Is the Tesla brand cooling off in the Danish EV market?

It’s not about the demand for electric vehicles. Every EV produced of any brand will be sold for many years to come. There are fluctuations between brands, but none of the manufacturers will go bankrupt due to lack of demand.

Profits Matter Most

In my opinion, the only reason a car manufacturer would go bankrupt is for lack of profit per vehicle produced. This poses a very serious problem for those who have until now enjoyed reasonable profits from gasoline-powered vehicles while now switching to electric vehicles. Those who have only ever made electric vehicles, with a good profit, will have fewer problems.

It seems obvious at this point that the entire automotive industry is moving towards electric vehicles in the short term. The short term being less than a decade in my opinion. When everything the cars sold are electric, only then will demand by brand become interesting, and crucial, again. However, some of the numbers below also indicate when demand for ICE vehicles will fall off a cliff.

Feeling matters less

Still, sentiments about quality and brand loyalty are a lot more fun than cold operating margin numbers, so that’s what we’ll be looking at here. And while Tesla may be ahead of the pack in terms of production and margins, it still has some work to do in the customer satisfaction department, at least in Denmark — for now. I talked about this a while ago, and Tesla still doesn’t seem to care much about it. I wonder why?

Scandinavian automatic index

Loyalty Group International conducts a brand sentiment survey every year in Scandinavia. This is called the automatic index. The Danish Motorists’ Association (FDM) has reviewed the details that concern user opinions regarding electric vehicles in particular. The Danish part of the survey is based on responses from 22,000 car owners. (The survey totals 52,000 for Scandinavia.) Here is my pick of what the FDM report says Danes think:

What is the reason not to buy an EV?

These responses are from car owners who said their next car will be not to be a VE. More than one answer was allowed.

  • 67.6% — Insufficient reach.
  • 52.0% — Not enough charging options.
  • 46.7% – Too complicated (charging hassle, range anxiety, etc.).
  • 45.3% — Charging takes too long.
  • 28.5% — Price too high.
  • 14.9% — No model matches my needs.
  • 4.9% — Delivery times are too long.
  • 2.4% – My favorite brand has no EV options.
  • 1.9% — Electric vehicles have poor handling.

Well, right away, this is very interesting. Obviously trying out a new technology instead of just reading about it will change those feelings. Not enough range? Yes, I remember. What is the gold limit? Let me know in the comments below.

Electric vehicle owners are the least satisfied car owners!

Owners rate their satisfaction on a scale of 1 to 7. Responses are recalculated on an index scale of 1,000 points.

  • Hybrid: 891 points
  • Plug-in hybrid: 864 points
  • Diesel: 857 points
  • Fuel: 851 points
  • Electric: 839 points

This one surprised me. But there could be a first-mover bias here. After all, the market share of pure electric vehicles is still so low that it creates a proportionately skewed experience on the negative side. Personally, I might have been more forgiving most of the time, but the expectations of the average car owner are probably pretty high. I’m making the hybrids win here, because you get some kind of EV experience but without any “charging hassle”. Still, I believe any type of hybrid is a stepping stone to pure EV. What do you think?

The most satisfied EV owners

Autoindex totals 23 brands, but since not all brands offer EV models, only brands with enough statistical answers are included here. The same index scale as before is used.

  • BMW: 916 points
  • Hyundai: 899 points
  • Skoda: 896 points
  • Kia: 894 points
  • Audi: 893 points
  • Mercedes-Benz: 893 points
  • Tesla: 885 points
  • VW: 852

Now, before any of my fellow Tesla owners end up here, let’s remember this is Europe, flooded with German-built cars, and even though Tesla is now building its Model Y in Berlin, it’s still a fact that high build quality is a proud tradition among legacy brands. But then again, isn’t prioritizing door slamming noises and leather stitching a dicey proposition when the whole industry spins its head? Isn’t the crucial strategy to try to reduce costs by focusing on motors, batteries, thermal management and extreme efficiency?

If scale and profit will determine who wins and who loses the electric vehicle game, aren’t you obligated to focus on innovation as a manufacturer? Does the story of a certain Model T ring a bell? I’m curious, would you rather your favorite brand compete directly in terms of scale or quality? I like the good build quality, and even the non-German built Škodas I’ve tried seem rock solid compared to my 2019 Model 3, which isn’t bad at all, but okay, this is not a German premium. It will be very interesting to see who even makes it onto this list at the end of the decade. And what’s new at Mercedes-Benz? How did he end up under the Koreans?

Oh, and just to be perfectly clear here: I believe that in order to maximize margins, and therefore maximize pricing power (i.e. not go bankrupt in a ruthless innovation paradigm shift), manufacturers should aim sufficient non-structural build quality (interior materials, paint, panel fit, etc.) and superior structural build quality (impact resistance, body-in-white, motors, batteries, electronics, software, etc.). Kudos to the very informative teardowns from Sandy Munro and his associates in this regard.

Why would you choose to buy an EV?

Responses come from car owners who listed their next car will be to be a VE. More than one answer was allowed.

  • 62.0% — For the sake of the environment.
  • 52.3% — The possibility of recharging at home.
  • 49.1% — Less noise.
  • 44.7% — Meets my driving needs.
  • 26.0% — Has good maneuverability.
  • 25.3% — Matches my green mindset.
  • 19.8% — I already drive an EV.
  • 16.6% — Attractive price.
  • 6.9% — Other reasons.

I won’t pretend that I don’t like gas-powered cars. I collect energy-guzzling classics. So I often find myself in the crowd at meets where even the mention of electric vehicles is a sin. I try wholeheartedly to provide rational arguments in favor of electric vehicles to die-hard motorcyclists in accordance with statements such as “electric vehicles are perfect for daily commuting, while old classics are perfect for hobbies”, and this wholesome exercise made me realize that if you really want to use the environmental argument, you should just ride a bike instead – and only if that’s not possible, drive an EV. What I’m trying to say is be careful, or rather, be tactful when it comes to “saving the environment”. Make sure your numbers are in order and think globally. In my experience, it’s very difficult in the heat of the moment.

When will an EV be a realistic alternative for you?

These responses are from car owners who said their immediate next car not to be a VE.

  • 1.7% — Within one year.
  • 4.4% — In 1 to 2 years.
  • 30.1% — In 3 to 5 years.
  • 34.2% — In more than 5 years.
  • 10.4% — Never.
  • 19.2% — Not sure.

It’s really interesting, and mainstream automakers should pay very close attention to it. If we assume that the response “In more than 5 years” is also a feeling “In less than 10 years” and that only half of the “Not sure” crowd ends up buying an EV, we could consider 80% of the customer purchasing electric vehicles within 10 years. This is what the disruption looks like.

And what would you be willing to pay for an EV?

  • 10% are willing to pay up to 30% more for an EV compared to an ICEV.
  • 20% are willing to pay up to 15% more for an EV compared to an ICEV.
  • 45% will only buy at price parity.
  • 14% will only buy an EV if it is cheaper than a comparable ICEV.

Considering that price parity will likely be within reach next year or the year after, 75% of buyers will soon be in the EV market. That’s crazy. The market will simply not be able to keep up. Many will be forced to wait a long time for their EVs, and how many of them will buy a new ICE vehicle in the meantime, instead of just driving their current cars into the ground? I believe the term is “Valley of Death”. Please give your opinion in the comments section, but remember these are Danish car owners, and even though EV sales are booming, we are a long way from the dominant EV situation in our neighboring country, Norway.

By the way, the survey reveals that 47% of Danish car owners think electric vehicles are cleaner than ICEVs, and 29% don’t….

To warm up. My 2019 Model 3 RWD at 75,000 miles, 40 cents/mile TCO. The EV market is heating up, and while Tesla may not reach the top spot in the Autoindex satisfaction survey, it certainly has a head start in the disruptive EV market. Photo by Jesper Berggreen.

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