Smart, Rich People Buy Electric Vehicles

Recent studies have suggested that Electric Vehicle (EV) owners are typically highly-educated and wealthy. So if you want to become highly educated and well off, buy an EV… maybe. Sadly, I don’t think the chicken-and-the-egg conundrum applies here. These studies also emphasized that the reason people buy electric cars is typically for the cost savings, not the environmental benefits.

At this point, due to the high price tag, EVs are typically purchased by individuals with a lot of money. The two highest selling electric vehicles in the US, the Nissan Leaf and the Chevy Volt, retail for about $36,000 and $40,000 respectively before the $7,500 government-provided tax-credit. The growth of EV sales has been slow, representing only about .02% of overall vehicle sales in 2012 but we have seen similar slow adoption rates with other eco-friendly, innovative cars.

Unlike some, I am not surprised about the result of this study. Hybrid cars exhibited a slow adoption rate. The Toyota Prius, that’s sales equal the sales of all other hybrids combined in the US, started out as around the same price point as the leaf and volt (after the rebate) and were once criticized for being too expensive for their basic design. Also, the operating costs are much lower for a plug-in electric car compared to a hybrid. So when looking at the total life-cycle cost of EVs, barring any battery problems, they are very cost competitive with hybrids. Though there weren’t any luxury hybrid’s at the time, like Tesla’s new Model S sedan, they were still priced much higher than the small cars in the segment they were competing in.

Musk has embraced the luxury EV trend but this could soon change.
Photo courtesy of USA Today.

Tesla CEO Elon Musk must have had a hunch about these buyer demographics when deciding in which segment to launch his Tesla cars. The company’s first two offerings are both priced in the luxury sector and their third model planned, an SUV dubbed the Model X, will probably be priced around the same.

Based on previous models, Tesla may seem like a luxury car maker, but Musk claims that his company is working on an affordable electric car for the masses that should be available in the coming years. As battery technology advances, the most costly aspect of EV’s, the retail price should surely decline. This trend was evident with the Prius and other Hybrids

I doubt the findings of this research comes as a surprise to EV owners and enthusiasts alike, but I would be surprised if the price and owner demographic of EV owns doesn’t move towards the status quo.  For this to be the case, the industry must cross two hurdles that the gas-hybrids haven’t had to face, the lack of charging stations and the relatively long periods of time it takes to recharge an EVs battery.

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