Best 5 Ways Automakers Can Make Electric Cars Profitable

3) Education and communication:

While between 30 percent and 45 percent of consumers in the U.S. and Germany say they’ve considered buying an electric car, less than 5 percent of consumers are actually buying electric vehicles, the report found, according to surveys.

That’s a large gap. It highlights how only about half of consumers say they understand how electric cars work. Through more education and marketing, that gap between interest and purchase could be made much smaller, and automakers should make efforts to create communication campaigns to figure out this problem.

Tesla seems to be well aware of this issue, because the notion is at the core of why the company insists on selling its cars out of its own Tesla stores. At Tesla stores, potential customers can learn about electric cars and battery technology, and have a hands-on experience with electric-car technology. Tesla doesn’t want its cars sold at traditional dealerships where electric cars are sold alongside traditional cars and often go ignored by dealers.

The report also found that consumers who are interested in electric cars are more fearful about range issues compared to consumers who have actually purchased an electric car. That implies that once someone owns an electric car, range anxiety is diminished. Communication campaigns explaining how charging works and where it’s available could be helpful in overcoming this barrier.

4) Know your demographics:

In the same way that there’s a lack of lower-cost, lower-range electric cars out there, the report contends that automakers need to target electric-car models to other types of buyers. There are a whopping nine types of buyers, say McKinsey analysts, including: status luxury enthusiasts, risk-averse greens, mainstream mobility seekers, mass premium seekers, low-cost performance, urban families, trendy families, high-tech status seekers, and feature-focused buyers.

If automakers can customize and sell to these different verticals, they could uncover major opportunities that their competitors are missing out on.

5) Don’t hide in the sand and ignore electrification:

The auto industry is undergoing a huge shift, not just in terms of battery technology and electric vehicles, but also with autonomous car tech, car-sharing tech, and connected cars. All of these investments together mean that car companies could become very capital-constrained.

However, the report says that automakers can’t rely on just internal combustion cars for long. Electric car tech could be disruptive to internal combustion cars as autonomy, connectivity and sharing are all reinforcing electrification. For example, a connected or autonomous car could make it easier to charge a car efficiently.

At the same time, battery costs are coming down significantly, and by 2025 to 2030, electric cars will “reach true price parity” with traditional internal combustion engines, notes the report. That’s just under a decade in the future.

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