The cost-of-living crisis is fueling a rise in electric vehicle popularity – EY analysis

• High fuel costs are now the top motivator driving consumers toward purchasing an electric vehicle
• More than half (55%) of those intending to buy a car globally plan to purchase an electric vehicle
• Yet the choice is not without anxiety, with 31% concerned by a perceived shortage of charging stations 

Consumers are increasingly confident about owning electric vehicles (EVs), with rising fuel costs, environmental concerns and lower ownership costs driving a spike in EV purchasing intent, according to new research from EY.

The EY Mobility Consumer Index 2023, an annual report launched in 2020 that provides insights into global automotive trends, shows that of those planning to buy a vehicle, more than half (55%) plan to buy a full electric or plug-in hybrid vehicle in the next two years.

Importantly, 38% say high fuel costs for internal combustion engine (ICE) vehicles are the primary motivator for buying an EV.

This is the first year that high fuel prices are cited as a top motivator for switching to EVs, surpassing environmental concerns and increasing penalties on ICE vehicles to take the top spot.

The latest report shows that consumer confidence in EVs has increased significantly overall, with EV buying intention rising across most markets, including the US (+19%), Sweden (+12%) and Japan (+11%).

Government incentives such as the Inflation Reduction Act (IRA) in the US are also having an impact and are expected to result in a further increase in uptake this year.

In mainland China, while the government ended EV subsidies in 2022, consumer inclination toward EVs continues to thrive, driven by a combination of automakers making increased efforts around research and development, competitive pricing and the wider availability of affordable models.

Meanwhile, SUVs emerge as the most preferred body type for potential EV buyers across geographies. While 43% of respondents indicate their intention to buy an e-SUV, 33% are inclined toward purchasing a sedan.

Furthermore, around 88% respondents indicate their willingness to pay a premium for EVs, compared with 80% in 2022, with 11% to 20% being the price premium that most respondents say they are willing to pay for an EV. 

Randall Miller, EY Global Advanced Manufacturing & Mobility Leader, says:

“For the first time, rising fuel prices is noted as the number one motivator driving EV buying intention, which has increased across most geographies with countries like Sweden, Japan and the US seeing the biggest spike this year. The cost-of-living crisis has shown consumers that buying an EV is potentially the best option for them, with over half of prospective car buyers looking to purchase an EV. However, the study also reveals that favorable government incentives in recent years have played a huge role in encouraging EV adoption. This could have longer-term effects, embedding EVs as a popular choice, as China ended its subsidies in 2022 yet had continued to see EV momentum. But as fuel prices gradually subside and return to more affordable levels, the real challenge for manufacturers is whether consumer inclination toward EVs will persist and what measures will need to be taken in the event that fuel prices decrease. Equally, with demand and confidence high, automakers must start to address consumer concerns to maintain momentum.”

Despite the positivity, there are lingering consumer concerns.

While worries about upfront purchase costs have diminished as more affordable models have been made available, 31% of respondents say a lack of charging stations is their biggest concern when considering purchasing an EV.

Importantly, this is true across several markets, with the US, China, UK and Germany citing EV charging as their biggest concern.

Miller says:

“As we continue to move toward an EV future, charging infrastructure remains a crucial hurdle that must be overcome. Collaboration between manufacturers, energy companies and governments at all levels is going to be essential in order to meet the needs of EV drivers hitting the roads; otherwise, the move to EVs will surely stall.”

-ends-

Notes to Editors

About EY

EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets.

Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About EY’s Global Advanced Manufacturing & Mobility Sector

Urbanization, changing consumer expectations and emerging digital technologies are reshaping what’s possible, from the production and distribution of goods to the transportation of people. To succeed in this new world of mobility and smart manufacturing, incumbents must transform themselves at unprecedented speed — to think like an innovative startup, tap into new talent and engage the customer. With experience across the value chain and key technology alliances, our teams show clients how to create efficiencies now while adopting digitization and optionality for long-term growth. Automotive, transportation, aerospace, defense, chemicals and industrial products companies can draw on the strength of our network of cross-industry players and put our diverse range of approaches to use today to equip their businesses for tomorrow.

About the Mobility Consumer Index

The EY Mobility Consumer Index (MCI) provides unique insights on the shifts being witnessed in journey patterns, modal choices, vehicle buying and transition to electric mobility in the post-COVID world. Based on a global survey of more than 15,000 consumers across 20 countries (Australia, Austria, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Singapore, South Korea, Spain, Sweden, UK, and US) during March 2023, MCI also aims to assess the consumers’ car buying journey while offering insights around their attitudes towards mobility choices and sustainability.