Report highlights consumer concern over electric vehicles

Download document:

14th Global Automotive Executive Survey - .PDF file.

Consumer enthusiasm for electric cars has failed to ignite as concerns around the cost of running and maintaining the vehicles prove too high a risk for buyers, according to a new report from KPMG.

KPMG’s International 14th Global Automotive Executive Survey, which surveyed 200 auto executives from 31 countries, reportedly found that the cost of batteries and recharging the vehicles was a major barrier to those considering purchasing electric vehicles.

According to KPMG, 62 per cent said that instead, consumers wanted their vehicle to last for as long as possible, signalling a need for mature and sustainable technologies.

To meet consumer demand, automakers surveyed say they plan to optimise the petrol engine further and invest in hybrid plug-in fuel systems over the next five years.

‘There is an increasing realisation that the petrol engine has further scope for optimisation,’ said John Leech, KPMG’s UK head of automotive. ‘This is quite a turnaround in direction and a sign that some of the newer technologies are taking longer than expected to emerge. This will benefit the UK, which is the second-largest manufacturer of petrol-engine-powered cars in Europe and especially UK suppliers of turbochargers and direct-injection petrol-engine components.’

According to a statement, the survey also warned new trends in globalisation, rapid urbanisation and changing consumer behaviour will cause a shift in the automotive landscape over the next five years.

The collective impact is expected to be felt across the entire automotive value chain, and calls for changes to automakers’ — and suppliers’ — business models.

‘Whereas in the past, automakers concentrated on just producing petrol engine cars, now they must cope with a range of propulsion technologies, new trends such as car sharing, internet connectivity as well as the growing significance of emerging markets,’ said Leech. ‘It is indeed a hugely transformative time for the global auto industry.’

Ninety two per cent of respondents said that fuel efficiency in relation to costs is the primary factor in vehicle purchasing decisions. Environmental concerns such as reducing CO2 emissions remain important to the consumer, but moved from second place in the KPMG 2012 global auto survey to fourth this year.

Twenty nine per cent of automakers and supplier executives surveyed say they will invest in downsizing and optimising petrol engine technology.

Plug-in hybrid technology will be an area of investment for 24 per cent of automaker and supplier respondents, while an average of eight per cent say they will invest in pure battery technologies.

This is said to reflect perceived consumer preferences for electric vehicle technology, with 36 per cent of respondents expecting consumer demand to be highest for plug-in hybrids over the next five years, followed by non-plug-in hybrids (20 per cent) which ranked first in the 2012 survey; fifth are pure battery-electrified vehicles at 11 per cent.

Leech said: ‘In the short term, the individual driver is likely to prefer a hybrid, whereas urban fleets may opt for electric cars. However, it seems that pure electric vehicles will not prevail, at least in the next decade.

‘Another critical consideration that the industry and public sector must address is when and to what extent an affordable infrastructure will be in place to address the recharging requirements of large numbers of electric vehicles or refuelling requirements of hydrogen-powered cars in the future.’

Key points from KPMG Auto Survey

  • Enthusiasm over electric cars wanes, with petrol engine cars and hybrids set to dominate over next decade
  • Fuel efficiency is the number-one priority for cash-conscious consumers
  • Brazil, Russia, India and China (BRICs) market share predicted to edge near 50 per cent, with 4x4s the fastest-growing segment
  • Car sharing or ‘pay on use’ could be the answer for growing urban areas, and an opportunity for new players
  • Emerging markets trend toward upscale vehicles; in mature markets: downsize
  • Traditional dealership model under threat as online activity grows