The Future of Electric Vehicles

Transcription

1 The Future of Electric Vehicles Or How can we get the customer to do what we think they should be doing? Comprehensive, Integrated, Actionable Answers Through Leverage Presented To: March 2016 PAGE 1

2 Impact of Low Oil Prices: Because of current oil prices, SV predicts that all new vehicles sold in the US will be a Hummer by 2017! Source: We made this one up. PAGE 2

3 Data Source: New Vehicle Experience Study Data Source: Strategic Vision s * New Vehicle Experience Study (NVES). î NVES is a comprehensive study covering all aspects of the customer and ownership experience including Live customer responses from Strategic Window. î Average Annual NVES samples 300,000+ new vehicle buyers including annual samples of the following Electric Vehicles (EV): î 2,200+ Plug-In Electric (PEV) (i.e. Nissan Leaf, Fiat 500e) î 5,000+ Hybrid Electric (HEV) (i.e. Toyota Prius, Ford Fusion Hybrid) î 1,000 Plug-In Hybrid Electric (PHEV) (i.e. Chevrolet Volt) *2015 data updated as recently as September 14, 2015 NVES is weighted to US Retail Sales PAGE 3

4 Personal Values: Defining Decision Making There is a developmental inclusiveness among the Value/Emotions. Core Value/Emotions at the base of the metaphorical tree are as important as those at the upper developmental levels. Love Balance Esteem Freedom Security Developing a Relation with Your Audience: 1. People require Security if they are to consider you. 2. If you can establish Security in product and message, people will look for aspects or images which promote Freedom (doing/getting what I want with ease and few hassles). 3. If you deliver adequate Security and Freedom, people look for signs (markers) that create Esteem through Innovation (actually useful things), quality or image (reputation). 4. With Security, Freedom and Esteem adequately delivered, people strive for Harmony (or a Balance) between what you offer and their Lives (does it meet their needs). 5. If you deliver the Foundation (Security and Freedom) most often, you have the opportunity to have something or be something/someone that/who is Loved. (Leverage). 6. Love creates Commitment, Advocacy and Sound Loyalty. PAGE 4

5 Background: On each step of the Decision Path, vehicle priorities are judged differently. î At every stage of the Decision Path, there is a Response and Emotional Trigger that has an impact on perceptions and priorities. î When customers days away from purchase, (Initial Consideration) their choices are more based on beliefs of how they Trust the Brand rather than the actual product sold. î When finally at the dealership shopping, customers are more prone to look at fuel economy as one of the tie-breaking attributes to determine the vehicle purchased. EXPERIENCE ACQUISITION Stage of Response Awareness Brand Equity Initial Interest Attention Initial Consideration Priority / Preference Final Consideration Experience Total Quality Total Value Customer Delight Commitment Bonding with Brand Brand Equity Loyalty Share of Heart Share of Mind First Consideration Initial Trigger Purchase Emotional Triggers Personal Need Relevant Positive Images Personal Need Excitement Security Trust / Assurance Freedom and Esteem Balance Harmony Experience Security Security / Freedom / Esteem / Balance Customer Delight Commitment Personal Balance / Harmony Relevant Positive Images Loyalty Something to Love Relevant Positive Images ACQUISITION EXPERIENCE Personal Reward The Decision Path PAGE 5

6 Simple Facts: Electric owners are driving more. Miles Driven Per Month 1, ,103 1,262 0 Gas Electric PAGE 6

7 Simple Facts: Electric owners are driving more, have a longer commute, Daily Commute (Miles) Gas Electric PAGE 7

8 Simple Facts: Electric owners are driving more, have a longer commute and spend more time in traffic. Daily Commute (minutes) Gas Electric PAGE 8

9 Awareness: About 1 in 4 customers get less from their vehicle than they expected when they purchased it. Expectations Electric Distance Delivery 8% 28% MPG Delivery 13% 23% 0% 5% 10% 15% 20% 25% 30% Less More PAGE 9

10 Excitement: Customer Attitudes Different customer priorities will have an impact on what brands and segments customers purchase. Tesla offers the best of performance and fuel economy. 60% Customer Attitudes (% Extremely Important - Top Box) 40% 20% 0% Leaf Tesla smart Small Car BMW Jaguar Premium Convertible Fuel economy is a leading consideration in my purchase decision I prefer vehicles that provide superior handling and cornering agility Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 10

11 Awareness: Gas vehicles can are more exciting for customers to own and drive Excitement - To Own and Drive 50% 46% 39% 32% 25% 0% Gas Electric Hybrid PAGE 11

12 Awareness: Gas vehicles can are more exciting for customers to own and drive but if you add in Tesla back into the mix, the reason for Tesla success can be realized. Excitement - To Own and Drive 75% 50% 25% 46% 61% 32% 0% Gas Electric Hybrid PAGE 12

13 Decision Path: On each step of the Decision Path, vehicle priorities are judged differently. Stage of Response Initial Trigger Emotional Triggers Excitement, Brand Trust & Alternative Technologies EXPERIENCE ACQUISITION Awareness Brand Equity Initial Interest Attention Initial Consideration Priority / Preference Final Consideration Experience Total Quality Total Value Customer Delight Commitment Bonding with Brand Brand Equity Loyalty Share of Heart Share of Mind First Consideration Purchase Personal Need Relevant Positive Images Personal Need Excitement Security Trust / Assurance Freedom and Esteem Balance Harmony Experience Security Security / Freedom / Esteem / Balance Customer Delight Commitment Personal Balance / Harmony Relevant Positive Images Loyalty Something to Love Relevant Positive Images ACQUISITION EXPERIENCE Personal Reward The Decision Path PAGE 13

14 Consideration: Function of Trust Honda and Toyota lead future consideration. Because of customer trust and reassurance with these brands, new technologies are more accepted. Tesla has excited many potential customers. Consider Brand in Future (% Definitely Will) Honda Toyota Ford Lexus BMW Mercedes Subaru Audi Acura Chevrolet Tesla Jeep Hyundai Cadillac Mazda Lincoln Kia Scion Mitsubishi 35% 35% 27% 24% 24% 23% 22% 21% 19% 19% 18% 16% 16% 12% 12% 9% 9% 2% 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: Strategic Vision NVES (2016) PAGE 14

15 Priorities: Customer Attitudes Balancing the vehicle experience with other priorities in one s life, including overall value, are greater considerations for most new vehicle buyers than fuel economy which places 10 th out of the top ten customer attitudes. Customer Attitudes (% Extremely Important - Top Box) Rank (of 40) Customer Attitudes Top Box 1 I prefer a balance of comfort and performance 46% 2 When I drive for fun, I mainly prefer to relax and listen to music or talk 41% 4 Value equals balance of costs, comfort & performance 37% 5 I prefer vehicles that provide superior handling and cornering agility 36% 7 I want [a vehicle] that I love so much that I look forward to nice enjoyable drives 31% 9 I want a vehicle that provides the quietest interior 27% 10 Fuel economy is a leading consideration in my purchase decision 26% Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 15

16 Priorities : Customer Attitudes Other aspects of value and ownership have a greater impact on owners daily lives, making more removed environmental considerations a sincere albeit secondary consideration. Interest in paying significantly more for this is among the least important customer attitudes. Customer Attitudes (% Extremely Important - Top Box) Rank (of 40) Customer Attitudes Top Box 11 I prefer a vehicle that has the capability to outperform others 25% 12 I prefer vehicles that provide superior straight ahead power 24% 13 I want to look good when driving my vehicle 23% 14 I see my vehicle as an extension of my personality 21% 39 I would pay significantly more for environmentally friendly vehicle 10% Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 16

17 Behavior: Purchase Reasons EVs succeed with a combination of Environmental Friendliness, Fuel Economy and Innovation. Tesla has found significant success by leveraging these attributes in an exciting performance vehicle to build even greater Esteem. Purchase Reasons (% Extremely Important) Gas PEV Tesla Model S PHEV HEV Environmental Friendliness 30% 63% 71% 47% 56% Fuel Economy/Mileage 47% 77% 79% 77% 82% Technical Innovations 35% 61% 87% 34% 48% Overall Thoughtful Engineering 43% 52% 79% 38% 42% Acceleration From Stop 35% 39% 72% 19% 23% Fun To Drive 47% 50% 81% 31% 35% Passing Capability 38% 37% 68% 22% 24% Overall Power and Pickup 45% 44% 74% 24% 28% Overall Quietness 42% 41% 69% 36% 38% Instrument Panel 36% 34% 61% 26% 26% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) Green highlights show significance over industry average (darker green shows strongest significance). Red boxes show significance below industry average. PAGE 17

18 Considerations & Barriers to EVs EV buyers have given much more thought to the realities of infrastructure and charging time as they are presently effected by it. 90% Which (if any) of the following have been significant concerns in purchasing an Electric Vehicle? 80% 70% 60% 50% 40% 30% 20% 10% 0% Location and availability of charging stations Normal distance that can be traveled on a full charge Recharging time Cost of battery replacement Overall cost of ownership Distance Technology is vehicle can too new travel in cold weather Ability of battery to hold a charge over time Types of available charging stations Workplace parking / charging Home electric bills Overall power & pickup Disposal of batteries at end of life Resale value of vehicle ELECTRIC GAS Source: 2016 New Vehicle Experience Study (NVES) PAGE 18

19 EV Range Required for Purchase Consideration Current EV owners shape their requirements based on current alternatives. Gas owners require greater emotional Security through greater capability in order to seriously consider EVs. 28% of gas owners say they will never consider EVs. 70% What is the minimum distance an electric vehicle would need to be able to travel on a single charge for you to consider purchasing or leasing one? 60% 50% 40% 30% 20% 10% 0% 0-50 miles miles miles miles miles miles 301 miles or more LEAF ELECTRIC GAS Source: 2016 New Vehicle Experience Study (NVES) PAGE 19

20 Last Minute Decisions: IHS and Strategic Vision formed a partnership in 2014 to understand how customer experience has an impact on future decisions. Summary of the Experience Impact of Fuel Economy î For those who purchased a new vehicle between and then returned to market and purchased a new vehicle between , î There was a significant increase in defection rates (disloyalty) from those brands by those who stated that they did not Love their fuel economy vs. those who did. î This equated to over 200,000 defecting customers that equates to almost 9 billion in sales that switched brands. EXPERIENCE ACQUISITION Stage of Response Awareness Brand Equity Initial Interest Attention Initial Consideration Priority / Preference Final Consideration Experience Total Quality Total Value Customer Delight Commitment Bonding with Brand Brand Equity Loyalty Share of Heart Share of Mind First Consideration Initial Trigger Purchase Emotional Triggers Personal Need Relevant Positive Images Personal Need Excitement Security Trust / Assurance Freedom and Esteem Balance Harmony Experience Security Security / Freedom / Esteem / Balance Customer Delight Commitment Personal Balance / Harmony Relevant Positive Images Loyalty Something to Love Relevant Positive Images ACQUISITION EXPERIENCE Personal Reward The Decision Path PAGE 20

21 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: My wife was concerned with the purchase price, it was about $5000 more for the Toyota Prius over the Honda Fit, and the Toyota Prius C was a much poorer quality/drivability of vehicle. I couldn't justify the additional price for minor MPG improvement and potential additional future repair costs. Honda Fit LX Owner, Considered Toyota Prius. Male, 43 years, $125,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 21

22 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: I have always wanted an electric car since I was young. My biggest disappointment with Nissan is that they have not advertised how cheap the car is, once you factor in all incentives. When I tell friends and coworkers what my NET cost was, they are blown away. This is barely mentioned in the advertising. ALSO, Nissan doesn't emphasize how fast the Nissan Leaf accelerates. I thought it was going to be slow like the Prius, so it was a happy surprise. VW advertises the torque of their EV, but Nissan doesn't. When people feel the torque of the Leaf, they are amazed. Nissan should emphasize PRICE and ACCELERATION. Nissan Leaf S Owner, Did not Dispose of a vehicle, did not reject another vehicle. Male, 48 years, $100,001 - $125,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 22

23 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: Evangelizing the future, not what s in stock Buying my Tesla was the best vehicle purchasing experience I have ever had. Their staff were not pushy, exceedingly knowledgeable and so helpful. They are evangelists for the electric vehicle industry as a whole and not just Tesla. They made buying the car a delight. By comparison, the Chevrolet, Toyota and to a lesser extent the Ford dealers that I visited were for the most part arrogant and only interested in selling what they had, not what I wanted. Chevy would not even quote me a cost until I agreed that I would buy the car from them immediately. It is not surprising that the motor industry is in such a bad state. I will never again buy an ICE car and I won't visit those dealers again. Tesla Model S Owner, Disposed Chevrolet Impala, Rejected Toyota Prius Plug In. Male, 60 years, $125,001 - $150,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 23

24 Pulse of the Customer: Actual statements from recent 2013 vehicle buyer. We share his thoughts as his issues about multi-unit dwellings (MUDs), range and other items are still relevant today. I LOVE this car. Every day I appreciate that I am able to travel around and get to where I need to go without burning gasoline I can sit in the horrendous traffic jams on the 405 and feel peace. I am hopeful that the price will come down. I made the choice to lease this vehicle because I believe electric vehicles are the future. Los Angeles doesn't have a single public fast charger Also I live in an apartment and although I am lucky enough to have my room right above where I park my car (and then I throw a heavy duty extension cord out the window to charge at night), most people in condos or apartments have no place to charge their car. - I hope that the infrastructure will fill out more and serve more people as time goes on. I really hope car companies are able to make battery breakthroughs with the next year's models miles is great, but the highway 70 cuts it a little too close for absolute comfort. Planning the day will make it all work, but on my long drive day I'd rather have the freedom to think of other things instead of where to strategically charge my car 2013 Nissan Leaf Owner who considered a Chevrolet Volt. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 24

25 Background: On each step of the Decision Path, vehicle priorities are judged differently. Stage of Response Initial Trigger Emotional Triggers Product Attributes, MPG & Alternative Technologies EXPERIENCE ACQUISITION Awareness Brand Equity Initial Interest Attention Initial Consideration Priority / Preference Final Consideration Experience Total Quality Total Value Customer Delight Commitment Bonding with Brand Brand Equity Loyalty Share of Heart Share of Mind First Consideration Purchase Personal Need Relevant Positive Images Personal Need Excitement Security Trust / Assurance Freedom and Esteem Balance Harmony Experience Security Security / Freedom / Esteem / Balance Customer Delight Commitment Personal Balance / Harmony Relevant Positive Images Loyalty Something to Love Relevant Positive Images ACQUISITION EXPERIENCE Personal Reward The Decision Path PAGE 25

26 Purchase: Although likely apparent by simply looking at the graph, No significant correlation exists between MPG and Vehicle Sales. Essentially there is no dependence between these two items. PAGE 26

27 Market Share Diesel has had a greater increase of market share than the Hybrid Electric Vehicles. Newer battery technologies are allowing for an overall increase of electric vehicles in general. Increases from 2008 are modest when compared to future expectations and regulations. Market Share (% Total Market) 3.0% 2.0% 1.0% 0.0% HEV Diesel PEV PHEV Tesla Model S Source: Strategic Vision 2008 & 2015 New Vehicle Experience Study (NVES) PAGE 27

28 Market Share: Electric Vehicles Toyota is the clear leader in EV sales with the various versions of the Toyota Prius accounting for more than 1 in 3 of all electric sales. Newcomer Tesla is already in the top 12 of all EV models sold. Market Share (% Electric Vehicles) Honda Accord Hybrid 3% Chevrolet Volt 3% Kia Optima Hybrid 3% Lexus CT200h 3% Toyota Prius 21% Ford Fusion Hybrid 4% Tesla Model S 5% Toyota Prius c 8% Toyota Camry Hybrid 5% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) Nissan Leaf 6% Toyota Prius v 6% PAGE 28

29 Demographics: Gender Those who purchase EVs are more often Male. This is also true for Diesel buyers. Hybrid owners attract more women buyers than other EVs. 100% Gender (% Male) 75% 60% 83% 75% 83% 60% 68% 50% 25% Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 29

30 Demographics: Marital Status Many of the EV and newer powertrains are often more expensive and families (dual income \ shared responsibilities) often have the means to acquire these products. 100% Marital Status (% Married) 75% 66% 78% 81% 84% 68% 71% 50% 25% Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 30

31 Demographics: Age Even though price can often be a deterrent, PEVs can attract younger buyers who are looking to be part of the future. However, in previous years PEV owners were more often younger than they are today. Age (Median) Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 31

32 Demographics: Age Although PEV owners are the youngest, they do not have a greater proportion of 34 & Under (Gen Y) buyers. Instead, Generation X (35 49) buyers are still the prime target that has the money and mindset to purchase Plug-In Electric Vehicles. Age (Groups) 25% 27% 36% 23% 29% 20% 18% 15% 12% 11% 12% 4% Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 32

33 Demographics: Education Plug-In Electric Vehicle buyers are the most educated. In order to sell more EVs, should we find ways to increase the number of college graduates? Education (% College Graduate) 100% 75% 87% 90% 74% 79% 61% 50% 52% 25% Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 33

34 Demographics: Occupation PEV owners are more often working in the professional fields. Occupation (% Professional) 50% 42% 42% 43% 25% 24% 27% 28% 0% Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 34

35 Demographics: Household Income Those who purchase alternative powertrains earn more than their gas-buying counterparts. Although still the highest earners, Tesla buyer median income has dropped over $30,000 from last year. Household Income (Median) $300,000 $280,418 $200,000 $159,897 $100,000 $86,202 $111,621 $101,706 $116,219 $- Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 35

36 Demographics: Emerging Markets Electric buyers make up the same proportion of buyers as standard gas owners (except for Tesla owners.) Ethnicity (% Ethnic Minority) 25% 23% 21% 22% 23% 12% 12% 0% Gas Diesel PEV Tesla Model S HEV PHEV Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 36

37 Behavior: Source of Sales EV, PHEV, Tesla and especially Leaf owners are very likely to add the vehicle to their fleet Tesla owners were at 51% add to fleet. Today, there is more replacing of the current primary luxury vehicle with a Tesla. There are also many Tesla owners coming back for another. Source of Sales (Where the business came from) PEV HEV PHEV Add to Fleet 47% Add to Fleet 26% Add to Fleet 35% Nissan Leaf 3% Toyota Prius 11% Chevrolet Volt 6% Toyota Prius 2% Toyota Camry 5% Toyota Prius 5% Honda Civic 2% Honda Civic 4% Honda Civic 3% BMW 3 Series 1% Toyota Corolla 3% Toyota Camry 3% Honda Accord 1% Honda Accord 3% Ford Escape 2% Volkswagen Jetta 1% Ford Focus 2% Honda Accord 2% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 37

38 Behavior: Source of Sales EV, PHEV, Tesla and especially Leaf owners are very likely to add the vehicle to their fleet Tesla owners were at 51% add to fleet. Today, there is more replacing of the current primary luxury vehicle with a Tesla. There are also many Tesla owners coming back for another. Source of Sales (Where the business came from) Nissan Leaf Tesla Model S BMW i3 Add to Fleet 50% Add to Fleet 39% Add to Fleet 42% Nissan Leaf 4% Tesla Model S 5% BMW 3-Series 4% Toyota Prius 3% Mercedes E Class 2% Toyota Prius 4% Honda Civic 2% BMW 5 Series 2% BMW 5-Series 3% Honda Accord 2% Lexus LS 2% Nissan Leaf 3% Toyota Corolla 2% Jaguar XJ / XJL 2% Chevrolet Volt 2% Toyota Camry 1% Toyota Prius 2% BMW X5 2% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 38

39 Behavior: Loyalty to Model and Fuel Type Some results this year are different from previous. Specifically, the Volt seems to be doing worse in retaining customers (though still loyal to Chevrolet) while the Leaf is doing better. Side note: those few Tesla owners that are disposing and returning to market are coming back to another Tesla 2 out of every 3 times. Repurchase Loyalty (Where they went ) Chevrolet Volt Nissan Leaf Toyota Prius Fuel Type Gas 61% 22% 46% EV 3% 58% 2% HEV 6% 8% 45% PHEV 29% 7% 2% Models Chevrolet Cruze 30% Nissan Leaf 32% Toyota Prius 31% Chevrolet Volt 29% Toyota RAV4 12% Toyota RAV4 6% Kia Optima 8% BMW i3 8% Toyota Prius v 6% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 39

40 Behavior: TV Shows Most Watched Electric buyers are looking to the future, even in their entertainment. Based on the chart below, can we conclude that (PEV) Science Fiction + (HEV) Daytime Drama = (PHEV) Star Trek? TV Watched Most Often(% Incidence over Gas Owners) Diesel PEV HEV PHEV Motor Sports 12% Fantasy 8% News 5% Comedy 8% News / information / educational 10% Films 4% Drama 4% Science Fiction 6% Action/Adventure 8% Science Fiction 4% Travel 4% Films 4% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 40

41 Behavior: Hobbies & Lifestyles Even though there are many trucks in the Diesel category, there are many similarities that these owners have with EV owners. For example, all love the outdoors and exercise. However, there are some interesting differences as well. Hobbies (% Incidence over Gas Owners) Diesel PEV HEV PHEV Camping trips 27% Travel - foreign 16% Live theater 13% Cycling 5% Fishing 13% Snow skiing 15% Travel - USA 12% Computer games 5% Pleasure boating 13% Cycling 13% Reading 11% Hiking, backpacking 5% Auto racing, rallying 13% Stocks, bonds, investments 12% Socializing at parties 7% Snow skiing 4% Hunting 12% Yoga 8% Owning domestic pets 7% Political activities 4% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 41

42 Behavior: Voting Tendencies No judgments please! Those who purchase PEVs are more likely to favor the Democratic political party. Note: Those stating No Party have significantly increased over the past couple of years. Political Party Associated (%) Gas Diesel PEV HEV PHEV Democratic 26% 17% 36% 37% 44% Republican 32% 35% 15% 22% 15% Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 42

43 Act II: Real Customer Statements PAGE 43

44 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: Electric efficiency Great little car but the range is very limited. I would want a much longer battery range, such as 300 miles or more per charge and a much faster recharge time. I like this car because it has a large cargo capacity so it will suit all of my day to day needs as well as being fuel efficient. I do not miss buying gasoline but the electrical efficiency (operating cost) of the car MUST improve. It feels like an electricity guzzler which is almost as bad as a gas guzzler. Fuel/energy efficiency is paramount for me and to that end, nothing can touch my 2004 Toyota Prius. I want an electric car that doesn't drink electricity. I don't care about the environment, I care about operating costs and driving range. The 100 mile range varies and I often feel the anxiety of the car running out of power. I really do not like that in my car. Nissan Leaf SV Owner, Did not Dispose of a vehicle, Rejected Chevrolet Volt. Male, 49 years, $90,001 - $100,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 44

45 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: Range and recharge convenience. I am disappointed with Nissan which claims that the Leaf has a range of 110 miles, but in fact it's closer to 70 miles. I am also disappointed that Nissan offered two years of free charging card, but the card is not valid in the stations that I need to use. Overall, I may change the Leaf for a vehicle that has longer range on a full charge. The current 70 miles range is not acceptable and not practical. To make it more practical, the vehicle has to have a range of 200+ on a full charge. Also, the shape of Leaf is less than interesting to me--nissan can make the Leaf a little better looking vehicle with redesign and make it look more like a Rogue. Nissan Leaf SL Owner, Did not Dispose of a vehicle, Rejected Honda Accord. Female, 55 years, $60,001 - $65,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 45

46 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: Estimates and education. The mileage reading/ status is not dependable. It gets too few miles. I have 50 mile round trip to work and back and thought that 85 miles would be sufficient though each night upon return home I only have 10 miles of reserve left. I do not drive this car above 65 mph and usually more slowly than that on highway... I do not understand where the estimates came from. Also, there is a significant difference between mileage estimate for summer vs winter driving. I drive the car in similar fashion no matter the season though, it reads that I can travel 105 miles in warmer weather and only 85 since the temperatures have dropped in to the upper 30s. Nissan Leaf SL Owner, Did not Dispose of a vehicle, Did not Reject a vehicle. Female, 49years, $175,001 - $200,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 46

47 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: Excitement with limited compromises. I purchased a Tesla Model S because after heavily researching the car it became clear to me that this company is ushering in the future of automobiles. I was enamored with the idea of never having to buy gas again, but every other electric car I looked into, and I looked at all of them, was full of compromises. Very little range, lackluster performance, slow charge times, gas range extenders, etc. Tesla was the only company that was breaking the mold and making not just a great electric vehicle, but one of the best cars available regardless of the type of fuel. The purchase experience was excellent and the car is by far the best I have ever owned. Tesla Model S Owner, Did not Dispose of a vehicle, did not reject another vehicle. Male, 74 years, $300,000 - $400,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 47

48 Pulse of the Customer: Actual statements from recent 2015 vehicle buyers: Charger availability, Compatibility I wish the rear windows opened. I wished BMW staff were more knowledgeable about electric charging options for the i3, such as where Level 3 charging stations compatible with the i3 are located. I added a Level 3 adaptor to my i3 because there are Level 3 fast charging stations near my house but they do not work with the BMW level 3 adaptor. BMW i3 Base Owner, Did not Dispose of a vehicle, did not reject another vehicle. Female, 59 years, $175,001 - $200,000 annual income. Source: Strategic Vision New Vehicle Experience Study (NVES) PAGE 48

49 Future Interest in PEVs Although only 1 in 10 new vehicle buyers are actively shopping / plan to shop for a PEV in the future, there is another 1 in 3 buyer who is open to hearing what PEVs can do for them. 60% How Interested Are You In Each Powertrain? 40% 14% 12% 20% 8% 16% 20% 37% 37% 39% 43% 28% 0% PHEV PEV HEV Fuel Cell Diesel I am open to learning more about it. Plan to research it for my next purchase or lease Actively shopping for a vehicle that uses it. Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 49

50 Future Interest in PEVs It is important to remember that buyers still want alternative powered vehicles to have some level of competitive pricing. Hybrid buyers are, starting in larger numbers, expecting a hybrid at the same price as ICE. How Much Would You Pay More for Alternative Fueled Vehicle Each Month? (Median) 2016 Gas Owners $40 PEV Owners $100 Hybrid Owners $50 PHEV Owners $100 Source: Strategic Vision 2015 New Vehicle Experience Study (NVES) PAGE 50

51 Act III: So How do we Sell More Electric Vehicles? PAGE 51

52 Answers: How do OEMs and their supply chain work together to respond to market dynamics and deliver cost-effective, sustainable vehicles to customer segments willing to adopt electric vehicles?: î Somehow, an honest discussion between OEMs and regulators needs to take place as the US customer, though getting ready, isn t ready yet to participate in the EV world that is being mandated. î The best OEMs can do is build vehicles that address the values and priorities of the customer. Tesla does well because it is an Innovative Sports Car first and an Electric Vehicle second. î Those who buy EVs today are not destined for one in the future. Innovation must continue. PAGE 52

53 Schematic Representation for Consumer Market Segmentation Analysis Segregating consumers into different groups where consumers in the same group have similar characteristics and consumers in different groups have dissimilar characteristics Classify consumers based on vehicle fuel type Gas Flex Diesel Hybrids Plug-in Hybrids Battery Electric Vehicles Segment Consumers within each fuel type using k-means clustering Gas-1 Gas-2 Flex-1 Flex-2 Flex-3 Diesel-1 Diesel-2 Hybrid-1 Hybrid-2 PHEV BEV-1 BEV-2 BEV-3 Identify factors separating the different consumer segments using logit regression Dataset comprising of (i) Strategic Vision New Vehicle Experience Survey (NVES) including purchase reasons, demographics, & (ii) Proxies for geography Income Centroid or Average Buyer or Avatar Confidential: Not for Age distribution, citation or publication 53

54 Schematic Representation for Hold-Out Dataset Identification Repeat steps for each fuel type cluster to identify non-fuel type members who might switch to that fuel type and take union of the datasets identified for each fuel type cluster BEV-1 Centroid Correlation BEV-1 Type Respondents Non-BEV Respondents {D B } Represents distribution of distances (using correlation metric) of BEV-1 respondents from BEV-1 centroid For optimistic growth scenario, x = 75% For realistic growth scenario, x= 50% Distance = 1-correlation(x,y) where, x: (BEV-1) Centroid y: BEV-1 Respondent ( x, y) = n i= 1 n ( x )( ) i= i x yi y 1 2 n ( x x) ( y y) i i= 1 i 2 Confidential: Not for distribution, citation or publication 54

55 Summary of Factors Separating Potential and Actual BEV Buyers Potential BEV-1 (relative to BEV-1) Potential BEV-2 (relative to BEV-2) Potential BEV-3 (relative to BEV-3) Care: More about Exterior styling Warranty/guarantee Reliability Less about Technical innovations Navigation system Prestige Fewer additional cars Have fewer children in household Live in areas with lower charging station density Care: Slightly more about Ease of customizing Navigation system Performance Slightly less about Power pickup Previous experience with Mfr brand Price Availability of 4wd Care: More about Handling in inclement weather Leasing terms Expected resale value Exterior Styling Value for money Price/monthly payment Less about Technical innovations Fewer additional cars Have fewer children in household Make slightly lower income Live in areas with lower charging station density Confidential: Not for distribution, citation or publication 55

56 How to Sell More Vehicles Increased Environmental Friendliness and MPG may not be enough for most US customers today. Instead, foundational Security items need to first be addressed (i.e. initial price, incentives, range, etc.) to increase sales in the next few years. Love Balance Esteem Freedom Security î For example, most US customers will not spend more than additional $50 a month for a vehicle with a MPG enhancing / environmental friendlier powertrain or technology. î Instead, creating products that customers can Love (i.e. Tesla) allow for customers to spend significantly more because it has the right balance of styling, innovation, performance and environmental friendliness. î Without Love, sales of these vehicles will have to continue to rely on incentives and leasing options that make it more affordable, even to those who earn over $150,000 annually. PAGE 56

57 Thank you! Thank you for your kind attention. Questions for Strategic Vision? Call us at: Look at Strategic Vision at: Alexander Edwards Dr. Darrel Edwards Our Guiding Principle: Always avoid steering by the rear-view mirror! PAGE 57