Navigant Research Blog

New Efforts Address EV Affordability

— June 29, 2015

Through the first 5 months of 2015, according to data from, plug-in electric vehicle (PEV) sales are down in the United States by 4% from 2014. This is due, in part, to the current price of gasoline being lower than the 2014 price by $0.89 cents per gallon (per the U.S. Energy Information Administration), as well as the drop off in sales of the Chevrolet Volt in anticipation of the updated model coming out soon. In fact, if the year-over-year Volt sales are ignored, the rest of the industry is actually slightly ahead of last year’s pace.

The higher upfront cost of PEVs is clearly one of the major hurdles to greater electric vehicle (EV) sales, along with greater consumer awareness of their benefits in reduced fuel cost, performance, and drivability. The higher price tag precludes many prospective buyers from considering a PEV, although several models are below the current average new car transaction price of $33,363, according to

Making PEVs more affordable would bring in EV buyers from a broader audience, as data from a recent Navigant Research survey of consumers in the United States indicates that the interest in PEVs is not limited to high-income families. Of the survey respondents who reported having an income between $25,000 and $50,000 annually, 15% said that they preferred their next vehicle purchase to be a PEV, which was higher than those with income of $50,000 to $150,000 annually (9%).

Incentives and Research

California is trying to make PEVs more appealing to lower-income families in areas where air quality is a concern. New programs for people living in the San Joaquin Valley Air Pollution Control District or South Coast Air Quality Management District provided incentives of up to $9,500 on a PEV purchase depending on the individual’s income level. While it won’t prompt a spike in nationwide sales, a successful program could encourage other regions to similarly target getting more PEVs into lower-income households.

The European Commission is also targeting lowering the cost of PEVs through three research projects. As reported by Automotive Fleet, the 3Ccar project is focusing on reducing the cost of the electronic components, which, along with the battery pack, are the primary contributors to the additional cost of PEVs. Greater volumes of PEV sales will lead to more competition in electronics, which will lower the cost and result in more sales.

Utilities are stepping up by creating programs to make EVs cheaper to operate and to make recharging easier. On June 8, the Edison Electric Institute signed a memorandum of understanding with the U.S. Department of Energy (DOE) that will make utilities more active participants in reducing the cost of electric transportation and to build on the DOE’s goal of making EVs as affordable as a gasoline car by 2022. Greater utility involvement is critical to reducing EVs’ operational costs as well as providing the baseline charging infrastructure for consumer confidence that EVs can be recharged wherever drivers need to go in urban areas.


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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