Analysis: The cost-of-living crisis is fueling a rise in electric vehicle popularity

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.

Mihai Drăghici, Partner, Consulting, EY Romania: “Romania’s electric vehicle (EV) market is rapidly growing, in line with the global trends. EVs in Romania are now capturing a significant 10% market share in May 2023, while diesel cars accounted for 13%. The trend indicates a promising trajectory towards a future where EV registrations are set to surpass diesel cars, possibly as early as next year. This shift also reflects the increasing preference for sustainable mobility in Romania.”

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.”