Anila Siraj: 2023 predictions - EV adoption, city concentration, consumer behavior, and more

Conspicuous increases in EV adoption may slow due to rising costs

The government as well as auto manufacturers / original equipment manufacturers (OEMs) -have made significant investments to ensure that EV adoption takes off by making more charging stations available. While this is expected to continue, we’re only at the beginning of the EV adoption curve. Encouragingly, EV growth is outpacing internal combustion engine (ICE) vehicles, with 249,575 new EVs on the road in 2022 alone.

Historically it has been mostly affluent drivers that can afford EVs. Reducing the price to encourage mainstream adoption remains a challenge, even with newer models coming on the market. Right now, demand is outpacing supply, resulting in longer wait times and higher prices.

The cost-of-living crisis has only increased this gap. Add into the mix a recession and higher inflation rates, and the slowdown in demand from the mainstream will be exacerbated. The reseller market is also creating a trap for those looking for affordable EVs – leased vehicles account for the vast majority of new car sales but when leases expire, drivers must choose to purchase the vehicle or return it. Even with more EV’s being returned, delays in supply of new vehicles is making used vehicles just as, if not more, expensive.

Big city living will increase disparity globally

Adoption will be concentrated in metropolitan areas where charging stations are readily available and reliable. Cities like London and San Francisco tend to receive more capital investment, but transient routes in and out of these cities will also see increased charger deployment and will lead to more EV corridors globally. However, creating an imbalance between rural areas, smaller towns and cities will only slowdown wider adoption.

Significant shifts in consumer behavior

In terms of sustainability, there are many societal issues that are driving people to change vehicles in the current economy, most notably sustainability and the environmental harm caused by greenhouse emissions.

And then there is Brand loyalty, Tesla, for example, arguably the most well-established manufacturer, have seen prices rise by nearly 10%.  Consumers who are on their second or third EV may continue to invest because of brand loyalty, the leading-edge technology, and the vast network of chargers that Elon Musk’s company offers.

We’re seeing a new generation emerge, one that is technology-first and resolute to their beliefs. Taking an old car brand, like Ford and installing a battery without technology at the heart of everything may not appeal. The presence and power of historic car manufacturers, from Rolls Royce and VW to Aston Martin, may not be enough to sway sustainably minded drivers from the grip of Tesla.

Plan B – backup batteries to make up for costly charging

2023 will be the year that retailers and forecourt sites evaluate the cost of charging. Not since the 2008 recession have overheads and the bottom line been under threat from rising operating costs, reduced demand from consumers to spend and supply chain challenges.

And without a steady stream of customers commuting or travelling generally, measuring peak charge demand will become key. Currently, electricity companies control the price and most implement ‘demand charges’ – using the peak price from the most used hour to charge organizations over an entire day. Organizations with charging forecourts will invest in backup batteries, or deploy chargers with built in back-up batteries, where they can manage the peak themselves. They’ll draw power to the backup battery to create steadier demand from the supply source, one that doesn’t spike and keeps costs as the same level across the entire day.

It’s a shrewd option in an environment where costs are rising, demand is falling, and companies must protect their profit and loss margins.