluxury;mygoalwasjustsomethingnippythatIcouldaffordtobuywithcash.OLIVER25,Single,NochildrenHouseholdincome:£50korless($64korless)Currentlyowns:Used,microcar•FosterbrandawarenessofdedicatedanddifferentiatedEVbrandswitha‘start-up’feel.•Developalower-costsubscriptionservice,witharewardschemeforthingslikefriend/familyrecommendationsandsmartcharging.•Conductsignificantmarketingeffortstomakeyoungercustomersawareoftherangeofsmaller,cheapermodelsyouarebringingtomarket.•Investinaninnovativeretailexperience,focusingontechnology,vehiclepracticalitiesandsustainability–and,importantly,offeringtheabilitytomakeapurchasewithoutanobviousdealerhandover.Significantlylesslikelytobuyfromatraditionaldealer67%78%vs.Morelikelytoswitchbrands47%40%vs.Likelytoresearchviarecommendations,andretailstoresorpopups19%11%vs.MorelikelytothinkstartupswillproduceEVsofthefuture35%25%vs.80%67%Technologyvs.67%60%Environmentalimpactvs.MOSTINTERESTEDINKNOWINGMOREABOUT…Batteryrangevs.17%23%LEASTINTERESTEDINKNOWINGMOREABOUT…SegmentDAverageKEYCHARACTERISTICSHOWCANOEMSWININTHISSEGMENT?18ElectricvehiclesSource:Deloitteanalysis.DeloitteInsightsdeloitte.com/insightsFIGURE11SegmentGCustomerPortraitTypicalpersonaIoftendrivelongdistancesforwork,andasIspendsomuchtimeinthecareveryweekIliketoinvestinsomethinglargerandmorecomfortablethatI’mgoingtoenjoydrivingandthatwillfitthechildreninattheweekend.Ialwaysbuynewanddon’tmindspendingmoreonmycar,butIwanttoknowit’sagoodinvestment,andIcansellitlateronforagoodprice.Iusuallybuyfromthesamebrand,they'reluxurybuttheyofferthebestservice.IalreadyknowwhichcarIwantandsowillprobablygostraighttothedealer,butifIneededtoresearchitmore,Imightconsideroneoftheirnewretailstores,thoughIwouldn’tbuyfromthere.IrecogniseEVsarebetterfortheenvironment,andanumberofmyfriendsalreadyownone,butI’mmoreinterestedinstyle,andI’mnotsureaboutthepracticalityofmylongdrivesforwork.IthinkmycurrentbrandwillbeabletooffermeasuitableEVatsomepoint,soI’munlikelytoswitchuntilthen.SUZANNE45,Husband,ThreechildrenHouseholdincome:£50k–100k($64k-$128k)Currentlyowns:Largepetrolcar•Developatransitionstrategyfor‘loyal’customers,toensurethatwhentheyarereadytomovefromICEtoBEVtheyhavetheinformationtheyneedandthemodelavailabilitytheywant,continuingthestrongbrandaffinityandminimisingtheriskthattheywillswitchbrands.•Proactivelyupselladd-onswithlargerandluxuryvehicles,includingtechnologyoptions,ongoingmaintenanceandservicepackages,valetservicedeals,ordata-focusedservices,toimprovethecustomerexperienceandstrengthentheongoingconnectionwiththebrand.•Workwithleasingprovidersandlargefleetoperatorstoensurethelatestmodelsoflargerandexecutivemodelsareavailableandreadytoorder.MostlikelytothinktheircurrentcarbrandisbestplacedtoofferanEV55%33%vs.Significantlymorelikelytopay£60+($77+)permonthmoreforaBEV25%15%vs.Carfeatures(e.g.,comfortandstyle)mostimportantinnextpurchase61%43%vs.Significantlymorelikelytoknowwhattheyintendtobuybeforeresearching46%28%vs.67%67%Chargingtimevs.52%60%Batteryrangevs.35%23%Resalevaluevs.MOSTINTERESTEDINKNOWINGMOREABOUT…Environmentalimpactvs.3%11%LEASTINTERESTEDINKNOWINGMOREABOUT…KEYCHARACTERISTICSHOWCANOEMSWININTHISSEGMENT?SegmentGAverage19Settingacoursefor2030PrioritisetodrivepurchasesHavingdevelopedthesenuancedCustomerPortraits,OEMsandotherstakeholderscandrilldownintotheobservationstodrawcon-clusionsaboutwhoislikelytobuywhat.Thiswillhighlightsegmentstoprioritiseandwheremarketingandpropositiondevelopmentbudgetscanbedeployedmosteffectively.SomesegmentsarenaturallymoreinterestedinpurchasinganEVthanothers;OEMsandtheirpartnersmaylooktotargetthemfirst–iftherightproductmix,capabilitiesandinsightareavailabletodosoeffectively.InourUnitedKingdomexample(seefigure8),SegmentGisthemostlikelytoconsiderbuyinganEV(69percentversustheaverage50percent)–perhapsnotsurprising,giventherelativelyhigherpricetagofEVsuptothispointandthegreaterlikelihoodofthoseconsumershavingoff-streetparking(77percentversustheaverage72percent).SegmentCisalsosignificantlymorelikelythanothersegmentstoconsideranEV,buttheseconsumers’motivesseeminglyrelatetothedistancetheyregularlytravelandtheirawarenessofpotentialownershipsavings(e.g.,throughlowerfuelcostsandreducedmaintenancecosts).Source:Deloitteanalysis41DeloitteInsightsdeloitte.com/insightsDon’townacarWorkRegularlydrivelongdistancesRarelydrivelongdistancesRarelydrivelongdistancesCommutePersonalTravel51+Boughtoutrightorspend<£299/monthBoughtoutrightorspend<£299/month+£300/month+£300/monthCurrentlyownacar<3031-50A47%D53%E47%G69%H50%F47%B53%C62%I38%LeastlikelyLesslikelyMorelikelyMostlikelyFIGURE12ShareofUnitedKingdomconsumersegmentswhowouldconsideranEVpurchase%reflectthoseinfavourfromeachsegment20ElectricvehiclesTHEIMPACTOFCOVID-19ONCONSUMERBEHAVIOURDeloitte’ssegmentationoftheUnitedKingdommarketwasperformedpriortotheemergenceofCOVID-19.Itisimportanttoconsiderhowshiftingpriorities,inlightofthepandemic,mayaffectthedifferentsegments.IntheUnitedKingdom,lockdownmeasurestookconsumersoutoftheautomotiveretailmarketforanextendedperiodoftime.Evenasrestrictionsareeased,financialconcernsmayshapehowpeoplere-engagewiththesector,andtowhatextent.Lingeringhealthconcernswilllikelyalsoplayapivotalroleinconsumerbehaviour.Short-termdemandforEVsislikelytochange,withinandacrosssegments.AccordingtoconsumerresearchcarriedoutbyDeloittebi-weekly,throughoutthepandemic,closetohalfofUnitedKingdomconsumersnowplantoowntheircurrentvehiclesforlongerthanoriginallyintended.42(Thenumberofconsumersaged18to34,or55andover,whoexpressedthissentimentismarginallylowerthanotheragegroups.)Withworktravelbeingakeycomponentofoursegmentation,itisalsoworthconsideringhowCOVID-19ischanginghowwetraveltoandforwork.Therecentresearchhighlightsthatovertwo-thirdsofconsumersplantolimittheiruseofpublictransportationinthefuture,andwelloverhalfplantolimittheiruseofride-sharingapps.Intheshortterm,thiswilllikelyacceleratedemandforcheapsecond-handcars,butinthelongtermthiscouldtranslateintoincreaseddemandforEVswithinSegmentA.COVID-19mightalsoprovetobeacatalystforthegrowthofonlinesaleswithindifferentsegments.OurCOVID-19–relatedresearchshowsthatafifthofconsumersnowplantobuytheirnextvehicleonline(ifpossible).Thisfigureisconsistentlyhigheramong18-to34-year-olds,suggestingthatSegmentsB,C,DandEcouldalldemonstrateasignificantjumpindemandforonlineservices.Withworktravelbeingakeycomponentofoursegmentation,itisalsoworthconsideringhowCOVID-19ischanginghowwetraveltoandforwork.21Settingacoursefor2030ChecklistforthejourneyaheadUltimately,it’suptoallstakeholdersintheauto-motiveindustrytoconsiderhowtheybestservetheirprioritisedsegments.Consumerinteresthasbeensparked,andtheonusnowlieswithnew-entryOEMs,captivefinancecompanies,dealershipsand,especially,establishedOEMstofeedthefire.TomaximisetheopportunitiespresentedbythegrowingdemandforEVs,businessleadersinallregionsshouldexaminetheprioritiestheyhavedefinedaccordingtothesegmentationexerciseandaskthemselvesthekeyquestionsshownbelow.TheanswersmayhelpsoftentheblowCOVID-19ismakingonthemarketand/oraidintherecovery.They’llalsohighlighthowwell-positionedthebusi-nessistohelpaccelerategrowthintheEVmarketandreapthebenefitswhenEVstakecentrestage.ESTABLISHEDOEMS:•Howwelldoesourexistingmodelrangefittheseg-mentswedeemhighpriority,andonwhichsegmentsshouldwefocusfuturemodels?•DowehavetherightEVsupplychainsandorder-to-deliverycapabilitiestorealiseourpromisestocustomers,especiallyintheinitiallaunchphase?•Canwesupport,orevendrive,changeinourfranchiseddealershipsbydeliveringmorecompellingin-storeEVmarketingandincreasingmodelavailability?•HowdowemakesurethatourfranchiseddealersarealignedwithourEVstrategy?Howcanweincentivisethemtosacrificethelong-term,recurringprofitofanICEvehiclesaletosupportthegrowthofEVs?•HowwelldoesourcurrentbrandingsupportnewEVmodel(andbroaderproposition)launches?Dowehavetherightmarketingandcampaignapproachestotargetspecificsegments?•Dowehavesufficientin-housecapabilities,ortherightpartnerships,toofferacompellingchargingproposition?•Howdoweimproveourcurrentomnichannelexperience?•Whatinnovativeretailformats,onlineandbricksandmortar,shouldweinvestin?NEW-ENTRANTOEMS:•Someconsumersegmentswillbeidentifiedas‘easierwins’tobuildbrandandcustomerintimacy,sohowcanourproductlaunchplanstargetthesemosteffectively?•Howcannewbusinessmodels,unconstrainedbylegacyITsystemsandphysicalfootprints,provideanenhancedcustomerexperienceascomparedtotraditionalOEMs?•WillChinesenewentrantsneeddifferentstrategiesforlaunchinginEurope?•Howwillwecontinuetoengagewithcustomersafterapurchase,toreceiveproductfeedbackandincorporateitintoarefreshedsalesstrategy?•Howwillwemanagetheafter-salesbusinesswithoutestablisheddealernetworks?•Arethereadditionalpartnersthatcouldsupportmarketentryandofferamorecompellingvalueproposition,suchasenergyproviders?22ElectricvehiclesCAPTIVEFINANCECOMPANIES:•Whichfinancingofferswillappealtowhichsegment?•Whatisthebestwaytomanagethewaveofincom-ingICEvehiclesandrealisetheexpectedresidualsonthese?•Whichfinancesolutionswilladdresscustomers’apprehensionaboutswitching(e.g.,combinedvehicleandwallbox-chargerfinancing,orsocialoffers,likecinematickets)?•Dowehaveacompellingofferingforourfleetcustomerstogainregulatoryandtaxbenefits?•Howcanourmarketingconvincinglyaddress‘rangeanxiety’andotherbarrierstoEVownership?•DowehavethecapabilitytounderstandandactonexistingEVcustomers’feedbackandlearn-ingstostrengthenourretentionprogrammes?DEALERSHIPS:•CanweeffectivelycommunicatethebenefitsofEVstoourcustomers?•Doweunderstandwhichsegmentswanttolearnaboutenvironmentalbenefitsandwhichareexclusivelyinterestedintechnologyandperformance?•Dowehavetheassetstosupportamoretargetedapproachtomarketing?•DoweofferafinanciallycompellingreasontoswitchtoEVswhilemaintaininganappropriatemarginonthevehicles?•CanwefullyexplainalltheavailablegovernmentgrantsandfinancialpackagesavailableforEVs?•Canweofferongoingmaintenanceandservicepackagesordealsthatincludefundingforat-homechargepoints?•Isourbusinesssetuptohandleanincreaseinonlinesales?•Canweoffercollectionanddeliveryservices?•Canweprovidetestdrivestoonlinecustomers?•Canweuseourexistingregionalfootprinttoeffectivelyfulfilonlinesales?•Isourbusinesssetuptodealwiththepotentiallossofrecurringrevenue(after-salesserviceandparts)?•AreourmarketingandsalesstrategiesfullyalignedwiththoseofourOEMpartners?23Settingacoursefor2030Endnotes1.“FuelType&PowertrainTechnology”,SMMT,https://www.smmt.co.uk/industry-topics/emissions/fu-el-type-and-powertrain-technology/,accessed18May2020.2.Deloitteanalysis:Automotiveplanningsolutions,IHSMarkit,https://ihsmarkit.com/index.html;EV-volumes.com:Theelectricvehicleworldsalesdatabase,https://www.ev-volumes.com/,accessed16June2020.3.“In2019,Plug-inelectriccarsalesinNorwayincreasedby10%”,InsideEVs,https://insideevs.com/news/391146/2019-plugin-car-sales-norway-increased/,accessed18May2020.4.“Petrolanddieselcarsalesbanbroughtforwardto2035”,BBC,https://www.bbc.co.uk/news/science-environ-ment-51366123,accessed18May2020.5.“ClimateActionPlan2050–Germany’slong-termemissiondevelopmentstrategy”,FederalMinistryfortheEnvironment,NatureConservationandNuclearSafety,https://www.bmu.de/en/topics/climate-energy/climate/national-climate-policy/greenhouse-gas-neutral-germany-2050/,accessed18May2020.6.“2020GlobalAutoConsumerStudy”,DeloitteGlobal,https://www2.deloitte.com/global/en/pages/consum-er-business/articles/global-automotive-trends-millennials-consumer-study.html,accessed1June2020.7.“Passengercarregistrations”,EuropeanAutomobileAssociation,https://www.acea.be/press-releases/article/passenger-car-registrations-38.5-four-months-into-2020-76.3-in-april,accessed18May2020.8.MatthiasSchmidt,“April2020WestEuropeanelectriccarmarketupdate”,SchmidtAutomotiveMarketIntelli-gence,https://www.schmidtmatthias.de/post/european-electric-car-sales-april-2020,accessed1June2020.9.Chinascalesbacksubsidiesforelectriccarstospurinnovation,Bloomberg,https://www.bloomberg.com/news/articles/2019-03-26/china-scales-back-subsidies-for-electric-cars-to-spur-innovation,accessed1June2020.10.RolandIrle,“GlobalBEV&PHEVsalesfor2019”,EV-Volumes.com,https://www.ev-volumes.com/,accessed1June2020.11.YileiSunandBrendaGoh,“Chinasaysnosignificantcutinnewenergyvehiclesubsidiesin2020”,Reuters,https://uk.reuters.com/article/uk-china-autos/china-says-no-significant-cut-in-new-energy-vehicle-subsi-dies-in-2020-idUKKBN1ZA0FB,1June2020.12.“EconomicperformanceofautomobileindustryinMarch2020”,ChinaAssociationofAutomobileManufacturers,http://www.caam.org.cn/chn/21/cate_158/con_5229834.html,accessed1June2020.13.EvelynCheng,“ElectriccarstakethespotlightinChina’spost-coronavirusstimulusplans”,CNBC,https://www.cnbc.com/2020/05/04/electric-cars-take-the-spotlight-in-chinas-post-coronavirus-stimulus-plans.html,accessed1June2020.14.Ibid.15.Teslascores77%ofUSelectricautosalesinNovember”,Cleantechnica,https://cleantechnica.com/2019/12/13/tesla-scores-77-of-us-electric-vehicle-sales-cleantechnica-report/,accessed1June2020.16.Deloitteanalysis:Automotiveplanningsolutions,IHSMarkit,https://ihsmarkit.com/index.html;EV-volumes.com:Theelectricvehicleworldsalesdatabase,https://www.ev-volumes.com/,accessed16June2020.17.Ibid.18.“2020GlobalAutoConsumerStudy”,DeloitteGlobal,https://www2.deloitte.com/global/en/pages/consum-er-business/articles/global-automotive-trends-millennials-consumer-study.html,accessed1June2020.19.“Germanywillrequireallpetrolstationstoprovideelectriccarcharging”,Reuters,https://www.reuters.com/article/us-health-coronavirus-germany-autos/germany-will-require-all-petrol-stations-to-provide-electric-car-charging-idUSKBN23B1WU,accessed16June2020.24Electricvehicles20.“ElectriccarstakethespotlightinChina’spost-coronavirusstimulusplans”,https://www.cnbc.com/2020/05/04/electric-cars-take-the-spotlight-in-chinas-post-coronavirus-stimulus-plans.html,accessed16June2020.21.“Plug-inelectriccarsalesintheNetherlandshitnewall-timerecords”,InsideEVs,https://insideevs.com/news/391681/plugin-car-sales-netherlands-all-time-records/,accessed1June2020.22.“ReducingCO2emissionsfrompassengercars-before2020”,EuropeanCommission,https://ec.europa.eu/clima/policies/transport/vehicles/cars_en,accessed1June2020.23.CuttingCO2emissionsfrompassengercars:TowardsagreenerfuturefortheEuropeanautomotiveindustry,Deloitte,https://www2.deloitte.com/content/dam/Deloitte/de/Documents/consumer-industrial-products/Deloitte-POV-cutting-CO2-emissions-from-passenger-cars.pdf,accessed1June2020.24.“Europe’stoughemissionsrulescomewith$39billionthreat”,Bloomberg,https://www.bloomberg.com/news/articles/2019-06-26/europe-s-tough-new-emissions-rules-come-with-39-billion-threat,accessed1June2020.25.“Germanyhandsoutcashforelectriccarsaspartofhugenewstimulussplurge”,CNNBusiness,https://edition.cnn.com/2020/06/04/business/germany-stimulus-electric-cars/index.html,accessed16June2020.26.“Francetohelpautosectorwithmeasuresworth$8.8B”,AutomotiveNewsEurope,https://europe.autonews.com/automakers/france-help-auto-sector-measures-worth-88b#:~:text=PARIS%20%2D%2D%20The%20French%20government,older%20models%20off%20the%20road,accessed16June2020.27.“ElectriccarstakethespotlightinChina’spost-coronavirusstimulusplans”,https://www.cnbc.com/2020/05/04/electric-cars-take-the-spotlight-in-chinas-post-coronavirus-stimulus-plans.html,accessed16June2020.28.TimelineofstrategicOEMtargets(allaccessed19June2020):Volkswagen,https://www.volkswagenag.com/en/news/2019/03/VW_Group_JPK_19.html,https://www.forbes.com/sites/neilwinton/2019/11/25/electric-car-sales-ambitions-dangerously-ahead-of-forecasts/#4763c9193ade,https://www.automotive-fleet.com/135579/vw-we-will-sell-up-to-3m-evs-in-2025.Toyota,https://insideevs.com/news/392026/toyota-500000-evs-2025/,https://asia.nikkei.com/Business/Automo-biles/Toyota-aims-to-sell-500-000-EVs-in-2025-chasing-VW-s-3m.Daimler,https://www.daimler.com/investors/reports-news/financial-news/20190513-ambition-2039.html,https://www.daimler.com/company/news/joint-venture-with-geely.html,https://www.daimler.com/innovation/case/electric/driven-by-eq-2.html,https://www.daimler.com/investors/reports-news/finan-cial-news/20191121-sustainability-initiative.html.FordMotorCompany,https://www.reuters.com/article/us-autoshow-detroit-ford-motor/ford-plans-11-billion-in-vestment-40-electrified-vehicles-by-2022-idUSKBN1F30YZ,https://www.reuters.com/article/us-autoshow-la-ford-electric-focus/ford-bets-on-an-electric-mustang-to-charge-its-turnaround-idUSKBN1XS05L,https://corporate.ford.com/articles/sustainability/new-generation-electric-vehicles.html.Renault-Nissan-Mitsubishi,www.alliance-2022.com/electrification/,https://electrek.co/2019/12/04/nissan-shifts-ev-strategy-to-premium-vehicles-not-discount-cars-like-leaf/.GM,https://www.thedetroitbureau.com/2019/11/gm-on-track-to-meet-20-ev-target-by-2023/,https://www.cnbc.com/2019/12/12/gm-expects-cadillac-to-be-majority-if-not-all-evs-by-2030.html,https://media.gm.com/media/us/en/gm/home.detail.html/content/Pages/news/us/en/2020/mar/0304-ev.html.PSA,https://www.groupe-psa.com/en/automotive-group/innovation/groupe-psa-lelectrification-en-marche/.Honda,https://hondanews.eu/eu/lt/corporate/media/pressreleases/162386/honda-commits-to-total-electrifica-tion-in-europe-by-2025,https://hondanews.eu/be/fr/cars/media/pressreleases/105219/hondas-electric-vision-two-thirds-of-european-sales-to-feature-electrified-powertrains-by-2025,https://hondanews.eu/eu/en/cars/media/pressreleases/193797/honda-accelerates-its-electric-vision-strategy-with-new-2022-ambition,https://global.honda/innovation/technology/automobile/electric-vehicles.html.SAIC,https://europe.autonews.com/automakers/vw-take-full-control-chinese-ev-joint-venture.BMW,https://www.bmwgroup.com/content/dam/grpw/websites/bmwgroup_com/ir/downloads/en/2020/Inves-tor_Presentation/BMW_Investor_Presentation_2020.pdf.JLR,https://www.autocar.co.uk/car-news/new-cars/jaguar-land-rover-invest-%C2%A31bn-three-new-uk-built-evs,https://www.expressandstar.com/news/motors/2020/03/23/jaguar-land-rover-set-to-invest-1bn-in-uk-ev-production/.Volvo,https://www.renewableenergymagazine.com/electric_hybrid_vehicles/volvo-xc40-recharge-electric-car-now-available-20200527,https://group.volvocars.com/company/innovation/electrification,https://techcrunch.com/2019/10/16/volvo-to-roll-out-a-new-electric-vehicle-every-year-through-2025/.25Settingacoursefor2030Tesla,https://fortune.com/2020/01/07/elon-musk-tesla-gigafactory-shanghai-china-ceremony/.BYD,https://global.toyota/en/newsroom/corporate/30565932.html,http://www.byd.com/en/news/2020-04-23/BYD-and-Hino-sign-a-strategic-business-alliance-agreement-with-a-focus-on-Commercial-Battery-Electric-Vehi-cles-development.Hyundai,https://www.greencarcongress.com/2020/01/20200102-hmg.html,https://www.electrive.com/2019/12/04/hyundai-unveils-its-electric-strategy-till-2025-and-beyond/.FiatChrysler,https://www.ft.com/content/bf70f356-65a4-11e8-a39d-4df188287fff.29.EoinBannon,“Electricsurge:Carmakers’electriccarplansacrossEurope2019-2025”,EuropeanFederationforTransportandEnvironment,https://www.transportenvironment.org/publications/electric-surge-carmakers-elec-tric-car-plans-across-europe-2019-2025,accessed1June2020.30.PaulLienert,“OutsideofTesla,futureEVsalesinU.S.maybethinformostbrands:study”,Reuters,https://www.reuters.com/article/us-autos-electric-forecast/outside-of-tesla-future-ev-sales-in-u-s-may-be-thin-for-most-brands-study-idUSKCN1SZ20I,accessed1June2020.31.“FleetmanagementinEurope:Growingimportanceinaworldofchangingmobility”,DeloitteGlobal,https://www2.deloitte.com/content/dam/Deloitte/cz/Documents/consumer-and-industrial/cz-fleet-management-in-europe.pdf,accessed1June2020.32.“BatteryElectricVehicles:Newmarkets.Newentrants.Newchallenges.”,DeloitteInsights,https://www2.deloitte.com/uk/en/insights/industry/automotive/battery-electric-vehicles.html.33.“The$18billionelectric-carbubbleatriskofburstinginChina”,Bloomberg,https://www.bloomberg.com/news/articles/2019-04-14/the-18-billion-electric-car-bubble-at-risk-of-bursting-in-china,accessed1June2020.34.“Hyundaiaddselectricvehicle‘skateboard’projectwithL.A.startupCanooto$87billionmobilitypush”,Forbes,https://www.forbes.com/sites/alanohnsman/2020/02/11/hyundai-adds-electric-vehicle-skateboard-project-with-la-startup-canoo-to-its-87-billion-mobility-push/#682634dd1017,accessed1June2020.35.DeloitteusedMonitorDeloitte’sGrowthPath®ActionSegmentation®withtheresultsofanationallyrepresenta-tiveconsumersurveyof1,496peopleofcar-drivingageintheUnitedKingdomwhoareconsideringbuyingacarinthenextthreeyears.TheDeloitteUKconsumersegmentationsurveywasruninNovember2019byAlligatorResearchonbehalfofDeloitte.36.“Electricvehicleandalternativelyfuelledvehicleregistrations”,SMMT,https://www.smmt.co.uk/vehicle-data/evs-and-afvs-registrations/,accessed1June2020.37.DeloitteUKconsumersegmentationsurvey.38.NeilMason,“UKcarreview-UK-February2020”,Mintel,https://reports.mintel.com/display/987894/,accessed23June2020.39.DeloitteUKconsumersegmentationsurvey.40.Ibid.41.Ibid.42.Deloittestateoftheconsumertracker,Deloitte,https://www2.deloitte.com/us/en/insights/industry/retail-distri-bution/consumer-behavior-trends-state-of-the-consumer-tracker.html,accessed17June2020.26ElectricvehiclesAbouttheauthorsDrJamieHamiltonjamihamilton@deloitte.co.ukJamieHamiltonisadirectorinMonitorDeloitte’sLondonofficeandleadsthestrategyandoperationsworkintheautomotivesector.HeworkswithseniormanagementteamsofleadingOEMs,leasingcom-paniesandnewEVentrantstounderstandthedisruptivetrendsreshapingtheautomotiveandwidermobilitysector.Jamie’scurrentfocusisonhelpingexistingandnewOEMsmanagethetransitiontoelectric,consideringallaspectsofthebusiness,fromengineering,salesmodel,chargingandmar-ketentry.DrBrynWaltonbcwalton@deloitte.co.ukBrynistheinsightleadforDeloitte’sUKautomotivepractice.Hehasawealthofexperienceworkingwithsomeoftheworld’sleadingconsumerbrandsdesigning,runningandimplementingconsumerresearchinareasthatincludeinnovationandtechnology.Heistheauthorofseveralrecentthoughtleadershipreportsonelectricmobilityandthefutureoftheautomotiveindustry.JamesRingrowjaringrow@deloitte.co.ukJamesisanexperiencedstrategist,primarilyworkingwithautomotiveandindustrialorganisationstoimagineanddeliverwinningapproachesfortheFutureofMobility.Hisengagementshaveinvolvedrefreshedvisionandgrowthnarrative,marketentryandinternationalgrowth,digitaltransformation,commercialandbusinessmodelredesignandbroaderholistic,strategictransformationsascompaniesseektorespondtodisruption.GenevièveAlbertsgalberts@deloitte.co.ukGenevièvestartedhercareerasanengineerataglobalOEMandisnowbasedinourstrategypracticeworkingwithsomeoftheworld’slargestcompaniestosupportthemwiththechallengesandchoicestheyfaceinafast-changingmobilitylandscape.Herexperienceincludeselectricandfuelcellmobility,alternativefuelsandadvancedbiofuels,energystorage,automotivevaluechainandnewbusinessmod-els,andbehaviouraleconomics.SaskiaFullerton-Smithsfullertonsmith@deloitte.co.ukSaskiaisaconsultantwithinourstrategyandbusinessdesignpracticeandispartoftheautomotivestrategyteam.Withabackgroundinmanufacturingengineering,Saskiahasexperienceinhelpingman-ufacturing-basedcompaniesunderstandtherapidchangesintheindustry,includingmobilityasaservicebusinessmodels,changingconsumerbehaviourandnewtechnology,andnavigatingtheoptionsavailablewithinthenewlandscape.EdwardDayedday@deloitte.co.ukEdwardsitswithinourorganicgrowthpracticeandhasexperienceworkingacrossaspectrumofstrate-gicautomotiveprojects.Withabackgroundineconomics,Edwardhasexperiencedesigningandmodellingbothmacroeconomic-andindustry-levelscenarios,overlayingimpactsfromkeytechnologicaldevelopmentsandsupportingthedevelopmentofoverarchingstrategicdirection.27Settingacoursefor2030MichaelWoodwardNSEAutomotiveleaderPartnerDeloitteNSE+442073030884mwoodward@deloitte.co.ukDrJamieHamiltonDirectorMonitorDeloitte+442073030650jamihamilton@deloitte.co.ukDrBrynWaltonInsightManagerDeloitteNSE+442070072352bcwalton@deloitte.co.ukJamesRingrowManagerDeloitteNSE+442073035215jaringrow@deloitte.co.ukGenevièveAlbertsSeniorConsultantDeloitteNSE+442070073336galberts@deloitte.co.ukSaskiaFullerton-SmithConsultantDeloitteNSE+442037412092sfullertonsmith@deloitte.co.ukEdwardDayConsultantDeloitteNSE+442073034345edday@deloitte.co.ukContactus28ElectricvehiclesAboutDeloitteInsightsDeloitteInsightspublishesoriginalarticles,reportsandperiodicalsthatprovideinsightsforbusinesses,thepublicsectorandNGOs.Ourgoalistodrawuponresearchandexperiencefromthroughoutourprofessionalservicesorganization,andthatofco-authorsinacademiaandbusiness,toadvancetheconversationonabroadspectrumoftopicsofinteresttoexecutivesandgovernmentleaders.DeloitteInsightsisanimprintofDeloitteDevelopmentLLC.AboutthispublicationThispublicationhasbeenwritteningeneraltermsandthereforecannotbereliedontocoverspecificsituations;applicationoftheprinciplessetoutwilldependupontheparticularcircumstancesinvolvedandwerecommendthatyouobtainprofessionaladvicebeforeactingorrefrainingfromactingonanyofthecontentsofthispublication.Thispublicationandtheinformationcontainedhereinisprovided“asis,”andDeloitteUniversityEMEACVBAmakesnoexpressorimpliedrepresentationsorwarran-tiesinthisrespectanddoesnotwarrantthatthepublicationorinformat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