The 2016 Detroit Auto Show: fuel misers assuage glamor and glitz guilt
After a U.S. sales record of 17.5 million new light duty vehicles in 2015, the automotive press was understandably bedazzled by the gorgeous array of new vehicles on display at the 2016 Detroit Auto Show.
In an obligatory nod to the upcoming submersion of the Maldives and Manhattan – Trump Tower may soon install a boat dock at the 3rd floor level – manufacturers also featured some exciting new fossil fuel savers.
The 200 mile range, all-electric Chevy Bolt took center stage in the skip-the-gas-station department, but our personal favorite was the rather more, um, idiosyncratic Elio Motors P5. At $6,800 and claiming 84 mpg, we’re talking big time green savings, both personal and planetary.
While lacking the steampunk panache of the Morgan Aero three-wheelers equipped with a rowdy exterior V-twin motorcycle engine that terrorized English country lanes in the 1920s and 1930s, it has serious geek street cred.
Hybrid sales fell in 2015, but BEVs grew
All this emphasis on reducing fossil fuel use coincided with U.S. gas prices well below $2 for a gallon of regular (Gas Buddy). Adjusted for inflation, $2 is the equivalent of 33 cents in 1970 – less than the actual average of 35 cents that year (Energy.gov) when many young Boomers were already driving.
A closer look shows battery-only units (BEVs), sans gasoline aids of any type actually grew by 8%, from 67,700 to 73,200 (Inside EVs).
In reality, it was plug-in hybrid (PHEV) and range extender model sales that fell – by a whopping 22%! Purists may groan, but these models are lumped into the EV category –and qualify for tax credits – because they eke out a few precious miles of battery travel before those pesky fossil fuels (yuk!) come to their rescue.
The 2015 decline of PHEVs mirrors a 15% drop for regular hybrid sales. With the arrival of a dozen or so new BEVs, hybrid technology’s green cachet has waned and, yes, lower gas prices have further eroded the appeal. For now. Time will tell. OPEC too.
Forced to build them – and to publicly pretend they really, really want to – until Tesla’s breakthrough, automakers weren’t exactly clamoring to serve an unprofitable market sliver.
As Reuters quotes former GM vice chairman Bob Lutz as bluntly saying, because of government mandates, “Electric vehicles are going to have to be crammed in the market at way below what it costs to make them.”
Boomers: the key to BEV sales success
One thing is certain, with government policies and much C Suite face on the line, BEVs are here to stay. The key question for automakers is: do you want to sell more?
For those who answer “yes” the Boomer buyer is crucial.
More than half (53%) of early Tesla S buyers were over fifty, as were 43% of all BEV buyers through 2013, an era dominated by the Millennial-friendly Nissan Leaf (source: Edmunds.com, Experian).
With Leaf’s huge 2014-2015 sales decline (30,200 to 17,300), and major growth by Tesla S and BMW i3, we now figure the BEV buyer median age at fifty-something.
Far from needing to save money on fuel, BEV buyers are well-healed.
Research firm Strategic Vision reports the median income for early Tesla S buyers was over $290,000. And, according to TrueCar.com, median incomes for early buyers of Ford Focus EV ($199,000) and Fiat 500e ($145,000) were way higher than among the proles who buy the gasoline versions ($77,000 and $73,000).
Even the new 2017 Chevy Bolt, lauded by WIRED as “the first true mass-market electric car” costs $37,500. In order to benefit from the Federal tax credit of $7,500 and get the net price down to a ballyhooed $30,000, we figure buyers/lessees will come from the top 15% in terms of income/assets. Not exactly mass-market.
Eventually, with more range improvements, BEVs will move beyond the visionary stage. But older, more affluent buyers – that would be us, the over-the-hill, fifty-plus crowd – will remain the dominant generation.
Silicon Valley aside, most Millennials don’t have enough money and typical Gen Xers are struggling to raise families and put their kids through college.
So expect a continued buyer skew to the 50-plus arena – the owners of around 80% of U.S. household net worth and buyers of half the nation’s new light duty vehicles.
Boomer-Plus: America’s most adaptable generation
It’s not just about demographics: to the chagrin of Madison Avenue’s Millennial-obsessed, 18-49 demo fetishists, Boomer-Plus Generation™ consumers – Baby Boomers, those born 1940-1945 and Gen Xers over 50 – are just about the most adaptable on the planet.
We’ve been adapting – and early-adopting – all our lives; we’re really good at it.
- We propelled import car brands past the Detroit nameplates our parents loved.
- We mainstreamed light trucks, SUVs and CUVs into market dominance.
- We were the first to jump aboard hybrids and BEVs – remember EV1?
Now in the empty-nesting and grandparenting lifestages, consultant Lori Bitter, principal of The Business of Aging, reports that Boomers are more open than ever to new possibilities. In a recent Media Post column, Lori explains they are at a point “with the most ‘consumer moments’ and an openness to trying new products and services that they may have not considered in the past.”
At 94 million strong – a population bigger and far more affluent than any European country – the Boomer-Plus Generation is destined to drive the BEV marketplace past the tipping point.
Brands serious about realizing EV profits, not just satisfying regulators, need to plug into the 50+ space before their competitors do. We can help spark the conversation.