Why are EV Sales slowing?

EV Car Sales has seen a decline both in India & Abroad. The arguments given range from range anxiety, charging infrastructure to government policies and subsidies. What most of us miss is the change in customer behaviour.

While EV cars make up 4% of the total sales, the only top 5 Car Manufacture who has been serious about EVs is Tata. Maruti has none and Hyundai & Mahindra have just made half hearted attempts in EVs. And where is Tata Motors? EVs make up for 13-14% of TaMo’s overall Passenger vehicle sales. What makes this % important?

If we consider the Technology Adoption Life Cycle introduced by Everett Rogers, the Innovators and Early Adopters segment make up for 16% of overall customers. As TaMo slowly reaches this 16% mark, they are seeing a slowdown in technology adoption.

Lets practically analyse some of the reasons given for this slowdown:

1. Range - range anxiety is a term introduced in our lexicon, to install fear in a buyers mind. More than 90% cars are driven for 10-40 km daily. Even with the lowest range EV (MG Comet - 230 km, Tata Tigor - 250 km), this would mean charging once every 5-7 days.
2. Charging infrastructure - again, most cars rarely see a highway, let alone do long (500+ km one way trips). Those doing 200 km kind of trips can just charge at home, leave, reach destination and charge overnight
3. Government subsidies - now while I am all for an initial support for a new technology, this wont last forever. Instead of relying on subsidies to be profitable, we need to look at ways to reduce battery, chip, etc costs.

The Innovators, the risk-takers and enthusiasts who love to experiment with new ideas or products have bought in early. The early adopters saw the potential of EV technology early and gave it a try. Then comes the chasm!

The early majority is the segment which will buy EV Cars next. They adopt once they see evidence of benefits and hear positive feedback from early adopters. They are also representing the critical mass needed for mainstream adoption. This is also proven to an extent by the trend in EV two wheeler sales, where the products mostly target the mass segment and thus the sales keeps on growing. This EM segment is also one of the reasons why the traditional 2 wheeler manufacturers are growing faster - but that's a discussion for another time.

“Crossing the Chasm” Geoffrey Moore, in his book Crossing the Chasm, expands on this model by highlighting a gap—or “chasm”—between early adopters and the early majority. Many technologies fail at this stage if they cannot transition from niche markets to the mainstream.        

If we do not adopt our product, pricing & most importantly communication, to appeal to the early majority, the chances of failures are high. Customers need to be educated on the obsolescence of range anxiety and of charging infrastructure. I am not saying the infrastructure is perfect, but it is evolving and if the early majority do not buy-in, investments in charging infrastructure can also see a slowdown and we will have a chicken & egg situation.

Manufacturers - its time to recognise this shift in customer segment, evolve and act accordingly.

Credits to Everett Rogers & Geoffrey Moore for the concepts.

#EV #Customers #Strategy #Growth