Consumer adoption of plug-in vehicles: Finding the bridge to the mass market

Dean Frankel

Research Associate

Lux Executive Summit Americas

March 18, 2015

It is not just about the batteries; consumers need choices within the right vehicle classes

Sales are limited due lack of consumer choice

To go from 1% to 10% adoption, plug-ins need to win the hearts and minds of the right consumer, the bridge consumer

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A case study – my quest for a suitable, affordable plug-in vehicle

What plug-in vehicles are available to them in September 2015?

While there are at least six plug-in options in their price range – none of them are appealing given their need for cargo space, aesthetics, and prestige

Their buying decision reflects the challenges faced to consumers who are already inclined to be bridge adopters

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Generation 1: Baby-mobile

+

= Double the baby power

4x increase in cargo volume

Addressing consumer choice – what plug-ins are available today?

Are these the cars to win the hearts and minds of consumers? NO!

Do you know what the top-selling vehicle was in the U.S. for 2014?

Ford F-Series

How about the second best? Chevy Silverado

Followed by the Dodge Ram and Toyota Camry

Well maybe it’s just a U.S. thing? Nope. China’s auto market is booming with Minivans and SUVs growing fastest

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The “out of my league options”…

BMW i8 Tesla Model S

It’s nice… But pricier than the ICE option, and I need more space, range, and options…

I would only drive this car as a second car or if I lived in a golf-cart community…

VW e-Golf BMW i3

The bridge to mass market – increasing consumer choice in the right class is key for driving adoption

Why is this the new vehicle battleground? Price: Industry average sales price is $35,000 (source: Kelly Blue Book)

Range: Average miles per driven per day is 37 miles, but longer trips are desired

What is needed? SUVs are the preferred consumer choice

Second and third generation “premium mass-market” vehicles 5

The second generation class of plug-ins attempts to bridge the gap, but key holes still exist

Automaker are coming out with second generation vehicles targeting the premium mass-market

These vehicles can sell well over 1 million units annually, BUT…

Where’s my sister’s second generation plug-in baby-mobile ?

SUVs

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100,000150,000200,000250,000300,000350,000400,000450,000500,000

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Global sales of leading

affordable luxury cars

(units)

Audi A4 BMW 3-SeriesMercedes-Benz C-Class AverageTesla's Model 3 goal

We need choice within the bridge

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The SUVs are coming, the SUVs are coming… 2016 Mitsubishi Outlander plug-in hybrid

2016 Audi Q7 e-tron

2016 Tesla Model X

2016 Volvo XC90

2016 BMW X5 eDrive

2018 Audi SUV (311 mile range!)

I get it… there’s a gap in the plug-in market, how do I do anything about it?

Auto OEMs Make cars that people want to buy!

• Plug-in SUVs

• Premium mass market $35,000 to $45,000 vehicle with a 200+ mile range

Chemical & Material Recursive decontenting – plug-ins as a test bed for new tech

• Light weighting a vehicle beyond the batteries reduces the need for large packs, improves performance

• Improving electrical efficiency

Utilities Focus on enabling new services for “bridge” consumers and businesses in your region

Hedge against diminishing revenues from energy efficiency and distributed generation

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So what have we learned?

Electric vehicles will take off when you can walk into any dealer, in any geography and have at least two plug-in options in the showroom display

To unlock the potential of plug-ins, the industry needs: More product offerings in key vehicle classes such as premium mass market

Better range unlocked by innovations beyond the battery

Electric vehicle services beyond public charging stations

If the automotive industry is able to make better electric vehicles to get to a 10% adoption rate, it will be a $93 billion battery opportunity in 2025

Utilities can hedge against electricity losses from distributed generation and customer energy efficiency improvements by enabling new charging services

Globally, electricity revenues from vehicle charging will be a $15 billion opportunity

In the U.S., vehicle charging will generate $5.5 billion in electricity revenue

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Lux Research Inc. 100 Franklin Street, 8th Floor Boston, MA 02110 USA Phone: +1 617 502 5300 Fax: +1 617 502 5301 www.luxresearchinc.com

Thank you

Dean Frankel Research Associate – Energy Storage dean.frankel@luxresearchinc.com +1 917 484 4870