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The EV Opportunity for OEMs and Utilities

Electric vehicle adoption is happening. Here’s how to drive value for customers.

Car makers are expected to commit to electric vehicle sales targets. This is both a challenge and an opportunity.

Electric vehicles haven’t become profitable yet. While battery development is advancing faster than expected, there is still work to be done to bring down unit costs, achieve economies of scale in production, decrease total cost of ownership and improve range and infrastructure to achieve parity with traditional combustion engine vehicles.

Despite long-standing challenges, there are significant opportunities for original equipment manufacturers (OEMs) and energy utilities to accelerate customer value and achieve broader customer adoption.


Cost is number one barrier to purchase

According to Publicis Sapient’s consumer research, The Digital Life Index, drivers report total cost of ownership (TCO) as the biggest barrier to EV purchase, beyond just the price of the vehicle, including at-home chargepoint setup, public charging, taxes, insurance and residual value. Many major markets offer subsidies and purchase incentives to offset the high cost of EVs, but they are complicated to navigate, require a lot of paperwork and not all tax credits are available to all buyers. In addition, not every EV or hybrid qualifies and neither do preowned vehicles. In short, subsidies are likely not a long-term solution to sustain sales and customer adoption.

Until the TCO of an EV is competitive or better than that of a combustion engine, adoption will be slow, industry watchers predict. The high cost of EVs is driven primarily by the battery. However, according to Bloomberg New Energy Finance’s annual battery price survey, since 2010, the price of batteries has dropped 89 percent to $132 per kilo-watt hour and the race is on to push the cost of battery packs below $100 per kWh. While a cheaper battery isn’t expected until 2025, Tesla and GM are heavily investing in battery production plants – in January 2022, GM announced that it is investing $7 billion in Michigan, with $2.6 billion of that earmarked for a new battery cell plant in Lansing with Korean partner LG Energy Solution. Depreciation is also a factor consumers take into account when considering an EV. As technology improves, batteries become more powerful, longer lasting and less expensive. Residual values of existing EVs are likely to drop faster as new models with higher ranges and lower prices enter the market. For many drivers, leasing will make more financial sense than purchasing.

To help navigate the complexity of buying and owning an EV, digital tools can help consumers better understand the costs associated. For example, Nissan’s cost calculator compares the cost of owning its Leaf EV with a customer’s existing gas-powered vehicle. It takes into account a driver’s location, daily commute, local gas prices, average miles per gallon, duration of planned EV ownership and electricity rates to calculate potential savings on gas. When it comes to subsidies and incentives, Tesla provides some information on their website by region and Chevrolet links out to government resources, but this is a space that remains complex. A reliable and accurate resource that provides consumers with a better understanding of whether they and the vehicle they’re interested in purchasing are eligible for certain incentives (and how to claim them) will help drivers feel more confident in making the switch.

When it comes to making a purchase decision, Mercedes’ EQ Ready App monitors a consumer’s driving behavior over a period of days to provide a personalized “EV readiness” score. The app records a user’s routes, shows whether destinations are within reach of an electric powertrain, provides information on energy requirements and advises on available infrastructure.

Matthias Von Alten

Transportation & Mobility Global Strategy Lead

Craig Gosling

Director, Utilities

Alyssa Altman

Head of Transportation & Mobility, North America

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Alleviate range anxiety

While EV adoption has taken off in other countries, the U.S. is showing more resistance. There could be a simple reason for that.

Historically, there haven’t been enough charge points. Potential EV customers are concerned with keeping their vehicle juiced up for long trips. For some journeys in the U.S., the lack of charging stations makes this impossible.

Publicis Sapient figures indicate that this remains an issue, with the distribution of the 113,600 charging stations in the U.S. unevenly concentrated in areas where uptake of EVs is already comparatively high, like California.

It’s not that American car drivers are not willing to consider EVs. In September 2020, the VW website famously crashed due to high demand from customers when it launched pre-orders for its ID.4 EV. But American consumers are still concerned that an expensive electric car could leave them stranded.

This sentiment is reflected in the recent Automotive Customer Research Report conducted by Publicis Sapient and Epsilon. According to the data provided by survey participants, charging – both at home and away from home – is the number one concern for potential EV buyers in the U.S. Participants are more concerned about charging electric vehicles on the go (74 percent) than about options for charging electric vehicle at home (26 percent). Close to half of consumers surveyed believe that EVs cost more than gas powered vehicles to operate. Around 50 percent of those aged 35 and above believe that electric costs more than gas powered vehicles to operate, which is higher than the perceptions among 18–34-year-olds (38 percent).

While the figures may look a little bleak for now, there is progress. More imaginative solutions are emerging that will work for the American lifestyle, like locating charging stations at fast food outlets and grocery stores.

Meanwhile, in Germany, Volkswagen has made the jump to new industries entirely to address customer concerns. Elli is VW’s foray into energy utilities, providing domestic energy, home charge point access, as well as access to thousands of charging locations at work, home and VW dealerships. Elli aims to become as ubiquitous as the smartphone, creating an ecosystem that alleviates the anxieties and answers the questions raised by electric car owners and potential owners.

Tesla has also found success with potential EV customers by offering additional services such as charge point installation and access to supercharger stations. In January 2022, the American electric vehicle and clean energy company based in Austin, Texas, posted a record fourth quarter for 2021 and full-year earnings, calling it a “breakthrough year” despite supply chain bottlenecks and chip shortages that have beleaguered the entire car industry.

There’s no doubt that Tesla is winning in the EV space in the U.S. EVs are being promoted as a way for people to reduce their individual carbon output, so consumers are more willing to purchase an EV and the go-to brand right now is Tesla. A good reason for the company’s success is that it can change its software and parts configurations quickly, depending on which components are available. Flexibility around car components and customer worries can go a long way to make any EV brand well positioned against competitors.

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Fix the disconnect in customer experience

The current customer experience of buying and owning an EV is fragmented – researching which EV to choose, buying or leasing the vehicle, claiming subsidies, purchasing insurance, installing a charge point, acquiring an energy tariff and accessing public charging infrastructure all require a plucky consumer to interact with a plethora of companies, apps, websites and paperwork.

Tesla has found success by absorbing much of this complexity for customers and offering additional services such as charge point installation, insurance and access to supercharger stations. Others like Volkswagen have made the jump to new industries entirely to address gaps in the customer journey. Elli is VW’s foray into energy utilities, providing domestic energy, home charge point access, as well as access to thousands of charging locations at work, home and VW dealerships. Elli aims to become as ubiquitous as the smartphone, creating an ecosystem that alleviates the anxieties and answers the questions raised by electric car owners and potential owners.

Additionally, compelling customer propositions often won’t be possible without partnerships; OEMs and utilities will need to collaborate to attract customers and tap into new revenue streams. For example, utilities can offer an EV along with a contract for home energy, much like telcos provide customers with new smartphones when they switch providers. Or, partnerships with third parties can also provide points of differentiation like Togg, a joint EV venture founded by five organizations including a telco and utility company.

The global market for EVs is currently driven by government regulations with the goal of driving down emissions. EVs are one of the most viable options for reducing the environmental impact of transportation, but there are improvements that must be made in order to be viable in the long term when it comes to customer experience across price, range and convenience.

The EV Opportunity for OEMs and Utilities

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Craig Gosling
Craig Gosling
Senior Client Partner

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