Navigant Research Blog

Why the Argument Over EV Prices Misses the Point

— January 3, 2014

Our recent white paper, Electric Vehicles Consumer Survey, has caused a stir, but not for the reasons I would have expected.  Based on a survey of 1,084 Americans, the white paper covers responses to a range of opinions on battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and what consumers are looking for as they consider their next vehicle.

Automotive News wrote a story on the survey focusing on the fact that most of those surveyed expect their next vehicle purchase to be under $25,000, which will be a challenge for many BEVs and PHEVs.  This story got retold by other outlets including Autoblog, Edmunds,, Wall Street Cheatsheet, and this oddball video reading of the story.  While the original piece by Automotive News seemed to cover the survey as a whole, the subsequent stories tended to focus on the price issue.  Like any good game of telephone, the issue got a little skewed from the original message that a majority of respondents are planning (perhaps “hoping” is a better word to use) to spend $25,000 or less on their next vehicle (note that I did not use the term “EV” in that sentence).  The result was statements like “A recent survey has all but confirmed that there appears to be a $25,000 threshold for EVs that most buyers have great difficulty in breaching.”  The implication may be there, but it’s certainly not confirmed by these survey findings. then wrote a response that, for the most part, more closely examined our methodology and the use of surveys in general. correctly pointed out that the sample consists of a general snapshot of Americans, including 19% who do not currently own vehicles and questioned whether that skewed the responses.  That’s an easy check by filtering responses (see the table below), and the short answer is: no, it makes very little difference in this sample.

The Price is Right

So, if the sample is valid, what do we make of the $25,000 price point responses?  I think an analogy can be formed from other data in the survey.  We asked people to rank order their preferred vehicle body-style for their next purchase, and only 25% selected pickup truck as a first or second choice.  Should the headlines from that finding declare “Good luck selling pickup trucks!”?  Of course not.

A more interesting way to examine this issue is look at different vehicle ownership filters in the survey.  Hybrid and current plug-in vehicle owners are significantly more likely to spend $30,000 or more on their next vehicle than the total sample.  That merely points to the fact that BEVs and PHEVs are still niche vehicles, and that’s how Tesla can be successful with a $70,000 to $95,000 Model S, at the same time that Nissan can be successful with $28,000 LEAF.

However, all of this misses the most surprising survey finding: BEVs and PHEVs aren’t even likely in the consideration set for consumers because many consumers don’t know much about them.  When asked about the operating costs, features, and excitement of owning an EV, between 14% and 21% of vehicle owners couldn’t even form an opinion on those three questions.  That tells me the market has a long way to go before shoppers in the mainstream will add EVs to their consideration set.

Selected Electric Vehicle Consumer Survey Questions by Vehicle Ownership, United States: 2013

EV Survey Blog Table (1-3-14)

(Source: Navigant Research)


In Energy Savings, Utilities Must Meet Consumer Expectations

— January 16, 2013

Pike Research’s just published Smart Grid Consumer Survey indicates that U.S. consumers have fairly realistic – or perhaps optimistic – expectations when it comes to saving money on their electric bills.  Nearly 6 out of 10 (59%) say they expect to save $15 or more on their electric bills based on recommendations from their utility.  That translates to about 15% or greater savings, given that the average U.S. electric bill is $103.67, according to the latest government data.

However, many existing energy-saving programs offer reductions only in single-digit percentages, often as little as 1% to 3%.  The much-touted Opower solution, which dozens of U.S. utilities have adopted, provides an average 1.5% to 3.5% decrease on energy bills through a combination of paper bill reports and online recommendations.  That’s not much to an individual homeowner.  But for a utility, the relatively small percentage – spread across thousands of households – can mean substantial savings in terms of reduced operational costs and help in terms of meeting efficiency targets.

Expected Savings Based on Utility Recommendation, United States: 2012

(Source: Pike Research)

Clearly, consumers have a good sense of what matters to them when it comes to savings.  If the product, service, or program a utility is offering does not deliver meaningful savings, on the order of 15% or more, consumers are unlikely to be interested.  While it’s nice to have a few percentages off monthly bills, they’re looking for double-digit reductions for the programs to be worthwhile.

So, it makes sense for utilities and vendors in home energy management (HEM) to provide something consequential, which is starting to take place.  PG&E in California, for example, is trialing a smart thermostat service, powered by Opower and Honeywell, that’s reportedly cutting heating and cooling costs by 15% to 25%.  Similarly, Reliant Energy in Texas is working with Tendril to deploy in-home displays that connect to smart meters, enabling savings of up to 15%.  More utilities should consider taking the lead to reach wider traction among consumers.  If not, current energy savings solutions will continue to languish.


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