Messaging the benefits of TVs will become more complicated.
Human rights and environmental challenges may soon sour EV sales. As EV producers scour the world for lithium and cobalt, not rare earth elements, and rare earth inputs, neodymium, samarium, terbium, and dysprosium, consumers are questioning the political-economic benefits of EVs.
According to the Wall Street Journal, “The first wave of buyers willing to pay a premium for a battery-powered car has already made the purchase…and automakers are now dealing with a more hesitant group.” Reading between the lines, price is not the only factor that defines the “hesitant group.”
No More Low Hanging Fruit
The wealthy liberal market is saturated.
Earlier this year, a Pew Research Center poll found that over half of U.S. adults are “not too or not at all likely to consider purchasing an EV, while another 13% say they do not plan to purchase a vehicle.” According to the same poll, the Americans who are more confident that the country will “build the necessary infrastructure are more likely than others to say they would consider purchasing an EV.”
But what if the “hesitant group” concerns go beyond practical reasons? What if they are also concerned about the impact of EV production on the environment and human rights? Challenges to our national security? There have been comparisons of mining for cobalt (a significant input for lithium batteries) to mining blood diamonds. Independence from fossil fuels may mean that we free ourselves from the political quagmire of the Middle East and instead find ourselves at the mercy of Chinese suppliers of graphite and lithium.
How will EV producers persuade potential buyers that an EV is better? At best, as the New York Times reports, the benefit of an EV on climate change versus a traditional gas-powered car is still a mixed bag. The overall positive impact of an EV will likely increase once advances are made in mining and electricity production.
So what to do to persuade the skeptical? For one, EV vehicles' prices must decrease dramatically, and the infrastructure must be built to support them. Both are underway. However, the political and human rights problems associated with sourcing critical components will not go away soon or may never.
There is Geo-Political Risk for EV and EV Battery Producers
Position yourself now with the right message.
Get ahead of the issue. Start developing support for a global process similar to the Kimberly Process that helped address sourcing “blood diamonds.” Only an international consensus on addressing the sourcing of scarce inputs will survive the human rights-driven criticism. The President’s Emergency Plan for AIDS (PEPFAR) initiated by President George H. Bush is an excellent example of how doing the right thing helped all parties, commercial and public.
An EV is not a trophy. It’s not meant to symbolize personal or professional success, but it does. Most of the ads we see today promote the image that an EV is parked in the garages of the rich. There is no context. EV producers might consider connecting the idea that owning an EV is part of a healthy, political, and environmentally conscious lifestyle. Finally, embrace the younger generations more likely to purchase an EV. They can be a powerful validator to the older generations who are skeptical.
Get a better sense of how our younger generations think about the most pressing issues of our day at In the Lime-Light, or visit us at Lime Rock Advisors to read more about how geo-political issues impact CEOs and leaders of not-for-profits.
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