It’s clear the rise of electric vehicles (EVs) has redefined the auto industry from a product point of view. But it has also forced automakers to innovate in how they connect with shoppers. The divergence in approaches between legacy automakers and startups like Tesla reveals a key insight: selling EVs isn't just about the product; it's about understanding fundamentally different customer bases.
In their early days, EVs were perceived simply as vehicles with a novel propulsion system –an evolution from hybrid technology to fully electric zero-emission powertrains. However, battery-electric pioneers like Tesla treated the EV as a new kind of vehicle to be sold in a new kind of way. By shedding legacy design constraints and conventional distribution schemes, the car was reimagined as a software-defined product. Tesla's over-the-air (OTA) updates, which enable real-time improvements and new feature rollouts, exemplify this approach.
The idea of OTA updates shifted the paradigm from static vehicles to dynamic platforms, much like smartphones. For early adopters, the concept of a car as a constantly evolving tech product resonated deeply. These customers are drawn to the novelty, the innovation, and the sense of participating in a beta-testing community. For better or worse, the Tesla model embraced the spirit of technological experimentation.
Startups like Tesla have excelled at capturing the early adopter market, but moving into the mainstream presents significant hurdles. One of the primary challenges is service accessibility. The direct-to-consumer model has some advantages but lacks the extensive service infrastructure that legacy automakers have built over decades. Traditional automakers, through their dealership networks, provide customers with nearby service centers, which startups struggle to match.
Another challenge is quality. Early Tesla models faced criticism for build quality issues, such as panel gaps and inconsistent paintwork. While early adopters might overlook such flaws in exchange for innovative features, mainstream buyers demand high standards of craftsmanship.
Legacy automakers face a different set of challenges as they enter the EV space. For these manufacturers, EVs represent not just a new propulsion option but a shift in how they must engage with customers. Unlike startups, legacy automakers are accustomed to serving a loyal customer base that values simplicity and convenience.
These companies must find ways to educate mainstream buyers about EV technology. Many consumers are unfamiliar with the requirements of EV ownership. Setting up a home charger is beyond the ken of many consumers and battery maintenance doesn’t compute. Dealerships, which have traditionally been transactional in nature, need to evolve into hubs for education and support. Legacy automakers also need to prioritize hassle-free ownership experiences. While startups emphasize cutting-edge features like OTA updates, traditional manufacturers must ensure that every aspect of EV ownership – charging, service, and reliability – is as seamless as possible.
The EV market now sits at a crossroads, appealing to two very different customer groups. On one side are the early adopters and tech enthusiasts who value cutting-edge technology. These folks, often drawn to startups like Tesla or Rivian, are excited by the innovation that EVs offer. They appreciate the concept of a vehicle as a gadget on wheels, offering frequent updates and technological advancements post-purchase. For this group, glitches or minor inconveniences are often forgiven, as they see themselves as pioneers in the tech ecosystem.
On the other side are the mainstream consumers who represent the bulk of car buyers. These customers prioritize reliability, convenience, and value. For them, a car is a practical tool, not a project. They are accustomed to the seamless service and hassle-free experience provided by legacy automakers. Mainstream buyers expect their vehicles to simply work, with minimal interruptions to their routines.
Some factors that currently limit EV adoption are common to both buyer groups. Purchase price remains a significant factor, since EVs still come at a premium compared to internal combustion engine (ICE) vehicles. Charging infrastructure is another major hurdle. Startups and legacy automakers alike must find ways to make charging faster, easier, and more reliable.
Automakers must adopt new strategies and address consumer concerns to accelerate EV adoption. Encouraging households to make their second vehicle an EV is one such approach. For many consumers, this offers a low-risk entry point into EV ownership while retaining an ICE vehicle for long trips or emergencies. By positioning EVs as complementary rather than replacement vehicles, automakers can attract hesitant buyers.
In addition, automakers need to invest in the EV ecosystem. This means improving charging infrastructure, expanding service networks, and ensuring that software and hardware support systems are reliable and easy to use. Battery innovation will also play a key role in the future of EVs. Advances in battery technology, such as solid-state batteries, promise greater range and faster charging, addressing two of the most significant concerns among potential buyers.
Finally, automakers must focus on reducing costs to eliminate the price premium associated with EVs. As production scales and battery costs decline, EVs will become more competitive with ICE vehicles, making them accessible to a broader audience.
The transition to electric vehicles is a monumental shift, akin to the adoption of automobiles themselves more than a century ago. Success will depend on the ability of automakers to not only produce innovative vehicles but also to understand and cater to the evolving needs of their varied customers.
Startups must learn to address the practical concerns of mainstream shoppers, while legacy manufacturers must embrace innovation and adopt a customer-first mindset. By addressing infrastructure challenges, prioritizing quality, and offering competitive pricing, the industry can bridge the gap between early adopters and the mass market.
The journey to widespread EV adoption will be challenging, more so with potential cuts to the Inflation Reduction Act based customer subsidies. However, with thoughtful strategies and collaboration, automakers can mitigate the challenges involved in the transition to a cleaner, more sustainable future.
Srini Rajagopalan is managing director and practice leader of automotive advisory & analytics at J.D. Power.
It’s no surprise that the move toward electrics is also being driven by growing consumer interest in vehicles that address the challenges of greenhouse gas emissions and climate change. Those who don’t see this this transition aren’t paying attention. However, taking this as a sign that the imminent end of the internal combustion vehicle is upon us assumes too much. The numbers and trends do not bear this out.
While our focus here is on all ‘greener’ vehicles offering lower emissions, higher efficiency, and greater environmental performance, we give significant focus to electrification on GreenCarJournal.com because, to a large degree, this represents our driving future. There are many electrified vehicles now on the market that have met with notable success, particularly gasoline-electric hybrids. In fact, hybrids have become so mainstream after 20 years that most people don’t look at them differently. They simply embrace these vehicles as a normal part of their daily lives, enjoying a familiar driving experience as their hybrids deliver higher fuel efficiency and fewer carbon emissions.
Less transparent are electric vehicles of all types because they have a plug, something that’s not familiar to most drivers. This includes plug-in hybrids that really are seamless since they offer both electric and internal combustion drive. The challenge is especially pronounced for all-electric vehicles that drive exclusively on batteries.
A recent survey of consumers and industry experts by JD Power underscores this. Even as the overall survey indicated most respondents had neutral confidence in battery electric vehicles, many said their prospect for buying an electric vehicle was low. They also had concerns about the reliability of battery electric vehicles compared to conventionally powered models. Clearly, there’s work to be done in educating people about electric vehicles, and it will take time.
Overall, automakers do a good job of providing media with the latest information on their electrification efforts, new electric models, and electrified vehicles under development. That’s why you’ll read so much about electric vehicles in mainstream media and learn about them on the news.
What’s less evident is that consumers truly learn what they need to know about plug-in vehicles at new car showrooms. Car dealerships are critical even in an era where online car buying is starting to gain traction. Showrooms are still where the vast majority of new car buyers shop for their next car, and the influence salespeople have on a consumer’s purchase decision is huge.
The JD Power study illustrates consumers’ lack of understanding about the reliability of electric vehicles…even though reliability is a given since electrics have far fewer moving parts to wear and break than conventional vehicles. Dealer showrooms can help resolve this lack of understanding with readily-available materials about electric car ownership, a sales force willing to present ‘green’ options to conventional vehicles, plus adequate stock of electrified vehicles – hybrid, plug-in hybrid, and battery electric – to test drive.
Sales trends tell us that conventional internal combustion vehicles will represent the majority of new car sales for quite some time. More efficient electrified vehicles will continue to make inroads, but not at the pace many would like, even at a time when greater numbers of electric models are coming to market. In the absence of forward-thinking dealerships willing to invest in change, an enthusiastic sales force eager to share the benefits of electrics, and auto manufacturers willing to incentivize dealers to sell electric, this promises to be a long road. It’s time to change this dynamic.