Last week’s demise of the much-talked-about Dyson car project was a sad day for the innovation and entrepreneurial spirit of the fledgling electric vehicle industry. There are many reasons suggested for the withdrawal, but it’s a clear lesson in the difficulties and challenges a start-up automotive electric vehicle brand faces. Engineering a highly complex new car with cutting-edge technology is only the tip of the iceberg, alongside the huge task of establishing a retail footprint and after-sales network, not to mention the enormity of creating consumer awareness and demand for the product and brand offer. Setting out on this mission is not for the faint hearted.

Many have therefore argued that it’s not the innovative and entrepreneurial start-ups who will drive the electric vehicle revolution, rather it will be the established automotive manufacturers. But with most countries running at less than 1% electric vehicle market share, the industry seems to have a long way to go to convince consumers that electric vehicles are an attractive proposition. And those same established automotive manufacturers have got most to lose!

It’s no coincidence that the countries with the highest levels of electric vehicle adoption also have the highest levels of government incentive. In Norway, where over 40% of all new cars sold are electric, an electric vehicle purchaser pays no tax or VAT compared to the buyer of an expensive internal combustion engine vehicle. In China, the world’s largest electric vehicle market, Government incentives have driven similar consumer behaviour.

And so, this week’s 34% reported year-over-year fall in Chinese demand for electric vehicles, widely attributed to a reduction in Chinese Government incentives, will have brought concern to Boardrooms. It also mirrors the UK experience. When the UK Government reduced the electric vehicle grant to £3,500, sales of electric vehicles fell, and there are reports of those grants being removed altogether.

But the established automotive manufacturers need consumers to start buying electric vehicles on merit, and fast! According to ACEA (Europe’s Automobile Manufacturer’s Association), in 2018, the average car sold across the EU had a CO2 output of 120.6g/km compared to a 2021 EU target of 95g/km. From 2021, the EU will levy a €95 fine for every 1g/km of CO2 emitted over the 95g/km threshold, for every single car that every single car company sells in Europe, every year. To put this into context, if those 2018 emission levels rolled forwards to 2021 and all new car emissions were equal, a vehicle manufacturer selling 300,000 cars in Europe would incur a fine in 2021 of around €730M. For a larger brand with 1,000,000 European sales, their fine would be nearer €2.4B. There are complicated discounts for eco-innovations and super credits for cars emitting less than 50g/km, but these fines are designed to, and will, steer vehicle manufacturer’s research and development budgets towards CO2-reducing innovation, predominantly vehicle electrification.

Today, there is a disconnect between the appeal of the electric cars that automotive manufacturers are developing, and propensity of customers to buy them. Government incentives that have driven consumer behaviour are diminishing, but today’s purchaser of an electric vehicle is still predominantly motivated by a rational and pragmatic financial push rather than an emotional, consumer-centric and demand-driven pull. Cost of ownership is, of course, important, and electric vehicles have a good story to tell, but since the invention of the internal combustion engine, customers have bought cars for many reasons, only one of them being cost.

The automotive industry needs to find a new narrative. It needs to embrace the rational and pragmatic financial benefits of EV ownership, but also focus on the more positive, emotional consumer benefits of vehicle electrification to motivate demand. As simple examples, silence is the new luxury and every electric vehicle is a performance car, thanks to the inherent attributes of electric motors – just two EV features that today’s internal combustion car buyers pay a significant premium for.

The automotive industry has to find new ways of connecting the appeal of its future electric cars with the demands of its buying customers. If not, this week’s demise of the Dyson car project won’t be the last.

Duncan Forrester is an award-winning, globally experienced, PR and Communications leader with over 30 years in the automotive industry and 20 years’ expertise in PR and communications, providing automotive start up and electric vehicle insights and consultancy services.

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