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March 8, 2018

How Could the Rise in Electric Vehicles Change Consumer Habits?

The automotive market is currently undergoing and adapting to some of the biggest changes it will have ever experienced, as more and more electric vehicles (EVs) are introduced. With the UK government’s plan to ban the sale of all new petrol and diesel carts from 2040 onwards, manufacturers are increasing their output of EVs to ensure they are fully prepared for the future. This will likely have consequences for how car buying habits change as well.

Additional Considerations to Make

When buying a petrol or diesel car there will be many considerations you need to make, such as the emissions, fuel, tax and insurance costs and more. With an EV you don’t need to worry about emissions, while tax and fuel costs will be a lot lower (you’ll still need to pay for the electricity powering the car). However, you will need to think about where and how you can charge the car and costs for any additional equipment required. This could result in brand loyalty when consumers buy a new EV if they don’t want to fork out for a fresh charging socket, for example.

Researching a New EV

According to research, by 2020 around 40 per cent of new car buyers will be millennials. Of these, 88 per cent research their next car purchase online, reading reviews and comparing options, with fewer heading direct to a dealership. For this reason, drivers of EVs are likely to have more knowledge about any car they buy and what’s available, with manufacturers needing to provide all such data accurately. Especially after the Volkswagen emissions scandal, drivers value honesty and transparency more than ever.

HPI Checks

It’s a good idea to undertake an HPI Check when buying any used vehicle to ensure there are no hidden problems with it. For EVs, HPI checks may need to change as well, to include further checks that cover the battery life or range, if possible. Existing checks included such as number of previous owners and valuation will still be useful.

Price Changes

One big issue for the industry and government in the future could be that of taxation. Fuel duties connected to the sale of cars raised around £28 billion in the 2016/17 financial year. Once there are no new petrol or diesel cars for sale, this could take a huge hit. One option that has been suggested and could be likely is a rise in the VAT on domestic energy consumption, which is currently at 5 per cent. Until this happens though, buying a new EV now could save consumers money in the long term.

Brand Associations

Certain manufacturers already have strong associations with EVs, such as the Nissan thanks to its Leaf model and of course Tesla. Depending on the quality of vehicles produced in the next few years, these could make or break many manufacturers’ futures. Like how Skoda have taken decades to recover from a poor reputation, should a dud EV or two be put out by one brand then it could turn off consumers from the beginning from any further EV they produce.

The future of new cars looks exciting and set for plenty of change, and vehicle manufacturers will need to adapt to stay ahead of the competition.

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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