With so many models in the pipeline, Deloitte projects a global supply glut of 14 million EVs by 2030. The supply-demand imbalance could lead to intense brand battles in the years ahead, with advertising playing a key role.
In the U.S., Tesla has been winning the EV war, without much competition. The trendsetting electric vehicle maker accounted for 80 percent of the 239,492 battery electric vehicles sold in the States last year, not including gas-electric hybrids, according to figures provided by Kelley Blue Book. While total EV sales jumped from 105,949 in 2017, the segment still only accounts for about 2 percent of total auto sales.
And Tesla has stumbled trying to enter the mainstream market, leading to a cash crunch. In late February the company announced it was closing almost all its stores in a cost-cutting move meant to fund a price cut on the Model 3, its first mass-market EV, to the long-promised $35,000 level. (The starting price had most recently been $42,900.) Days later Tesla reversed course, saying that it would indeed keep some stores open but would raise prices on its more expensive Model S and Model X vehicles. Wealthy buyers have fueled demand for those vehicles, a factor that has led competing luxury brands like Audi, Porsche, Jaguar and Mercedes to step up their EV plans or risk losing clout with affluent buyers.
"They want in. They have seen Tesla eating into their sales," says Tim Fleming, a forecaster at Kelley Blue Book, of the luxury automakers.
Tesla broke through by mostly shunning traditional advertising, unless you count the seemingly daily headlines garnered by its mercurial CEO, Elon Musk. "They have already built a very strong brand," says Autotrader analyst Michelle Krebs.
But marketing could play a bigger role as the luxury EV market heats up. Krebs expects established brands to do more traditional advertising, but asks, "What is Tesla going to do? Certainly, they don't have the kind of money that an Audi or a Porsche has to do that kind of advertising."
Calming the range anxiety
Audi's marketing push comes as it prepares to launch three battery electric vehicles—part of its new e-tron series—in the next three years in the U.S., beginning with an SUV that has a $74,800 starting price. Marketing includes influencer deals with Judner Aura, who runs a YouTube page reviewing tech products that has more than 2 million subscribers. A recent video shows him test-driving an e-tron at a car-racing resort in Spain.
Audi is also planning TV ads for the SUV, which will hit dealers in the second quarter. Loren Angelo, VP of marketing for Audi of America, declined to reveal details, but says, "What we want to do is dispel some of the myths around EVs."
Range anxiety and lack of charging infrastructure are the top two consumer concerns limiting EV growth, according to an AlixPartners survey. But according to the Deloitte report, fears will fade with the next generation of battery electric vehicles, with new models capable of getting anywhere from about 250 miles to 620 miles per charge.
Audi says its e-tron SUV gets 160 miles after 30 minutes of high-speed charging. The brand touts a partnership with Amazon Home Services in which buyers can sign up to have an electrician install a home-charging unit. For e-tron buyers, Audi is giving away 2,000 miles worth of charges at sites run by Electrify America, which is building a nationwide network of such sites, expected to number 484 across 42 states by July. Audi parent Volkswagen formed Electrify America in 2016 as part of a legal settlement related to VW's diesel scandal, in which it had installed devices on diesel cars to cheat on emissions tests.
Environmental vs. practical
Electrify America is also shoveling millions of dollars into a brand-agnostic electric vehicle awareness campaign. The group earlier this month tapped San Francisco agency Eleven to oversee a 30-month, $62 million marketing effort that begins in July. Mike McKay, chief creative officer at Eleven, suggests the best ad approach is to lean in to practical points—such as the fact that most EVs today look like normal cars—rather than to play up environmental benefits. "Everyone is aware that the electric car is better for the planet. I think that job is done," he says.
Honda—whose goal is to generate two-thirds of its global sales from electrified vehicles, including gas-electric hybrids—also favors a practical approach. "A lot of it is just simplicity in the messaging," says Susie Rossick, assistant VP of Honda national and regional marketing.
Honda recently began an Electrification Education program that includes dealership point-of-purchase kits "so we have something next to the vehicle that speaks English, that doesn't speak technology," Rossick says. On its website, Honda runs a quiz to help people pick the right electrified car—a hybrid or fully electric one—based on factors like where buyers live. Currently, Honda only sells its all-electric Clarity in California and Oregon—where charging stations are widely available —while its hybrids are available nationally.
In the meantime, Hyundai is prepping a "green family" campaign that will debut later this year. It will combine Hyundai's multiple hybrid and electric models as well as its hydrogen-powered Nexo fuel cell SUV. "We feel that from an efficiency standpoint, a messaging standpoint, we've got to roll everything up into a family to show some breadth and width of the offering," says Dean Evans, chief marketing officer at Hyundai Motor America.
Volkswagen of America has yet to outline marketing details for its forthcoming EV onslaught, which includes a line of vehicles under its new I.D. sub-brand. "Given the importance of EVs to the brand, we plan to put significant dollars against marketing efforts," a VW spokesman stated in an email.
Crafting VW's EV marketing future was a key part of the automaker's recent global ad agency review. Last month, Johannes Leonardo was named the automaker's lead shop in the U.S.
In Texas, VW dealer Luciano says there's a lot of chatter about VW's I.D. Buzz, modeled after the classic Microbus. It won't hit the market until 2022. "I've been doing this 38 years and it's been a long time since I've seen the interest in a vehicle like I've seen with I.D. Buzz," he says. Once a skeptic about EVs, Luciano is now sold. "There are many people who will never drive them. But there are just as many people who think it is the only way to go."