Dealers, car buyers weigh in on EVs

The Capital One July 2022 Car Buying Outlook reveals intriguing perspectives about EVs – and offers dealers some useful takeaways.

Dealers and car buyers differ on key issues surrounding acceptance of electric vehicles (EVs), including affordability, the reasons why consumers are interested and how they learn about them. As such, it’s likely that dealers will have to realign some of their strategies to win over car buyers.

These are some of the primary takeaways from the second volume of the July 2022 Car Buying Outlook, a report recently published by Capital One. The goal of this report is to help dealers better understand car buyers’ attitudes, behaviors and preferences in many different categories, including their perceptions of EVs.

Opportunities for dealers

For dealers, the opportunities presented by EVs are becoming clearer. While only 35% of car buyers surveyed say they’re likely to buy an electric vehicle as their next car (and only an estimated 1% of cars on the road today are fully electric vehicles, according to reports from Reuters and The New York Times), 61% agree they represent the future of vehicle ownership. And 84% of dealers feel the same way, the survey shows.

“Dealers will need to meet customers where they are on their journey and be prepared to support them when they walk into the dealership,” says Tim Mullins, national sales vice president for Capital One Auto. “That starts with educating their staff about EVs, understanding what customers think about EV ownership and recognizing why they are interested in driving an EV.

“That’s why Capital One publishes the Car Buying Outlook – to help inform dealers about what their customers think about various issues and then act accordingly,” he says.

EVs are gaining traction with dealers. The survey shows that 77% of dealership respondents currently sell EVs and 85% of the dealers who don’t are planning to do so within the next five years.

Fuel costs drive interest

One thing is abundantly clear, according to the survey: Both dealers and car buyers agree that fuel costs are driving interest in EVs. In fact, of the 35% of car buyers who currently own an EV or indicated an EV will likely be their next car, 72% said that saving money on gasoline is a top reason for their interest. And 83% of dealers say they believe spikes in gas prices earlier this year created even more interest in EVs.

“As car buyers become more educated about EVs and ownership, the top reasons for buying one (shown in the survey) may change as well,” Mullins explains. “The approach to selling EVs will need to be flexible.”

Further survey results reveal that 52% of consumers that currently own an EV or indicated they’re considering buying one are interested in EVs because they help the environment, while 26% are attracted by lower costs for maintenance and upkeep.

However so-called “range anxiety” ranks among the top reasons car buyers aren’t interested in EVs. The survey shows that 41% of these car buyers say they’re not interested in buying an EV because of the short driving range and limited battery life.

Contrasting views of affordability

Buyers and dealers are misaligned when it comes to EV affordability. For example, 59% of car buyers say they’re not interested in an EV because they’re too expensive while 80% of car dealers believe their average customer can afford one.

In other words, dealers are significantly more likely than car buyers to believe that EVs are affordable – a situation that presents an opportunity for dealers to educate consumers about EV financing, tax breaks, service and maintenance.

Interestingly, 83% of dealers that indicated they are highly or completely virtual agree that EVs are affordable for their average consumer.

There’s also an affordability divide between tech-savvy and more traditional car buyers. The survey shows that 30% of car buyers that have purchased or plan to purchase vehicles online say EVs are affordable, but only 15% of car buyers that have purchased vehicles in person or plan to do most of their car-buying in person feel they’re affordable.

Dealers also think that car buyers are interested in EVs because of the tax advantages, but numbers found in the Car Buying Outlook don’t support that belief. While 40% of dealers think this is true, only 20% of car buyers who said they drive an EV or are interested in doing so agree. This indicates another area that dealers could concentrate on to win over EV-wary customers.

Current events shape EV attitudes

The survey also supplies dealers with other kernels of information that can help them. For example, consider this disconnect: 44% of dealer respondents believe that the performance of EVs drives consumer interest, while only 20% of car buyers that indicated they drive an EV or are interested in doing so agree.

What can dealers make of this discrepancy? Mullins says this difference in opinion underscores how consumers are driven by what’s happening in the world around them. When gas prices skyrocketed earlier this year, for example, they reported that saving money on gas was a top reason for their interest in EVs, he notes.

“I think it is important for dealers to keep a pulse on what is happening in the world and how it affects their customers,” Mullins says. “The performance of the car is important, but it’s currently not a top reason car buyers are interested in driving EVs. But that may change.”

EV education will be critical

Dealers must be prepared to inform car buyers that are less knowledgeable about EVs about the various advantages they offer. This will help them feel more comfortable about taking the leap and adopting this technology

“According to the survey, only 56% of car buyers stated they are familiar with electric vehicles,” Mullins explains. “There is going to be a great variance in how much car buyers know about driving and owning an EV.”

However, there may be a hurdle for dealers to clear: While 82% of dealers want to be the source of information about EVs, only 14% of car buyers say they actually rely on dealerships to get educated about EVs.

But Mullins believes this poses an opportunity for dealers to meet customers where they are, just as they do in other aspects of the car-buying process.

“I don’t think dealers necessarily need to be a go-to source of information,” Mullins says. “However, I do think they need to be prepared to provide information for car buyers with varying levels of knowledge about EVs.”

Car Buying Outlook provides actionable data and insights that dealers can use to shape strategies in an ever-changing auto-industry environment. Visit www.capitalone.com/about/newsroom/car-buying-outlook-deep-dive/ to read the latest report. The information it provides is based on surveys of both dealers and consumers, conducted by Morning Consult from early through mid-June 2022. The survey sampled 400 owners, managers and other executives at car dealerships that have posted annual sales of at least $1 million, as well as 2,209 car buyers that have either purchased a vehicle within the last six months (378 consumers) or plan to buy one within the next two years (1,831 consumers).