Written by John Eichberger
Headlines make one think that electric vehicles (EVs) are the most popular and increasingly dominant technology on the road. While the automobile manufacturers are spending a lot of money to improve these vehicles and the number of models available and units sold continue to increase, they still represent less than 2% of all light duty vehicles sold in the United States. It is within this context that fuel marketers need to consider how the market is evolving.
The reality is that the trend is definitively moving towards vehicle electrification, but it will be a very long time before EVs represent a majority of vehicles on the road. This means that marketers who are paying attention to the trends have an opportunity to adjust their business models to take advantage of potential opportunities.
Let’s take a look at a few data sets to put the market development of EVs into context:
EV Sales are Growing
Through the first half of 2019, sales of Battery Electric Vehicles (BEVs) are outpacing 2018 by 96.4%, which is a tremendous rate of growth that should not be dismissed. However, the overall impact on the market is less dramatic because it translates in 127,000 units from a total pool of 8.5 million
EV Market Share Remains Limited
Consequently, in terms of overall market share, BEVs command 1.5% of new vehicle sales through June 2019. By contrast, vehicles powered by internal combustion engines combined for 98% of all new vehicles sold. This means that the ability of these new powertrains to influence a transition of the fleet will be limited, until they can command a significantly greater percent of new vehicles.
Fleet Turnover Takes Time
There are about 270 million light duty vehicles traveling roads it the U.S. Consequently, if every single vehicle sold beginning January 1, 2018, and every vehicle sold thereafter, were equipped with something new, it would take about nine years before that new feature was found in 50% of the vehicles on the road.
Pay Attention and Evolve
The bottom line is that the hype does not yet reflect reality. The market is changing, of that there is no doubt, but it will be an evolution. And this means that fuel marketers have an opportunity to evaluate their customer preferences and capitalize on opportunities that new vehicles may present. It would be a mistake to panic, but it would also be a mistake to ignore the trends. Marketers who pay attention and take action when appropriate for their markets, will find themselves relevant in the future.