- EVs are disrupting the way that consumers are shopping and perceiving automaker brands.
- This shift gives legacy automakers a unique opportunity.
- Although the EV race is in early stages, Ford, Hyundai and Kia are showing signs of a brand evolution.
Four Major EV Trends to Watch in 2023
Legacy automakers seizing opportunities in the EV space
As the auto industry continues to forge its path toward an electrified and autonomous future, the stakes are higher than ever. But an interesting upside has emerged: Early data shows that EVs are giving automakers the opportunity to redefine their brands in the eyes of consumers, which ordinarily would require a hefty investment over years, if not decades. Here's how three legacy automakers are capitalizing on this once-in-a-lifetime moment.
How we got here
Social media conversations led by Tesla superfans would suggest otherwise, but mainstream consumer interest in EVs has been slow to gain momentum. In 2021, just 2.6% of new vehicle purchases were electric. This took a turn in early 2022 when skyrocketing gas prices prompted many Americans to ask themselves if it was time to make the switch to an EV, and in mid-March, one out of four vehicles shopped on Edmunds was electrified. Gas prices have since dropped, but between splashy new EV debuts backed by big automaker marketing dollars and spirited discussion surrounding EV tax credits within the Inflation Reduction Act, a growing number of car shoppers are paying attention to the EV market.
A closer look at Edmunds’ sales and trade-in data through November 2022 for three EVs from mainstream brands — the Ford Mustang Mach-E, Hyundai Ioniq 5 and Kia EV6 — reveals that electric vehicles are not simply redefining transportation; they’re powering a seismic shift in consumer perception of the automotive giants that manufacture them that could create a competitive edge in the years to come.
The four major EV market trends that reflect this notable shift in consumer shopping behavior have already begun to emerge in 2022, but we anticipate that they will only grow more apparent in 2023 and beyond.
Trend 1: EVs are attracting more luxury owners
According to an auto industry adage, once a car buyer goes luxury, he or she never goes back. But recently, thanks to brands like Tesla, the definition of luxury has evolved to be less about seat fabrics and more about powertrain and in-vehicle technologies. Trade-in data for all three of these EVs reveals that these mainstream brands are capturing an impressive share of luxury trade-ins compared to their brand stablemates.
Share of luxury trade-ins for EV model
Share of luxury trade-ins for respective brand
Trend 2: EVs are winning conquests from other brands
Even more exciting than luring luxury buyers into non-luxury brands is the fact that these vehicles are also drawing in owners of other brands. This is no easy feat in the auto industry and a part of the reason why leasing was invented — to drum up repeat business. The cost of keeping a buyer is much less than finding a new one, and these EVs are drawing in new buyers naturally, which is a benefit that can’t be underestimated.
Trade-in conquest for EV model*
Trade-in conquest for respective brand**
*Share of vehicles traded in for the EV model from a different brand (i.e., share of trade-ins for the Mustang Mach-E that were not from the Ford brand)
**Share of vehicles traded in for the brand from a different brand (i.e., share of trade-ins for the Ford brand that were not from the Ford brand)
Trend 3: EVs are commanding top dollar
New vehicle prices have spiked notably over the past year due to the supply shortage, but demand for EVs continues to be high even with gas prices softening. It isn’t a surprise that EVs from Hyundai and Kia are commanding higher prices than their brand average, given their lineups of already highly fuel-efficient, smaller vehicles. But it is notable that Ford — known for its big trucks and SUVs — is drawing in a higher dollar amount for a vehicle that has one of the smallest footprints in its lineup.
EV model average transaction price
Respective brand average transaction price
Trend 4: EVs are appealing to younger shoppers
Although EVs are more expensive, their higher prices don’t necessarily translate into an older buyer base. In the first nine months of 2022, 44.1% of all EV buyers were under 451 — in comparison, 35.5% of buyers were from this age group for all new vehicles purchased — which for automakers translates to many more new vehicle purchases in the future.
All three EVs signal the start of a brand renaissance for Ford, Hyundai and Kia: These mainstream brands are attracting younger, more affluent and luxury-oriented consumers by nature of the introduction of desirable, tech-forward EVs to their lineups. However, this early advantage isn’t a guaranteed win since the market will witness an onslaught of new EVs in the coming decade. What these brands can focus on is adapting to their new buyer base and exceeding their expectations, which won’t ultimately guarantee success but will give them a solid chance to turn these new buyers into repeat buyers. Opportunities on this scale don’t come along often, and the automakers that play their cards right will likely gain a significant advantage in the EV race that is set to determine the fate of these massive multinational companies.
1IHS Markit, January-September 2022
EV manufacturers are being given the chance to reinvent their brands as the number of different electric vehicles remains relatively small. From pulling in traditional luxury buyers to grabbing market share from competitors, these automakers are enjoying an opportunity that may not come around again.