EV Evolution – What to Watch for in 2024
As we leave 2023 behind, I took some time to reflect on the changes we have seen within the evolving EV landscape. Here are my top EV predictions for 2024.
Crossing the Chasm
In 2023, we saw several Original Equipment Manufacturers (OEMs) revisit and revise their plans and manufacturing goals around their transition into a fully electric production line. While this raised some eyebrows and opened conversation about whether the EV bubble has burst, it’s not all doom and gloom, in fact quite the opposite.
Trends in adoption are still positive. According to Kelly Blue Book, the EV share of the total US vehicle market was 7.6% in 2023, which is up from 5.9% in 2022. We are still on an upward trajectory, just a slightly slower one. And that is to be expected with any technology adoption as we ‘cross the chasm’, as theorized by Geoffrey Moore.
The chasm represents a gap between the Early Adopters and Early Majority in the diffusion of innovation lifecycle – a period where the transition needs a push and more education and support for would-be EV drivers from all stakeholders including those that have already adopted.
I see 2024 being the year we begin to cross this chasm, but this will not be without its challenges. While there are initiatives and incentives in place to help with this push from the government, OEMs, Charge Point Operators (CPOs), and retailers alike, there is still a gap in terms of education to help the first round of Early Majority feel comfortable with EV adoption, especially around range anxiety and charger availability. Education is going to look different in different markets. Those in colder climates where the battery life reduces significantly may need more assurance around technology advancements to extend battery life. Those in remote areas with less public charging may need a higher sense of security around increased uptime of chargers and emerging technologies such as charging-while-driving initiatives.
EVs Becoming More Affordable
We saw prices of EVs considerably decrease in 2023! This is a huge step in terms of trying to cross this chasm to reach the Early Majority. While this may have initially been an effort by Tesla to try and maintain their market share lead, it has helped drive down prices of other makes and models in a bid to remain competitive. Added to that are the changes in legislation to extend rebates, all of which have benefited the EV driver.
Through 2024, I predict prices dropping further as interest increases, which in turn encourages adoption. OEMs have an inherent interest in increasing adoption – not least to help meet their EV goals. They are working to spur sales growth, not only through more competitive pricing, but also by playing their part in EV charger deployment, helping increase confidence in the ability to charge, and hence, reducing range anxiety worries of future EV drivers. Coupled with this is the availability of more affordable, smaller EVs. China has already shown their affordable models are a success, and this has increased the pressure on legacy OEMs to follow the lead.
Charging and Consumer Price Insensitivity
CPOs and retailers alike are realizing that the current EV driver is price insensitive and is willing to pay more for speed and convenience. This is consistent with the profile of the innovator and Early Adopter segments who are typically wealthy, as well as the need for convenience of charging taking precedence over price.
With the variability in operating costs that hosts experience, such as high demand charges, as well as the high capex spend that needs to be recouped, more and more are starting to explore dynamic pricing strategies in a bid to manage their ROI, while also remaining competitive as charging station availability increases.
We will only see experimentation around pricing strategy and tactics increase in 2024. There is already evidence of this increase across many markets in Europe. While we’re unlikely to hit the volatile pricing phases that we see with traditional fuel, we will start to see more variability with considerations being given to time of day, day of week, kWh draw, idling, links to loyalty programs, etc. A key component of this will be the overall customer experience and using pricing and ease of payment to attract EV drivers to peripheral services available at the site.
I anticipate 2024 playing out as a test year in terms of pricing strategy, trialing different tactics with the price insensitive customer in preparation for the Early Majority who will undoubtedly have increased price sensitivity.
The Hydrogen Race – A Disruptor to EV?
The race is on for hydrogen with increased focus on the merits of powering heavy-duty vehicles by hydrogen fuel cells rather than pure electric. While there have been several commercial EVs – light and heavy duty – that have entered the market, it is still up in the air if pure EV is best suited given the larger and heavier battery packs that are needed, reduced range and capacity, and charging infrastructure requirements.
However, hydrogen does not come without challenges, not just from an infrastructure perspective but also regulations around safety. There is still plenty of skepticism about the safety of hydrogen, and even with all that is being done to dispel any myths, it may not become the passenger alternative fuels vehicle of choice. However, it still offers a more attractive prospect for heavy-duty vehicles, especially those used for cross-country journeys.
We have seen an increased focus on hydrogen across Asia and Europe, and even the US. While the heaviest concentration of fuel-cell charging within the US is currently in California, my prediction is that we will only see this take off in other markets across the US in 2024 as the EV revolution transitions from passenger to commercial heavy-duty vehicles.
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