The following article first appeared in the June 2017 issue of Strategies, the newsletter of the Association of Energy Services Professionals.
By Ben Block
Could better marketing be what’s missing for electric vehicles (EV) to finally take off?
Nearly half of car buyers now consider going electric, offering utilities a potentially transformational boost in sales.
But actual EV sales are still low across much of the country. This leaves many utilities unsure how to approach the new market — especially in a political climate where fuel efficiency rules may be in flux. EVs currently account for just over 1 percent of monthly U.S. auto sales.
Utilities are already building charging infrastructure through ratepayer-funded programs, yet too few invest in customer education. EV awareness campaigns can help diminish “range anxiety” by educating potential drivers about the feasibility of battery-dependent transport within their communities.
Truly accelerating the EV market may depend on it.
EV Market Drivers
Despite relatively low market adoption, the EV market is clearly on the rise. Sales in 2016 grew by 4 percent over the prior year. EVs are predicted to be cost competitive with the basic four-door, gasoline-powered car by 2022. To show automakers that demand remains strong despite changing federal government priorities, 30 city leaders across the country announced in March their willingness to purchase $10 billion of electric cars and trucks.
California accounts for more than half of the past two years’ EV sales and already has over 11,000 charging outlets. Those numbers are expected to surge due largely to more stringent vehicle emission standards and new climate legislation. California plans to lower greenhouse gas emissions to 40 percent below 1990 levels by 2030.
In January, California further proved its leadership role when the state’s three largest electric utilities announced plans to collectively invest $1 billion in transport electrification projects. Ratepayer funds will go toward new charging infrastructure and EV rebates, as well as incentives for projects that electrify public and private vehicle fleets.
While California currently leads the nation, other states have vowed to follow its lead. Nine states across the Northeast and Northwest have adopted California’s goal that EVs account for 15.4 percent of sales by 2025. Innovative utilities are also found beyond the West Coast. Kansas City Power and Light has committed to spend $20 million toward building 1,000 public EV charging stations across its service territory. For the first two years, KCP&L says its stations will offer free charging. EV sales have since grown 51 percent in the Kansas City region.
Avista in Idaho and eastern Washington serves a small territory yet sees opportunity. The company is planning to install 272 charging stations over the next two years. “We see this as a longer-term trend we want to get ahead of,” said Rendall Farley, Avista’s EV manager.
EV charging has also become a workplace perk. For city dwellers who lack a convenient charging option at home, even a low-speed charger at the office is a major benefit, provided their commute is within range.
Recognizing this potential, utilities including Alabama Power Company, Alliant Energy and Georgia Power are offering commercial customers incentives to install workplace charging. Plus, many states offer tax credits or direct rebates.
High Interest, Low Demand
Despite the availability of federal, state and utility incentives, a significant gap exists between consumer interest in EVs and market adoption. A lack of marketing and educational resources are partially to blame.
Auto manufacturers would be expected to take the lead on marketing their new EV models. However, auto companies, and in particular auto dealers, still focus much more on conventional cars and trucks.
Ford, for example, advertised the gasoline-powered Focus in 4,750 instances to a national TV audience in 2015, according to a Sierra Club study, while its Focus Electric appeared in about 200 spots. GM, Nissan and Mercedes chose not to purchase any nationwide advertising for many of their EV models that year.
Automakers are instead focusing on markets where EV adoption is more mature, such as California or the Northeast. GM advertised the Volt in only about 200 instances nationwide, but purchased 800 spots in California and another 10 in the Northeast.
A lack of effective marketing and education extends to the dealership. Another Sierra Club study found that many dealerships regularly do not have EVs in stock, hide EVs at the back of show lots, and fail to train salespeople on the full benefits of EVs.
Tesla appears aware that traditional, franchised dealerships are ill-equipped for the electric transition. Tesla insists on selling its vehicles at Tesla-owned stores, where customers are taught about EV and battery technology by Tesla-trained staff.
As Usual, Education Is Key
“Range anxiety” is often to blame for low demand. Without more charging locations, too few buyers purchase EVs; without more drivers, too few investors install charging stations. Plus, research firm McKinsey & Company says only about half of consumers understand how EVs work.
Recognizing that consumers will need to be more comfortable with EV and charging station technology before abandoning their gas-powered cars, an alternative approach is underway in Portland.
Forth, an economic development nonprofit formerly known as Drive Oregon, opened the nation’s first permanent EV storefront in May.
Their Electric Showcase, supported with U.S. Department of Energy funds, features a range of EV models and charging equipment. Brand-neutral experts help talk through EV options with unsure buyers. Visitors can test charging equipment and test drive cars. Forth even offers long-term rentals so potential buyers can experience whether their range anxiety is warranted.
If the approach followed by Tesla and Forth outperforms sales tactics used at traditional auto dealers, utilities and local governments should take notice. Reaching ambitious sales targets may only be possible if new charging infrastructure is coupled with strategic marketing and education campaigns that explain the mechanics of EV charging and how drivers can conveniently find a station.
As much as some would like to think that technology alone can transform buyer habits, the lessons we have learned from energy efficiency adoption suggests this not to be the case. Large-scale transformation requires a significant marketing push.
For inspiration, check out a 2015 Georgia Power ad that shows just how easy an EV lifestyle can be.
Ben Block is a Marketing Manager with Clean Markets. He can be reached at firstname.lastname@example.org. This article is contributed by the AESP Marketing Topic Committee.