Big carmakers show they too can gain from the electric car shake-up

By Peter Valdes-Dapena, CNN Business

Startup automakers, like Lucid and Rivian, often make the point that, as Tesla has shown, electric car shoppers are open to trying new brands. What’s true for startups, though, is also true for big automakers like Ford, General Motors and Volkswagen.

For those long-established car companies, new electric vehicles are attracting customers who are not current owners of their brands, according to data from the automotive website Edmunds.com. That means electric vehicles are bringing in those always sought after “conquest sales.” These are sales that not only bring in revenue but that can, automakers hope, create new long-term customers.

If everything goes right, that is.

Among buyers of the new Ford Mustang Mach-E, almost 70% were not already Ford customers, according to Edmunds.com. For most Ford models, only 42% are trading in a non-Ford vehicle. For General Motors’ Chevrolet brand, the trend is similar. Among buyers of the Chevrolet Bolt models, 60% were new to the Chevrolet brand. For most Chevrolet models, just under half were not existing Chevrolet customers.

At Volkswagen, which sells far fewer vehicles in the United States than Chevrolet or Ford, the difference was smaller but still notable. Among those buying the ID.4 electric SUV, 72% were not current VW customers, compared to 60% of VW buyers overall, according to Edmunds.com.

Things seem to be similar for the new F-150 Lightning pickup, Ford CEO Jim Farley said in an interview with CNN Business last August. Among those placing deposits on the new truck, Farley said, 70% to 80% were new to Ford, and similar percentages hadn’t owned a pickup of any kind before.

So far, the sales figures are not enormous by the standards of major auto brands. Tesla still far outsells any of these automakers’ electric vehicles. In the first nine months of 2021, GM sold roughly 25,000 Bolt EVs and EUVs. (Due to a battery recall, GM hasn’t offered the Bolt for sale since late August.) Ford sold about 18,000 Mach-Es and VW sold 12,000 ID.4s.

The competitive brands people are trading in run the gamut from other mainstream brands like Toyota to, particularly for the Mach-E, luxury brands like BMW and Audi. Toyota was the most commonly traded-in brand although it still represented only about 10% at most.

Gaining new customers is good for any automaker. But the ultimate goal is to keep those customers when they’re ready to move on to their next vehicle. For customers who have purchased an electric vehicle, that’s probably going to mean another electric vehicle, said Tyson Jominy, vice president of data analytics at J.D. Power.

“They remain pretty loyal to EVs in general,” he said, of owners of vehicles like the Chevrolet Bolt.

The “conquest sales” benefits of having brand new SUVs won’t last forever, though, said J.D. Power’s Jominy. Eventually, new electric cars will just be more new cars, and customers will settle into familiar buying habits having, again, settled on their favorite brands.

And just as a carmaker reaps the benefits of customers trading in their old electric vehicles for new ones, that will mean a lower percentage of new customers. The Nissan Leaf provides a perfect example, according to Edmunds.cpm. In 2012, 80% of Leaf buyers were new to Nissan, according to Edmunds.com. In those days, the Leaf was nearly the only EV most Americans could buy, with Tesla just starting production of the Model S. Today, the Leaf has much more competition, and only 50% of its buyers are new to the brand, according to Edmunds.com. That’s largely because a lot of Leaf customers are now trading in their old Leafs for a new ones, said Ivan Drury, an industry analyst with Edmunds.com. (Nissan contested Edmunds.com’s figures, saying that 50% to 60% of Leaf buyers have consistently come from outside the brand since the model’s launch.)

The first challenge, then, is that automakers need to have other electric vehicles available for customers who are ready to move up to, say, something larger or more luxurious. Car shoppers, whether looking at electric vehicles or not, tend to be set on the sort of thing they want and an automaker that doesn’t have it will get passed over, said Michelle Krebs, an industry analyst with Autotrader.

“SUV buyers are going to buy SUVs, so is there another SUV EV that’s coming when their lease is up?” she said.

GM has more electric models coming but, in the short term, has no electric vehicles to sell at all right now. The Bolt EV and EUV have been temporarily pulled from the market while GM works to replace batteries in Bolts already on the road following an earlier battery fire recall.

“GM has committed to introducing more than 30 new EVs through 2025, leveraging our Ultium Platform, so we hope Bolt customers will stay with us as we work through the recall repair process and also continue to find EVs that fit their needs in the future,” said GM spokesperson Kelly Cusinato in an email.

The first and most important job, though, is making sure the customer is happy with the electric vehicle they just bought. Fortunately for GM, Chevrolet Bolt owners interviewed by CNN Business consistently said they were happy with the vehicle itself, despite sometimes overwhelming inconvenience from the recall.

The Ford Mustang Mach-E has also received critical acclaim and seems likely to create happy customers, said Drury.

“You’re not buying a Ford GT [supercar], but you are buying something they’ve put a lot of money into to succeed,” he said.

Beyond that, customers have to get a positive experience at the dealership, he said, especially those that might have traded a luxury car. They would have become accustomed to a level of service not often found at mainstream brand car dealerships.

“It can be jarring to some degree,” he said. “The hope is that the vehicle can make up for any disappointments.”

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