Unpacking The McKinsey Mobility Consumer Survey — Henny Penny Edition

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“The sky is falling, we must run and tell the king!” said Henny Penny. That is the message many so-called news outlets are touting after the McKinsey Mobility Consumer Pulse 2024 report was published this week. I first learned of this report when my brother-in-law sent me a link to a headline in the Boston Globe that screamed, “Buyers Remorse? Nearly half of EV owners plan to switch back to gas powered cars.” That was followed by the New York Post, which carried the story with a similar headline.

Naturally, I was somewhat alarmed by such apocalyptic news, so I did something almost unheard of in the world of journalism today. I read the McKinsey report myself. Lo and behold, it does suggest that some EV drivers are less than thrilled with their ownership experience, but it has other information that adds context to the findings. The report compiles input from more than 30,000 people in 15 countries since 2021. Those statistics are important for understanding the conclusions. A lot has changed in the world of mobility since 2021. Here are some of the major conclusions from McKinsey.

• 37% of electric vehicle buyers would consider getting their next car online
• 38% of respondents who do not have an EV yet, consider a BEV or PHEV as next car
• 59% of EV buyers want to use more digital connectivity services in the future
• 21% of car buyers consider autonomous driving functionalities as key buying factor for their next car
• 29% of electric vehicle owners are considering a switch back to a traditional combustion engine car
• 27% of European EV buyers are open to considering a Chinese brand for next purchase
• 9% consider current electric vehicle charging infrastructure to be sufficient
• 29% would like to replace their private vehicle completely with other forms of transport in the next 10 years

Looking at the data over the past three years, McKinsey found that globally, the percentage of people who intend to make an electric car their next purchase continues to rise, however more slowly. It also found that those who are considering an electric car are younger, more tech savvy, and tend to live in urban areas.

Many Still Have Questions About Electric Cars

Any sales person will tell you that people who have questions about a product will delay purchasing until their questions are answered. The McKinsey survey proves that point. It found the highest barriers for electric vehicle adoption are low familiarity with the technology and high perceived cost. The first is a perennial concern, especially for electric cars. Lots of people still have never driven in one and know next to nothing about them. Some of the fault for that goes to manufacturers and dealers, who have done an incredibly poor job of educating consumers.

There are still many who believe an electric car cannot be driven in the rain or through a puddle. Others think you need to drive miles away to find a fast charger. The concept of charging overnight at home is simply foreign to many people. Granted there are some who do not have the ability to plug in at home, but even those who do are unaware of the difference between Level 1, Level 2, and Level 3 charging. I like to explain to people that Level 1 is like filling a swimming pool with a 1/2″ garden hose. It will get the job done, but it takes a while. If your car is parked for 12 hours or more, why do you care how quickly it charges? You wake up every morning with a full battery and life is good.

Level 2 is like filling a swimming pool with a 2″ pipe. It’s faster than Level 1, but still can take several hours. Level 3 is like filling the swimming pool with a fire hose. There are lots of people who think they need a Level 3 charger in their garage so they can recharge their battery in 10 minutes or less, even if the car won’t be used again until the next day. It may seem silly to many EV owners, but perception is reality and the education of the buying public has been deficient in most cases. People who don’t understand what they are buying usually don’t buy. End of story.

The High Cost Of Convenience

Conventional cars are convenient. You drive them until the tank needs to be refilled, you pull into a gas station, and 10 minutes later (or less) you are on your way. You don’t have to think about it; it just happens with little to no prior thought required. Keeping an electric car takes some prior planning. People live busy lives. Anything that adds an extra layer of planning is a nuisance they can do without, and charging an EV does require more planning than finding a gas station. Of course, there is the little matter of keeping the Earth from becoming a baked potato that no longer supports human life, but that is decades in the future while getting to work on time is a very near term consideration. Convenience versus sustainability. In most cases, if that is the question, convenience is going to win every time.

The Boston Globe does say the results of the McKinsey research are not all bad. Of the survey respondents who still drive ICE cars, 38% said they would consider buying either a battery-electric car or a plug-in hybrid as their next car. In addition, other surveys have found that consumers like EVs. A poll of 300 EV owners taken by CDK Global, maker of software for car dealerships, found that 73% planned to purchase only electric cars in the future. Liz Najman, director of market insights at Recurrent, a research company that tracks the EV market, said that its survey of EV owners showed a similar high level of owner satisfaction.

McKinsey Highlights Connectivity & Online Purchases

One finding of the McKinsey report should be troubling to automakers, many of whom are getting away from making their cars compatible with smartphones. The survey data suggests that is a marketing blunder that could come back to bite them. People really, really like their smartphones. They know how to use them and they resent being forced to use a different ecosystem when they drive. The situation is particularly acute for EV drivers. Electric vehicle buyers consider in-car technology more important than the average car buyer, McKinsey says. In its survey, it found that only 20% of respondents say they are satisfied with the offerings available on new cars today. Companies that are excluding Apple CarPlay or Android Auto from their new models may be going down the wrong road, the survey suggests.

In addition, car dealers are facing a situation that will impact them soon, if it hasn’t already. A majority of people told McKinsey they prefer to complete a car purchase online. Car dealers have spent a century perfecting their system of extracting the maximum amount of profit from each customer with an array of techniques that rely on one factor — having a real live buyer in the dealership where they can be controlled and manipulated in any number of ways. Online shopping gives dealers far less control over the sales experience. Buyers love that; dealers hate it.

A Truly Awful Charging Experience

The number one reason people gave McKinsey for considering a switch back to a conventional car is the dreadful state of EV charging away from home. Here is an area where Tesla has shined, building its own Supercharger network that does one thing spectacularly — it works, seamlessly and efficiently, the first time, every time. While other manufacturers have been busy figuring out how to make electric cars, they have largely ignored the charging piece of the puzzle. Let cities and towns do it, let private companies do it, let utility companies do it, let anybody do it, just as long as they don’t have to do it.

I have neighbors who routinely drive a Chevy Bolt back and forth between Florida and the Midwest. They love the car, but dread taking long distance trips with it. They recently got rid of their Bolt and replaced it — with a Chevy Blazer EV. A better charging experience has made all the difference. For EV drivers in the US, the Tesla Supercharger network is slowly being opened to more non-Tesla drivers. Of course, Tesla has a financial incentive to do so. There are billions in federal money available to improve EV charging across America, but because of permitting issues and pushback from red states that refuse to spend the money, only seven new charging locations have been completed with that money so far.

The Politics Of EVs

A report by Bank of America this week claimed the high cost of electric vehicles is slowing EV uptake in America. Some of that is attributable to high interest rates, with car loans now at 9% or higher for  many consumers. Bank of America (BofA) says high prices are setting back the anticipated EV adoption curve by a year or more. “EV demand growth has slowed sharply in 2024, likely due in part to affordability,” the report says. Only 3% of EVs in the U.S. are priced at less than $37,000, according to the research, compared with more than half of gas-powered or hybrid vehicles.

The BofA analysis is based on the assumption that most US consumers will buy an EV if the price is competitive with an internal combustion engine vehicle. However, manufacturers “are unlikely to achieve ICE-comparable costs on EVs until 2028+,” it said. “This means OEMs have little incentive to ramp EV production, despite what might be higher levels of demand at lower prices. As such, we expect EV penetration to inch higher from 2024 to 2027, but after 2027 it could start to accelerate.”

Analysts at Bloomberg reached a similar conclusion in a June 12 report, which said that electric vehicle markets around the world “are not all traveling in the same direction or at the same speed in 2024. Sales of EVs continue to rise globally, but some markets are experiencing a significant slowdown and many automakers have pushed back their EV targets. The growth rate is visibly slower than before.”

Developing economies such as like Thailand, India, and Brazil are “experiencing record sales as more low-cost electric models are targeted at local buyers,” BloombergNEF noted. And China is the only large market “that has reached the point of consumer-led takeoff for EV sales.” Policy support for EVs “looks less certain than it did a year ago. In the US, EV market jitters, inflamed by the upcoming presidential election, helped slow down adoption this year, and by 2027 only 29% of cars sold in the country [will be] electric.”

The Takeaway

There is so much more to the McKinsey report than some EV owners saying they are switching back to conventional cars. What we can learn from that survey is that there is a lot of turmoil in the auto industry, turmoil that is being leveraged by political considerations in an election year in which one candidate says all federal support for the EV revolution will come to a screeching halt on “Day One.”

The primary consideration is that today, the world wastes about three-quarters of all the energy contained in the oil and methane extracted from the Earth. Most of that wasted energy is in the form of heat — more heat in the past few decades than 25 billion atomic bombs. The painful truth is that if we continue our profligate ways, we are dooming our children to a world in which extreme heat, drought, flooding, wildfires, and sea level rise will make life untenable. Less expensive electric cars are in the pipeline; better charging infrastructure is just around the corner as well. Convenience or a sustainable Earth? That is what this all comes down to. Choose wisely.