A new survey from Bloomberg Intelligence on auto-buying intentions has found that EU automakers’ battery-electric vehicle (BEV) growth goals look ambitious, with just 16% of private buyers in Europe favouring them, and 44% opting for hybrids that play to BMW, Mercedes and Toyota’s strengths and disadvantage pure-play Tesla. Few charging points, range anxiety and high prices are the top concerns among respondents.
Only 16% of respondents planning to buy a car in the next 12 months in Bloomberg’s survey of Europe’s top-five passenger-vehicle markets (74% of regional sales) opted for a BEV.
That contrasts with ambitious government targets and may force a watering down of commitments to phase out ICE sales, led by Norway in 2025 and the UK in 2030.
Hybrids are favoured, split evenly between hybrid electric vehicles (HEV) and plug-in hybrids (PHEVs), though the latter isn’t yet reflected in sales with just a 7% 1H share. Some form of ICE remains the preference of 82% of buyers.
Legacy automakers’ lukewarm response to BEV sales reflects a lack of profit incentives (costly batteries and an absence of scale) to pursue sales volumes beyond what’s needed to meet emission legislation and avoid fines. Generous tax incentives boost BEV-fleet sales.
Michael Dean, Senior Autos Analyst at Bloomberg Intelligence, said: “Europeans continue to favour internal combustion engine (ICE) models – including hybrids – and not the battery electric vehicles (BEVs) promoted by policymakers, posing a potential stumbling block to pure-plays like Tesla.
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“The lack of charging stations and range top concerns, with high prices and falling subsidies also deterrents. Tesla is nevertheless in pole position on buyers’ wish lists, alongside Audi, Mercedes and BMW, but less than 10% of buyers seeking (or willing to pay extra for) autonomous-driving features, puts a potential cap on the sector’s lofty software-profit ambitions. The good news for EU automakers is that brand loyalty remains high, though extended delivery waiting times are forcing some switches.”
Favoured by 44% of respondents, hybrids are the most popular choice of electrified vehicle. That doesn’t bode well for BEV pure-play Tesla, with consumers concerned over range and a lack of public charging. That said, Plug-in Hybrid Electric Vehicles (PHEVs) are unlikely to be the preferred choice of legacy automakers, due to the added cost of combining two power trains.
Charge points, range anxiety, price haunt BEVs
European charging infrastructure is growing rapidly, though, with only 690,000 public connectors as of 2022, it’s failing to keep pace with EV sales. It’s also well below the 1.4 million points needed by 2025 to meet Bloomberg NEF’s base transition scenario. Charging and range anxiety therefore continue to top the list of consumers’ concerns, as 75% of BEVs registered in Europe in 1H had sub-312-mile (500-kilometer) ranges, according to JATO.
High prices remain an obstacle, and despite Tesla’s (19% European BEV share) recent price cuts, it still averages a 14% premium to other BEVs and cost 55% more than an average ICE in June (JATO data).
Prices of new cars are seen as being ‘too high’ in Europe, according to 83% of survey respondents, with 19% of those polled likely to postpone a purchase in anticipation of price reductions and 16% intending to buy a lower-specification version. Average list prices in Germany, the UK and France have already fallen from the December 2022 peak, according to JATO Europe data. At the same time, the average discount in Germany reached 14% in June (13% in December), 13% in France (12% prior) and was unchanged at 5% in the UK.
Buyers won’t wait over 6 months for delivery
One of the main reasons cited in the Bloomberg survey for switching brands is a preferred type of vehicle being unavailable. That ties in with 45% of buyers being unwilling to wait more than three months for delivery, and almost 80% unprepared to kick their heels for over six months.
EU automakers benefited from extended order backlogs amid depleted inventory in recent years, given semi-conductor supply constraints. Yet as production normalises, there’s a concerted effort underway to rebuild inventory channels and reduce waiting times to pre-pandemic levels. That also explains why production at several EU automakers exceeded deliveries in H1 – 126,000 overproduction for BMW, 53,000 for Mercedes Cars – in an attempt to rebuild dealer stocks.
Tesla tops consumers’ most-wanted list along with Mercedes and Audi, Dean added: “It’s not all bad news for Tesla when those polled were asked what marque they would buy if money wasn’t an issue. Despite consumers being wary of BEVs – due to their limited driving range, the lack of charging stations, high prices and a preference for hybrids – Tesla jointly heads buyers’ most-wanted brands, together with Mercedes and Audi. BMW isn’t far behind, with Porsche topping the table for luxury automakers.”
Brand loyalty among European auto owners appears strong, with 61% of survey respondents confirming they’re likely to purchase the same marque, and only 17% certain of changing. Brand retention is highest in Germany, with just 13% of those polled unlikely to purchase the same again. This bodes well for German automakers’ near-60% domestic market share. Renault, Stellantis and Ford have the lowest rate of loyalty, though may draw comfort from follow-on questions suggesting the main reason for changing brands is due to being able to move to a higher-priced one, or the unavailability of a preferred type of vehicle.
Dean continued: “Brand loyalty is key for legacy automakers to shield their market share against the rising threat of new entrants such as Tesla and lower-cost imported Chinese battery-electric vehicles. Automakers need to boost consumers’ confidence in their autonomous driving features to achieve ambitious software revenue targets by the end of the decade. As price is key for potential buyers, technical performance is often a secondary issue. Consistent with this finding, it appears that European consumers aren’t entirely comfortable using autonomous driving features yet.
“A third of survey respondents wouldn’t be happy enabling any type of autopilot, with a quarter saying they wouldn’t let anyone in their family use it. Only 19% said they were willing to pay extra to have an autopilot function. Self-parking and heated seats are the top two subscriptions consumers would pay for in addition to the purchase price of a vehicle.”
Bloomberg Intelligence’s inaugural auto-buying survey was conducted amongst 1,500 adults planning to buy a car in the next 12 months. It focuses on the five largest markets of Germany, the UK, France, Italy and Spain – making up about 75% of the region’s sales.