Automakers continue to spend billions on advanced vehicle features such as autonomous vehicle technology, assuming that consumers will pay a premium to gain access to those advanced technologies when they appear on the market, according to audit, consulting, tax and advisory services company Deloitte.
However, results from the 2020 Deloitte Global Automotive Consumer Study show that 34% of U.S. consumers surveyed indicate that they are not willing to pay extra for AV technology. And for those willing to pay anything extra, it does not cover the costs required to develop and deliver the technology.
For the study, Deloitte surveyed more than 35,000 driving-aged consumers from 20 countries. Deloitte says the online study helps to provide insights into critical issues impacting the automotive sector.
Global acceleration of EV demand
Demand for electric vehicles is another of those issues, and Deloitte says in a news release that demand is “accelerating across the globe.”
Rising interest in alternative-fuel vehicles in several global markets as policy makers implement stronger environmental policies is a reason for automakers to invest in developing new powertrain technologies, Deloitte writes.
However, a combination of a more restrained environmental policy, low fuel prices, and tight incentives have kept interest in hybrid and fully electric vehicles largely at bay in the United States, according to Deloitte. The company writes that 41% of consumers are actively considering an alternative-fuel vehicle in the future. That includes hybrid electric, and battery-powered electric.
That is a gain from only 29% last year, according to Deloitte.
Deloitte vice chairman Craig Giffi said technologies in the alternative powertrain domain seem to be advancing to where they have offset concerns over the past decade.
“However, to encourage the consumer uptake of advanced vehicle technologies, the automotive ecosystem still has some work to do in terms of making EVs as easy and convenient as internal combustion engines, lowering the cost of EVs, and figuring out just who will build and pay for the charging infrastructure,” Giffi said in a news release.
The ‘mixed bag’ of EV charging infrastructure
That charging infrastructure is another critical issue that Deloitte identified.
The company writes that EV technology is improving each year. But because of battery range and charging infrastructure concerns, consumers still might not be convinced to make the purchase.
Consumers in the Republic of Korea, India, United States, and Japan list the lack of electric vehicle charging infrastructure as their biggest concern.
But Deloitte notes that although 41% of U.S. consumers believe full battery vehicles should have a range of at least 300 miles, the average vehicle owner travels only about 27 miles per day.
Also, 27% of U.S. survey respondents are willing to wait between 30 minutes and one hour to fully charge an electric vehicle. Those percentages are even higher in the Republic of Korea (29%), Germany (30%), India (35%), and China (40%).
Vehicle connectivity: Concerns on privacy and data security
Consumers are split on whether the advantages of increased connectivity in vehicles are worth the cost.
Eighty percent of respondents in India and 76% in China are embracing the idea.
However, for the United States, at 46%, and Germany (36%), not so much.
Even in India, though, 69% have concerns about privacy and data security. Most other countries also share the concern, at 62% in Germany and 59% in the United States.
Deloitte also asked consumers who they would trust the most to manage the data that a connected car generates and shares. The answer? It’s a mixed bag across the globe. Fewer than 40% of consumers in most countries would choose OEMs for this role.
Returning to the topic of consumers’ lack of willingness to pay more for a vehicle with advanced vehicle features, some evidence suggests an improvement over the last few years in consumer willingness to pay at least something for advanced technologies.
Deloitte Consulting global automotive sector leader Joe Vitale says automotive industry stakeholders are currently facing challenges in the areas of business models and product portfolios. They must rethink long term investments while not getting left behind, he said.
“Underlying these massive R&D investments is the assumption that consumers will actually pay for advanced vehicle technologies when they appear on the market,” Vitale said in the release.
He continued, “However, as consumer skepticism gains momentum, automakers should rationalize returns on invested capital to remain profitable as consumers’ desires to purchase new technologies continue to wane and shift gears to the realities of electrified vehicles.”
More on autonomous perception
Additional thoughts on autonomous technology to come out of the survey: Reports of accidents involving autonomous vehicles have had a strong impact on consumers’ view of the technology. Seventy-two percent of respondents in the Republic of Korea, 70% in India, and 68% of U.S. respondents say media reports of accidents involving autonomous vehicles has made them more cautious of the technology.
Forty-eight percent of U.S. consumers believe that fully autonomous vehicles will be unsafe.