U.S. consumers want EVs, but cost and range remain issues

DETROIT—About half of the owners of gasoline- and diesel-powered vehicle in the U.S. are considering a hybrid or electric vehicle, consultant KPMG International Ltd.'s consumer pulse summer 2023 survey found.

The majority of consumers willing to consider those vehicles expect to purchase one within the next two years, according to the survey released Monday.

KPMG surveyed 1,003 people in the U.S. on April 21-26.

For most consumers considering the switch to electric or hybrid vehicles, gas prices and environmental concerns are the top motivators.

Affordability remains an obstacle for many potential EV buyers, Gary Silberg, KPMG global automotive sector leader, said. Silberg said he expects demand for EVs to continue to grow but sees affordability as an important caveat to industry optimism.

"A lot of people are excited about the opportunity, but I don't know how many people can afford it," Silberg said.

On the survey, households with incomes of at least $100,000 were much more likely to report already owning an alternative-fuel vehicle than households with lower incomes and were more likely to be considering an alternative fuel vehicle if they did not already own one.

Consumers in lower income brackets are the least likely to be considering a hybrid or EV, despite being the most likely to be concerned about rising gasoline prices.

Inflation Reduction Act tax credits for EV buyers could help change the landscape in the next few years, Silberg said, but the impact will take time as manufacturers adjust supply chains to qualify for the credit.

For dealers, being able to solve customers' high-tech vehicle problems is essential in a hybrid and electric future, Silberg said. "If someone has a tech question, they have to be able to do it," Silberg said. "I think that is the secret sauce for them going forward."

Hybrids and EVs are most popular in the Pacific and Mountain regions and least popular in the Midwest, the survey found. Weather and population density are shaping variations in demand across regions, Silberg said.

The West Coast is naturally a more welcoming environment for batteries than the Midwest. "When it's minus 10 degrees you're not getting the same range you would get in California where it's relatively temperate—not even close," Silberg said.

Higher population densities on both coasts also make it more practical for consumers to rely on vehicles with limited ranges than it is for consumers in the middle of the country.

Generation X and Millennials are the most likely to say they plan to purchase a hybrid or EV within the next two years. The youngest vehicle owners in the U.S. are enthusiastic about EVs but can't afford them, Silberg said. Older Americans, on the other hand, have more income stored up but are more likely to still be coming around to the idea of EVs.