July2023

Automotive&AssemblyPractice

Electric-vehiclebuyersdemandnewexperiences

Consumerattitudestowardelectricvehiclesarechangingfast—andsoareexpectationsofthecar-purchasingexperience.

byThomasFurcher,IsabelaHidalgoGiraldo,FelixRupalla,andAnna-SophieSmith

2Electric-vehiclebuyersdemandnewexperiences

Whenbuyinganelectricvehicle,consumerswantanexperiencethatmatchestheirexpectationsofthecaritself.Thatis,somethingexcitingandinnovativebutalsoreliableandpredictable.Theyexpecttobothtransactonlineandnegotiatewitharealperson,andtheystillneedtotakeatestdrive.However,theoverallexperienceneedstobemoreseamless,morepersonalized,andmoreflexiblethanitwasinthedaysofforecourtwalkarounds.

ThesearesomeofthefindingsofMcKinsey’slatestFutureofAutoRetailconsumersurvey,1whichpolledmorethan4,000respondentsglobally,focusingonconsumersentimentaroundelectrification,thecar-purchasingexperience,andinnovationsinautomotiveretail.Thefindingsshowthatconsumersexpectanexcellentexperiencebutarenotalwayssurethattheindustryisreadytomeettheirneeds.

Inthisarticle,weshowhowgrowthindemandforelectricvehicles(EVs)isshapingtheautomotiveretailjourney.Whileconsumersenjoydigitalinteractions,theyareconcernedaboutfactorsincludingopaquepricing,complexityinthe

configurationprocess,andvariabilitybetweendealerofferings.Whenitcomestotestdrives,consumersareincreasinglyinterestedinnewformats,includingtestingvirtuallyorathome.

Whatdotheseshiftsmeanfortheautomotiveretailindustry?First,thatcompaniesmustembracebolddecisionsandinnovationtomeettheneedsofdigitalconsumers.Also,asattitudesevolve,thatnewentrantswillshakeupthemarket.Thekeyforallmarketparticipantswillbetokeepacloseeyeontrendsandbereadytorespondwithfeaturesthatexciteconsumersandsupportlong-termdemand.

Intentisaccelerating

MoreconsumersthaneverareconsideringbuyinganEV(Exhibit1).AccordingtotheMcKinseyMobilityConsumerPulseSurvey,theproportionofconsumersconsideringbattery-electricvehicles(BEVs)rosebyfivepercentagepointsto20percentbetweenDecember2021andDecember2022,whiletheproportionconsideringaplug-in

hybrid(PHEV)rosebyfourpercentagepointsto

Exhibit1

Moreconsumersareconsideringelectricvehicles.

Globalconsumerpurchaseintentbyvehiclepowertraintype,1%ofrespondents

Battery-electricvehicle(BEV)

Plug-inhybrid-electricvehicle

1moreused

internal-combustion

engine(ICE)

1more

newICE

Afewmore

ICEbeforeswitchingtoEV

Noplansto

switchtoEV

Dec2021

Dec2022

151818181123

202214151019

+9percentage-pointincreasein

consumersplanningtobuyanEVasnextvehicle

1Figuresmaynotsumto100%,becauseofrounding.

Source:McKinseyMobilityConsumerPulseSurvey,conductedonline;Dec2021,n=26,285;Dec2022,n=27,869

McKinsey&Company

1FutureofAutoRetailconsumersurvey,McKinseyCenterforFutureMobilityconsumerinsights,August2022,globaln=4,078.ConsumerswereinterviewedinChina,Germany,UnitedKingdom,andtheUnitedStates.

22percent2Thesurveyalsoshowsafour-percentage-pointdropinEVskepticismbyconsumers,from

23percentofconsumerswhocategoricallydonotwanttoswitchtoEVs,to19percent.

Increasingcomfortwithonlinebuying

Inaworlddominatedbydigitalengagement,consumers’firstinstinctwhenconsideringacarpurchaseistogoonline.Oneinthreebuyerssaytheywillnotonlyresearchbutalsobuyonlinefortheirnextcarpurchase,citingsimplicityandspeedaskeydrivers.InChina,morethanhalfofrespondentssaythattheywouldbuyavehicleonline,regardlessofpowertrainchoice.Inothergeographies,onlinepurchasingismorefavoredamongEVbuyers,withtwiceasmanychoosingonlineoverphysicaltransactions.

Despiteenthusiasmfordigital,traditionalapproachesremainpopular.Forty-fourpercentofconsumerssaythattheyvalueapersonalconnection,and40percentsaythattheyappreciatetheopportunityforpricenegotiation.Indeed,only24percentsaytheywantanentirelyhuman-freeexperience.

Brandloyaltyputtothetest

Intimesofsystemicchange,consumersaremorewillingtoabandonlong-standingloyalties.Thispresentsatestforestablishedbrands(Exhibit2).Morethan50percentofrespondentssaythey

Aboutthesurvey

TheseinsightsweredevelopedbytheMcKinseyCenterforFutureMobility(MCFM).Since2011,theMCFMhasworkedwithstakeholdersacrossthemobilityecosystembyprovidingindependentandintegratedevidenceaboutpossiblefuture-mobilityscenarios.Withourunique,bottom-upmodelingapproach,ourinsightsenableanend-to-endanalyticsjourneythroughthefutureofmobility—fromconsumerneedstomodalmixacrossurban/ruralareas,sales,valuepools,

andlifecyclesustainability.Findoutmore

abouttheMcKinseyCenterforFuture

MobilityonMcK.

maytryanewbrandwhentheyswitchtoelectric.

AndifonlyBEVsareconsidered,theproportion

risesto70percent.

Consumersarenotwowedbythe

purchasingexperience

Ofconsumerswhoboughtacarinthepastthreeyears,only53percentsaytheywereverysatisfiedwiththeexperience.Toppainpointsincludedpricetransparency,vehicleavailability,andprocesscomplexity(Exhibit3).Inaddition,assupplychainscatchupinthewakeoftheCOVID-19pandemic,

Inaworlddominatedbydigitalengagement,consumers’firstinstinctwhenconsideringacarpurchaseistogoonline.

2McKinseyMobilityConsumerPulseSurvey,December2021–22.Interviewstookplacein13countries.

Electric-vehiclebuyersdemandnewexperiences3

4Electric-vehiclebuyersdemandnewexperiences

75

50

45

36

Exhibit2

Therearesignsofweakeningbrandloyaltyamongautomotiveconsumers.Likelihoodofswitchingtoanewbrandwhenmovingtoanelectricvehicle1%ofrespondents

Globalaverage52

GermanyUKUSChina

1Percentageofrespondentsstating“verylikely.”

Source:McKinseyFutureofAutoRetailSurvey,Aug2022;China,Germany,UK,andUS,n=4,078

McKinsey&Company

Exhibit3

Consumersseehighnumbersofpainpointsintheelectric-vehiclebuyingprocess.

Painpointsintheelectric-vehicle(EV)purchaseprocess,%ofrespondentswhoboughtinpast3years

UKUS

ChinaGermany

0100

Lackoftransparentpricingand

nodealer-standardizedpricing

Deliverywaittimes

Switchingofsalespersonnel

orcontactatdealership

Toomanyconigurationoptions

Notestdrivevehiclesavailable

Lackofseamlessonline/

omineexperience

Relevantpriceorperformance

informationdiiculttoind

Noonlineorderingavailable

Limitedornoinancingavailable

LackofanswerstoEV-speciic

questions

Contractdocuments

unclearorcomplex

051015202530354045505560

Source:McKinseyFutureofAutoRetailSurvey,Aug2022;China,Germany,UK,andUS,n=4,078

McKinsey&Company

Smallsetofpreconiguredoptions PersonalizedcarconiguratorTestdriveoption(bringanddrop)

Featuresondemand

Secureinancingandquoteonline Postpurchase,predeliveryconigurationchangeoptionsDirect-to-consumer

salesapproach

Haggle-freepricingSimpliiedandfullydigital contractmanagementVirtual-realityshowrooms

5-clickvehiclepurchasejourney

lackofavailabilityfortestdrivesandlongdeliverywaittimesarehighonconsumers’minds.

SomepainpointsaremoreacuteintheEVspace.Thirty-threepercentofconsumerssaythattheyregretalackofoptionsforpersonalizedconfigurations,comparedwithonly25percentoftraditionalcarbuyers.Meanwhile,33percentdemandasmallersetofpreconfiguredoptions,and28percentwanttheopportunitytochangeconfigurationpostpurchaseandpredelivery,comparedwithonly20percentoftraditionalcarbuyersonbothcounts.

Whenaskedaboutpotentialadaptationsandinnovationsinthepurchasingprocess,respondents’toppreferencesincludesimplicity,convenience,higherlevelsofpersonalization,andgreaterpricetransparency—allcorefeaturesofthedigitalexperience.FutureEVbuyersplacemoreemphasis

thantraditionalbuyersonsimplicityandpersonalizationinthevehicle-selectionprocess(Exhibit4).

Testdrivesareakeybattleground

Fewpeoplewanttobuyacarwithouttestdrivingitfirst.Indeed,acrossboththecombustionengineandEVcategories,87percentofconsumerssaytheywanttotestdrivebeforepurchasing,andtheproportionholdssteadyacrossdemographicsandgeographies.Giventhedifferentexperienceofferedbyelectricvehiclesandconsumers’commonlackofknowledgeofEVs,testdrivesareevenmoreimportantinthatsegment.Reasonsincludegettingafeelforperformanceandhandling(61percent)andcomparingtheelectriccarwiththeircurrentone(45percent).EVbuyersalsowanttolearnaboutcharging.

Exhibit4

Electric-vehiclebuyersaremoreinterestedinnewretailformats.

Itemsofinteresttoconsumersinnewelectric-EVinclined

vehicle(EV)retailformats,%ofrespondentsNotEVinclined

0100

0510152025303540

Source:McKinseyFutureofAutoRetailSurvey,Aug2022;China,Germany,UK,andUS,n=4,078

McKinsey&Company

Electric-vehiclebuyersdemandnewexperiences5

Exhibit5

Testdrivesarestillimportant,butautomotiveconsumers’tastesarechanging.

Preferredtestdrivelocation,%ofrespondents

Amountwillingtopayforat-hometestdrive,%ofrespondentsby$pricelimit

100GlobalChinaUK

USGermany

Dealershiporstore

35

80

Virtual

testdrive

6

60

12

10

Findmorecontentlikethisonthe

McKinseyInsightsApp

Scan?Download?Personalize

17

At

Shared

9

home

testdrive

40

Rental

11

20

Pop-uptestdriveeventFriendsandfamily

0

Free$25$50$75$100$125$150$175

Source:McKinseyFutureofAutoRetailSurvey,Aug2022;China,Germany,UK,andUS,n=4,078

McKinsey&Company

Consumersareopentonewtestdriveformats,includingat-hometestdrives,rentals,andevenvirtual-drivingexperiences,citedby53percentofChineserespondentsasapossibility(Exhibit5).Manyconsumersarewillingtopayforahometestdrive.Globally,80pe