Consumers are warming up to the concept of fully self-driving vehicles, but some roadblocks may lay ahead for automakers, according to the 2018 Deloitte Global Automotive Consumer Study.
While consumers appear more apt to embrace emerging technology in the form of autonomous vehicles, many are brushing off newer powertrain options in favor of traditional engines. Most US consumers (80 percent) still favor either a gasoline or diesel engine, up slightly from 76 percent in 2017, and only 15 percent said they would choose a hybrid engine in their next vehicle.
International consumers show a growing preference for alternative powertrains. More than one-third (38 percent) of Japanese consumers and 36 percent of Italian consumers would prefer a hybrid engine in their next vehicle, and 40 percent of Chinese consumers hold the same view.
"The economics of electric vehicles compared to traditional powertrains are presently not favorable enough for either consumers or automotive companies," said Joe Vitale, Global Automotive Leader, Deloitte Touche Tohmatsu Limited. "However, two significant trends could move us closer to the tipping point: battery cost reduction and government regulation. The trend toward mandating electrified powertrains — not merely demanding increased fuel efficiency or better carbon footprints, especially in Europe and China — lays out a 'must-do' path for global car makers. Also, as automakers simultaneously begin to broadly partner on building out the electric charging infrastructure and developing other value-added services that increase the convenience factor for consumers, electric vehicles can become a desirable alternative for most consumers."
Deloitte's research also finds that consumers are not willing to pay much more for autonomous vehicles. Deloitte's most recent consumer survey data on the topic found that in countries such as Germany (50 percent), the US (38 percent) and Japan (31 percent) consumers were unwilling to pay extra money for these vehicles. The findings were similar for electric vehicles, where 42 percent of German consumers and just over one-third of people in Japan and the US said they are unwilling to cover additional costs to get alternative powertrain technology.
However, Craig Giffi, Vice Chairman, Deloitte LLP, and US automotive leader, notes: "As exciting as autonomous-vehicle technology looks to be, and despite the current higher interest and acceptance of autonomous technology versus electric vehicles in consumers' minds, government regulations look to be forcing the investment in electrified vehicle technology. At the same time, consumers around the world are consistent in saying they do not want to pay anything extra for either electrified or autonomous vehicles, leaving automakers with some difficult capital allocation and business model decisions if they expect to make any money at all."
Deloitte's study suggests that auto manufacturers developing and bringing advanced vehicle technology to market, such as autonomous vehicles, should simultaneously create new business models that can sustain an appropriate return on investment.
Finally, given the over 1 billion conventional vehicles on roads around the world today, and the tens of millions that continue to be sold on an annual basis which are all expected to last well over a decade, the transformation to greater adoption of autonomous driving and electric powertrains will take quite some time to reach a tipping point. Automakers must balance ongoing innovation and new business models with the need to sell, service and delight today's consumers with improved technology they are most willing to pay for in the near term, such as safety.
About the Global Automotive Consumer Study
As part of a continuous assessment of consumer behavior, Deloitte recently surveyed over 22,000 consumers in 17 countries around the world to shed light on consumer preferences regarding a variety of critical issues impacting the automotive sector. The overall goal of the study is to answer important questions that can help companies prioritize and better position their business strategies and investments.