This year’s Deloitte’s Annual Generation Y Automotive Survey has mixed results for the EV market. The good news is that this crucial group of consumers overwhelmingly prefers alternative power to traditional gas-only vehicles – by a margin of 59% to 37%. That should help keep automakers focused on fuel efficiency. However, only a very small percentage has a preference for pure battery electric vehicles.
The key take aways from the survey:
- Gen Y in the US comprises 80 million young people between the ages of 19 and 31. This is the largest generation since the Baby Boomers.
- Gen Y will buy an estimated 25% of new cars sold this year – a figure which will rise to 40% in ten years time.
- Almost half of Gen Y, or 35 million individuals, will buy a new or used car in the next two years.
- 59% of Gen Y respondents stated a preference for alternative power
- 57% stated a preference for hybrid gasoline-electric vehicles
- Only 37% stated a preference for traditional gas-only vehicles
- Only 2% stated a preference for pure battery electric vehicles
- Even with their overall preference for hybrids, Gen Y consumers still prefer a non-plug-in hybrid by a margin of more than two-to-one over a plug-in version. However, that still leaves a considerable market for plug-in hybrids – of around 19% of respondents
- 49% stated that they would be willing to pay an extra $300 for each mile per gallon of improvement they can get out of a hybrid
These numbers tend to support our view that plug-in electric hybrids are likely to do better than the limited range pure battery electrics that most of the major automakers are planning.
No doubt range anxiety remains a key issue. This also suggests that pure battery electric vehicles are likely to do better in the luxury sector where the price can support a larger battery with a more significant range – such as in the Tesla Model S, which has a range of up to 300 miles.
We continue to like Tesla as a trade, where the company’s recently announced 8,000 plus reservations for the Model S points to an already well formed niche market. As production starts and the Model S hits the streets we would expect the company’s order book to expand further.
You can read a longer view on the future of the electric car here.
The study is a joint effort between Deloitte’s Automotive practice and the Michigan State University Broad College of Business and has been conducted for the past four years. Since inception more than 4,500 Gen Y consumers have taken part in the survey.
Disclosure: I am long Tesla.