Chapter 4. Consumers’ Vehicle Preference Survey
C. EV Preferences (Survey Section III)
EV demand can be expected to increase as EV and battery performance improve.
Figure 4-14. Respondents’ Preferred Fuel Type for Their Next Vehicle Purchase
When asked to choose their next vehicle for purchase based solely on fuel type, respondents selected gasoline followed by hybrids, electric batteries, and diesel, in descending order.45 These answers are indicative of a waning preference for oil and a growing preference for hybrid vehicles. Policymakers can thus foster EV demand in the early stage of the EV market by targeting PHEV drivers as chief policy beneficiaries.46 Respondents whose average monthly household income ranged from KRW 3 million to KRW 6 million showed the greatest preference (nearly 60 percent) for purchasing EVs as their next vehicle. The popularity of EVs was relatively low (approximately 10 percent) among respondents with comparatively higher household incomes. This suggests that the low maintenance costs and excellent mileage of EVs make them more appealing to middle-class consumers, while the lack of large, luxury EVs makes them seem less appealing to consumers in higher income brackets.
Figure 4-15. Reasons for Avoiding EVs (Two Reasons Per Respondent)
충전시설 부족 Shortage of charging stations
긴 충전시간 Long charging time
짧은 주행거리 Short driving distances
배터리 수명 Battery life
AS After-sales service
중고차 시세 Used car value
유지비 Maintenance costs
자동차 성능 Performance
디자인 Design
높은 가격 High prices
다양하지 못한 모델 Lack of diversity in models
Figure 4-16. Reasons for Choosing EVs (Two Reasons Per Respondent)
친환경성 Eco-friendliness
기술혁신(미래지향성) Innovation
디자인 Design
성능 Performance
유지비 Maintenance costs
기타 Other
When asked about their reasons for being willing to purchase an EV, 82.2 percent of respondents picked eco-friendliness, followed by low maintenance costs (55.4 percent) and innovation (42.5 percent). Consumers today, in other words, would choose EVs mostly due to the normative force of eco-friendliness. Although EVs are expensive and difficult to use at present, consumers are willing to purchase EVs to contribute to preserving the natural environmental. EV purchase subsidies should reflect this fact and be offered in proportion to the direct social benefits of driving EVs (e.g., contributing to the environment), thereby helping EV drivers conceptualize the monetary value of their choices. This will be discussed in greater detail in subsequent sections.
The next five survey questions asked respondents about the conditions they thought should be met in order for EVs to gain competitiveness. Respondents were asked how long they thought it should take to charge an EV at a fast-charging station. For this question, respondents were also provided with data noting that it takes five minutes, on average, to put gas into an ICE vehicle. Approximately 48 percent of respondents answered that they would be willing to purchase an EV if it took slightly, i.e., six to 10 minutes, longer than the amount of time needed to put gas into an ICE vehicle. Another 23 percent, however, answered that completely charging an EV’s battery should take the same amount of time needed to fill up the tank of an ICE vehicle. Long charging times, in other words, could act as a significant obstacle to raising EV demand.
Figure 4-17. Respondents’ Preferred EV Charging Time
5분 이하 5 minutes or less
6~10분 6 to 10 minutes
11~20분 11 to 20 minutes
21~30분 21 to 30 minutes
31~60분 31 to 60 minutes
23.0
47.5
16.8
10.4
2.3 0.0
10.0 20.0 30.0 40.0 50.0
5분 이하 6~10분 11~20분 20~30분 30~60분
%
Figure 4-18. Respondents’ Preferred Single-Charging Driving Distances for EVs
300km 이하 300 km or less
301~400km 301 to 400 km
401~500km 401 to 600 km
501~600km 501 to 600 km
601km 이상 601 km or more
Next, respondents were asked how far they thought an EV should be able to go on a single charge. For this question, respondents were provided with information saying that, on average, an ICE vehicle can drive 600 to 700 kilometers on a full tank. Approximately 35 percent of respondents picked a single-charging driving distance of 401 to 500 kilometers; 25 percent, selected 501 to 600 kilometers; and 22 percent said 301 to 400 kilometers. EVs capable of driving for at least 300 kilometers on a single charge are scheduled for market release beginning in late 2018. Automakers will need to increase the single-charge driving distances of their EVs to at least 400 kilometers in order to effectively foster demand.
Increasing the driving distances of EVs requires increasing the battery capacity. Larger batteries, however, take longer to completely charge than smaller ones. Therefore, in order to foster EV demand, technological advancements are needed to overcome this inverse correlation between driving distance and charging time.
Respondents were also asked about their preferred EV charging mode/method. Nearly 51 percent preferred fast-charging, while 28 percent preferred slow-charging outside the home (via charging stations at work, in shopping malls, and in parking garages). Only 14 percent preferred charging at home. With the majority of households in urban areas in Korea living in high-rise apartment buildings and other such collective housing buildings, Korean consumers prefer fast, out-of-the-home charging options as opposed to slow charging at home. Respondents’ answers to this question emphasize the pressing need to expand the charging market and infrastructure in Korea. As Figures 4-15 through 4-19 show, policy support for the EV market needs to include measures to expand EV charging infrastructure.
3.9
21.8
35.3
25.1
13.9
0.0 10.0 20.0 30.0 40.0
300km 이하 301~400km 401~500km 501~600km 601km이상
%
3Figure 4-19. Preferred Modes of EV Charging
홈 완속 충전 Slow charging at home
급속 충전 Fast charging
완속 충전(직장, 쇼핑, 주차 시) Slow charging outside home (work, malls, parking garages)
배터리 교환 Battery replacement
Figure 4-20. Preferred Station-to-Station Distances
1km 이내 1 km or less
2km 이내 1 to 2 km
3km 이내 2 to 3 km
4km 이내 3 to 4 km
5km 이내 4 to 5 km
5km 이상 5 km or more
Respondents were then asked how far apart they thought EV charging stations should be. Nearly half (47 percent) preferred less than five kilometers. The number and density of EV charging stations should be comparable with those of gas stations in order to foster EV demand.
Next, respondents were asked what they thought the final price difference should be between ICE vehicles and EVs, assuming that they had the same performance. In other words, respondents were asked how much more they were willing to pay to purchase an EV instead of an ICE vehicle for the same performance. Assuming that an ICE vehicle has a purchase price of KRW 30 million, 26 percent of respondents answered that they would be willing to pay 10 to 20 percent more to
13.9
51.4
27.6
7.1
0.0 10.0 20.0 30.0 40.0 50.0 60.0
홈 완속 충전 급속 충전 완속 충전(직장, 쇼핑, 주차 시)
배터리 교환
%
4.2
8.7
16.6
7.3
46.9
16.2
0.0 10.0 20.0 30.0 40.0 50.0
1km 이내 2km 이내 3km 이내 4km 이내 5km 이내 5km 이상
%
purchase an EV of the same class. Another 27 percent said price differences of up to 10 percent were acceptable. However, 34 percent of respondents answered that they would purchase an EV only if the EV was priced the same as, or lower than, the ICE vehicle of the same class. From these answers we can infer that Korean consumers are unlikely to purchase EVs if there are no purchase subsidies, and the absence of purchase subsidies could significantly hinder the growth of the EV market. It is therefore important for policymakers to ensure that EV retail prices do not exceed 110 to 120 percent of the retail prices of ICE vehicles of a comparable class before removing purchase subsidies. Additional financial incentives may be needed to induce consumers to purchase the relatively higher-priced EVs.
Figure 4-21. Preferred Price Differences Between ICE Vehicles and EVs
30% 이상 30% or more
동일 Same
저렴 Cheaper
Respondents were also asked in how many years they would purchase an EV, if they planned to purchase an EV, and why they selected this specific purchase timeframe. Of all the respondents, 11 percent answered that they would purchase an EV in three years or less; 23 percent, in three to five years; and 39 percent, in five to 10 years. Another eight percent said they had no intention of purchasing an EV. Respondents answered that they timed their EVs purchases in anticipation of EV performance improvements and the expansion of charging infrastructure. Approximately 35 to 40 percent of respondents expected decreased EV prices and an expanded charging infrastructure in the future. While respondents viewed the expansion of charging infrastructure and the increase of driving distances as technical problems that could be solved in the short- or mid-term, they viewed shortening EV charging time as something that would take longer to achieve.
Figure 4-22. Respondents’ Timeframe for EV Purchases
11.6
23.2
39.2
14.3
3.7
8.1
0.0 10.0 20.0 30.0 40.0 50.0
3년 이내 3~5년 5~10년 10~15년 15년 이후 구매 생각
없음
%
3년 이내 3 years or less
3~5년 3 to 5 years
5~10년 5 to 10 years
10~15년 10 to 15 years
15년 이후 More than 15 years later
구매 생각 없음 No intent to purchase
Figure 4-23. Reasons for Future EV Purchase Timing (Two Reasons per Respondent)
충전시간 하락 기대 Anticipation of shortened charging times 충전시설 확충 기대 Anticipation of expanded charging infrastructure
가격 하락 기대 Anticipation of decreased EV prices
성능 향상 기대 Anticipation of EV performance improvement
보급 확대 기대 Anticipation of more EVs available on the market 현재 자동차 교환 시점 Anticipation of time before needing to buy a new vehicle
The survey also contained two questions designed to help solve the problem of network effect as it relates to EV demand.
The direct network effect generally refers to the effect of increasing the number of consumers using a given product based on increasing the number of consumers intent on purchasing the product.48 Approximately 36 percent of respondents answered that they would purchase an EVs irrespective of whether people around them purchased an EV. This group of consumers may be relatively unsusceptible to the direct network effect. Another 25 percent of respondents, however, answered that they would purchase an EV if they knew at least five people who had purchased an EV. Figure 4-24 shows the distribution of the direct network effect on the EV market. The next survey question was designed to identify the critical threshold of the EV market, to help us forecast at what point in time the demand for EVs would dramatically increase after consumers purchased EVs under the network effect. Twenty-five percent of respondents said that EVs would have to represent 5-6% of the new vehicle market in order for them to consider purchasing an EV. Forty percent said that EVs would have to represent 10% of the new vehicle market in order for them to consider making an EV purchase. The first threshold for EV demand would therefore be 5-6% of the new vehicle market, and the next threshold (when the EV market would be considered ‘stable’) would be when EVs make up 10% or more of the new vehicle market.
48 Indirect network effect, in the context of the EV market, refers to the effects of increased/decreased charging infrastructure on EV demand. Identifying these effects would help us solve the problem of how to foster EV demand before/after expanding infrastructure.
4Figure 4-24. Number of EV Purchasers Needed Before Respondents Would Purchase Their Own EV
5명 이내 Fewer than five
5~10명 5 to 10
10~15명 10 to 15
15~20명 15 to 20
20명 이상 More than 20
상관 없음 Does not matter
Figure 4-25. Market Share of EVs in the New Vehicle Market Required for Respondents to Purchase Their Own EV
15.1% 이상 15.1% or more
구매의사 없다 No intent to purchase
25.7
19.7
10.6
2.9 4.8
36.3
0.0 10.0 20.0 30.0 40.0
5명 이내 5~10명 10~15명 15~20명 20명 이상 상관 없음
%
1.5 2.9 2.5 3.9 5.8 8.5
1.7 1.9 1.5 10.6
20.8 31.5
6.8
0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0
%
Figure 4-26. Respondents’ Forecasts of EV Share of the New Vehicle Market by 2040
10% 이하 10% or below
In the final survey question, respondents were asked what percentage they thought EVs would represent of the new vehicle market by the year 2040. As of 2016, EVs made up only 0.3 percent of all new vehicles sold in Korea (IEA, 2017, p. 49). A significant number of respondents were optimistic and said that they thought EVs would become an integral part of the vehicle market by 2040. Although EVs make up only a fraction of the vehicles sold in Korea today, many consumers believe that climate change, pollution (particularly air pollution), technological advancements, and gradual price decreases will eventually make EVs successful in the larger vehicle market.