Luxury EV Sales Outpace Overall Market
The plug-in electric vehicle (PEV) market continued to see strong growth in early 2014, and the high-end segment is likely to expand most quickly during the remaining months. According to data from HybridCars.com, sales of PEVs in the United States grew by 24% during the first quarter of 2014 compared to the prior year and now make up approximately 0.6% of new light duty vehicle sales.
But, if you look at sales from only the luxury vehicle segment, the penetration rate jumps to nearly 3% of new vehicles sold. Nearly all of those sales (94%) came from just one company – Tesla Motors. Two models accounted for the rest of the luxury EVs sold: the Cadillac ELR and the Porsche Panamera S E-Hybrid, both plug-in hybrids.
PEV Market Penetration by Vehicle Type, United States: 1Q 2014
(Source: Navigant Research, HybridCars.com, AutoNews.com, Tesla Motors)
PEVs are doing well in the luxury market not only because the Tesla Model S is a great looking and performing vehicle, but also because its target audience is unfazed by its higher price tag. Whereas Chevrolet, Nissan, Ford, and others are asking consumers to spend an additional $5,000 to $10,000 for a comparable looking electric compact or sedan (albeit with more features, such as navigation and telematics), Tesla and the other luxury makers are requiring customers to spend about as much as they normally would. Upselling is always more challenging than asking customers to choose between equally priced options.
Top Down Approach
Navigant Research predicted that the luxury market would be an area of great interest and activity this year as part of our free annual white paper, Electric Vehicle Predictions: 10 Predictions for 2014. Tesla, which reported sales of 6,457 vehicles during 1Q in its recent quarterly filing, continues to thrive, but competition is coming. (Tesla does not identify how many of its vehicles were sold outside of the United States separately, so the PEV percentage in the United States is slightly inflated.)
Until recently, the only other luxury options have been the Cadillac ELR and Porsche Panamera S E-Hybrid (the Fisker Karma was also briefly on the market). However, BMW will soon have two models available, and Mercedes just announced an aggressively priced battery electric vehicle. And, within a year, Audi and Volvo will also be in the mix with new PEVs for sale in the United States.
While the styling from some of the luxury PEVs may not mirror their internal combustion engine counterparts, the interior creature comforts and vehicle performance will tempt consumers who are interested in avoiding paying more at the pump. The rapid expansion of luxury PEV models available should enable the segment to stay well ahead of the overall PEV market penetration for the foreseeable future. We can expect even more luxury PEVs to be announced before the year is over.
The overall PEV penetration rates will only grow if automakers pursue more segments and the high costs of batteries today makes moving from the top down a reasonable strategy. Tesla and Chrysler are also eying other potential opportunities for PEVs – the SUV and minivan segments.
If you’d like to hear more on the future of electric vehicles, I’ll be speaking at the Electric Drive Transportation Association annual conference on May 20 in Indianapolis.
New to EVs? Start here
Electric Cars Pros and Cons
EVs are a great solution for most people. But not everybody.
Seven Things To Know About Buying a Plug-In Car
A few simple tips before you visit the dealership.
Incentives for Plug-in Hybrids and Electric Cars
Take advantage of credits and rebates to reduce EV costs.
Buying Your First Home EV Charger
You'll want a home charger. Here's how to buy the right one.
The Ultimate Guide to Electric Car Charging Networks
If you plan to charge in public, you'll want to sign up for charging network membership (or two).
Electric Vehicle Charging for Businesses
How do you ensure that electric car owners will be happy with every visit to your charging spot?
How to Use the PlugShare EV Charging Station Tool
Locate EV charging stations and optimize their use with a powerful mobile app.
Quick Charging of Electric Cars
Add 50 to 60 miles of range in about 20 minutes. Here's how.
The Real Price of EV Public Charging
Compare the cost of charging on the road to what you pay at home.
Electric Vehicle Charging Etiquette
Thou shalt charge only when necessary. And other rules to live by.