Why people want to buy electric cars? | The Financial Express

Why people want to buy electric cars?

What climate change, people want electric cars because these are cheaper to run,

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People who want to buy electric cars aren’t doing it for the environment, a new study has found. They simply want electric cars because these are cheaper to run than internal combustion engine (ICE) cars.

The India findings from the “2023 Global Automotive Consumer Study” by Deloitte have noted that the draw for EVs continues to centre on the consumer perception that fuel costs will be significantly lower than ICE cars, outweighing the concern for climate change.

According to the study, released this week, the top reason for a buyer choosing an EV as her next vehicle is ‘lower fuel costs’, or running costs, followed by ‘better driving experience’, ‘less maintenance than ICE cars’, and ‘using the vehicle as a power source’. In fact, ‘concern about climate change’ is a distant fifth on their list.

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Rajeev Singh, partner & Automotive Sector leader, Deloitte Touche Tohmatsu India—who is one of the authors of the study—told FE that earlier it was incorrectly assumed that the concern for climate is pushing buyers towards electric cars.

“The concern for climate is not going to drive a larger mass towards electric cars,” he said. “When the electric wave started 5-6 years ago, there was a section of people who wanted to consider electric cars as an option because the concern for climate was big for them. But we knew that as the number of people who want electric cars as their next choice increases, their decision will be based on low total cost of ownership (TCO).”

During the middle of last decade, only about 10% of the overall car buyers considered electric cars as their next purchase, but now that percentage has gone up to about one-third. If you include hybrid, the ratio goes up to 40-45%. “Lower TCO is becoming important,” Singh said. “So, in a hybrid car, fuel efficiency becomes very important. Fully electric cars are anyway much cheaper to run compared to ICE cars.”

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According to studies by carmakers like Tata Motors and MG Motor India—which have an electric car portfolio—the running cost of an electric car can be as low as Rs 1 per km, compared to about Rs 4 per km for diesel cars and more than Rs 5 per km for petrol cars. But the sticker price of an electric car is higher (because batteries are expensive). For example, the Tata Tiago EV XT (Rs 9.99 lakh) is Rs 3.24 lakh more expensive than the Tiago XTA (Rs 6.75 lakh). But calculations show that if you use it more than Rs 12,000 km per year for over eight years, the TCO is lower, and even lesser if you are driving it more.

Another reason people want to buy electric cars is driving experience. “Driving an electric car can be wholly different experience from driving ICE cars. There is no engine sound and very little NVH (noise, vibrations and harshness), and that makes the cabin very quiet and comfortable,” Singh said. “This low NVH experience is also what car buyers have started valuing, especially those who have been inside an electric car.”

He added that when the number of respondents goes up in any study, what people actually want starts to get reflected, because a lot of them are possibly serious buyers. “Now that almost one-third people want to buy EVs, we have an idea what they actually want,” he said. “The concern for climate is a reason, of course, but a far bigger reason is lower running costs.”

As far as other findings are concerned, the study noted that despite the fears of inflation, consumers are opting to pay a premium for purchasing their next vehicle. “Those who want to buy cars in the price bracket of Rs 10-25 lakh is 47%. Those who want to buy cars priced Rs 10 lakh and below are 28%,” Singh said. “Half of the surveyed consumers (49%) prefer to pay for connected car features and technology upfront as part of the purchase price. Also, about 82% consumers are interested in purchasing insurance directly from the manufacturer, citing ‘convenience’ and ‘cost saving’ over their current provider.”

He added that safety is a key priority for Indian car buyers, and about 85% consumers prefer getting updates on safer routes, and 84% preferred getting maintenance updates and vehicle health reporting/alerts along with updates to improve road safety and prevent potential collisions.

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First published on: 21-01-2023 at 02:10 IST