When will the Heartland embrace electric vehicles?

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As National Charging Infrastructure Is Created, Coastal America Still Dominates Electric Vehicle Registrations

With $5 billion in funds for the electric vehicle charging network (and more to come) available under the bipartisan Infrastructure Act, states are lining up for their share of federal largesse.

However, outside of major coastal cities, retail electric vehicle registrations have yet to take root, according to new analysis from S&P Global Mobility. The top eight electric vehicle markets in the United States are all in coastal states and account for 50.5% of total electric vehicle registrations in 2022. The major metropolitan areas of Los Angeles and San Francisco* alone account for almost a third of the total share of electric vehicles in the United States. market.

While the 22 central states** account for 27.1% of total U.S. retail vehicle sales through August, their representation in EV adoption has remained stagnant from 2021 to this year, at a warm share of 15.5%. According to data from S&P Global Mobility, only Colorado and Nevada (and to a tiny extent, Utah) exceed their overall retail share in EV representation.

EV vs Total Retail Registrations

Coastal dominance

It’s no surprise that California, a leader in green initiatives and electric vehicle adoption, dominates the top of the stock rankings. Greater Los Angeles (18.9% of total EV sales), San Francisco Bay Area (10.8%) and San Diego (3.3%) saw no change in their position among top five year-over-year comparing rankings for calendar year-to-date (CYTD: January-August) 2022 versus 2021, while Sacramento improved its position from the prior year .

Additionally, of the 13 markets that increased their share for CYTD 2022 compared to 2021, most were in the “smile” states***, including Atlanta, Austin, Dallas, and Houston. Only Chicago, Las Vegas, Missoula and Salt Lake City accounted for market share gains in major cities in the “Heartland” states. Not all coastal markets are guaranteed market share gains; New York and Boston saw a slight decline in the share of electric vehicles this year.

market share of the top 15 BEVs

“BEV’s control of market share on both coasts is attributed to their higher mix of early adopters compared to Central American shoppers,” said Tom Libby, associate director of loyalty solutions and industry analysis at S&P Global Mobility. “Their demographic profile is more in line with the traditional BEV buyer than the average American profile.” But Libby sees growth potential for electric vehicles in key core markets: “Greater acceptance and much wider consumer awareness is resulting in a natural progression of adoption from the coasts to the core of the country.”

A chicken-and-egg scenario could also be in play. Coastal cities have worked harder to create charging infrastructure, along with incentives for homeowners to install charging equipment in their garages.

“There’s no doubt that lack of charger availability is having an influence in Midwestern states, but it’s not the factor,” said James Martin, associate director of consulting for S&P Global Mobility. “An equally important factor is product availability in form factors that customers are ready to buy.

“There really wasn’t an option in terms of family-friendly, moderately priced CUVs,” added Martin. “And some models, such as the Hyundai Kona EV, were initially not available in Midwestern states – based on OEMs’ decision to focus on Section 177 (CARB) states where automakers could accumulating credits. Now car manufacturers are starting to produce more common electric vehicles. The availability of these vehicles will most likely be a factor that will stimulate the installation of more charging infrastructure.”

With the passing of the BIL Acts and the Inflation Reduction Act (IRA), more nationwide tax incentives will be available. The state that will receive the most funding from the initial $900 million tranche will be Texas, although its major city with the largest market share is Dallas, with just 2.4% of the EV market (8 591 electric vehicles sold at retail through August). Texas may be betting that more charging infrastructure will drive demand for electric vehicles in the state.

Heartland Buyer Profiles

Is there a difference in buyer profile between Coastal America and Central America?

Yes and no.

According to loyalty analytics data from S&P Global Mobility, which tracks the back-to-market behavior of buyers, there is little difference in the demographic and psychographic profile of those turning to battery electric vehicles.

Comparison of BEV Inflows from Coastal Market Share Leaders (Los Angeles, New York, Sacramento, San Diego, San Francisco, and Seattle) vs. Domestic Market Share Gainers (Atlanta, Austin, Chicago, Dallas, Houston , Missoula, Salt Lake City) shows little difference in buyer cohorts. There are a few more of these types of people in the coastal and smiling states.

demography BEV share of conquest leaders

Caucasian shoppers with high household incomes dominate the adoption bases in both regions. The only difference is that the central markets are geared more towards a slightly younger demographic.

Year-to-year comparisons between the two regions show similar results; both reflect the biggest declines from Caucasian shoppers and the biggest gain from Asian American shoppers. The increase in the influx of Asian American buyers indicates that the early adoption of this technology was not a passing phase.

Share of conquest BEV

“The typical Asian American new vehicle buyer is younger than any other ethnicity, including African Americans and Hispanics,” Libby said. “In the first eight months of 2022, 48% of Asian American shoppers were between the ages of 18 and 44. Younger buyers are generally more open to new ideas and new products; their brand loyalty is generally lower than that of most other age groups.

Is there a difference in brand preference between coastal and central shoppers? Tesla’s (TSLA) dominance remains unchanged as it controls over 65% of all BEV’s conquest shares in both areas. The brand’s public perception as the preeminent BEV manufacturer has cemented its position as the first choice of buyers looking to upgrade from an internal combustion engine (ICE) vehicle to a BEV.

However, the year-over-year change in conquest share shows that demand for Tesla appears to be slowing in core markets. Kia (OTCPK:KIMTF) and Hyundai (OTCPK:HYMTF) were the leaders in gaining market share, improving their position by more than 2 percentage points – even if the budget-conscious Hyundai Ioniq5 is not sold than in 39 states. Mercedes-Benz (OTCPK:MBGAF), Rivian (RIVN) and Ford (F) were the other brands to be among the top five heart winners for CYTD 2022 compared to 2021.

Share of conquest BEV

The increased interest in Korean brands coincides with a decline among more established BEV manufacturers. However, this does not necessarily represent a drop in demand. For example, Volkswagen (OTCPK:VWAGY) saw significant record declines in 2022 for its ID.4, primarily due to supply chain grunts and market allocations to more EV-friendly regions. However, VW’s new ID.4 assembly line in Tennessee went live in October, and the automaker says it has 20,000 unfilled reservations and factory capacity of 7,000 units per month.

BEV acceptance is moving inward in America, albeit at a slower pace than expected. Libby thinks it will take time before electrification is fully embraced in the heartland.

“Adoption of BEVs is a long-term process that needs to reach an inflection point similar to the adoption or acceptance of Asian-origin vehicles in the United States,” Libby says. “This inflection point is when the product becomes generally accepted and it usually occurs when volume and exposure reach a level that influences any reluctant outliers.”—-

*Given their fluid geography and county boundaries, “Greater Los Angeles” includes the contiguous counties of Los Angeles, Orange, Riverside, and San Bernardino. “The San Francisco Bay Area” includes the Bay Area of ​​San Mateo, Santa Clara, Alameda, Contra Costa, Solano, Napa, Sonoma and Marin counties.

** For this calculation, S&P Global Mobility analysts ranked the central states as Arkansas, Colorado, Idaho, Illinois, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, Utah, West Virginia, Wisconsin and Wyoming.

***Smile States are categorized as beginning with California in the west, traversing the Sun Belt and southern coastal states, then up the Atlantic coast to Virginia.

Original post

Editor’s note: The summary bullet points for this article were chosen by the Seeking Alpha editors.

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