Analysis: The different preferences of early adopters and mainstream consumers could account for why sales are changing in Ireland - Dr. Fionn Rogan, Senior Research Fellow, Energy Policy and Modelling Group, MaREI Centre/Environmental Research Institute, University College Cork

Sales of battery electric vehicles in Ireland are down in 2024. For nearly every month since January 2024, there has been a reduction in the share and absolute number of battery electric vehicles sold compared to the same period in 2023. For example, in March 2024 battery electric vehicles (BEVs) sales were 1,884 (compared to 2,930 in March 2023) and were 13% of sales (compared to 19% in March 2023). Similar trends apply to second-hand cars.

Why is this happening?

When the Government removed the €2,500 grant for new plug-in-hybrid-electric vehicles (PHEVs) in January 2022, sales of PHEVs slowed and BEVs increased. This was the intended outcome. In July 2023, the Irish government reduced the grant for new BEVs from €5,000 to €3,500. While there wasn't an immediate impact, there is now a slowdown in sales of BEVs, whereas PHEV sales are increasing again.

The reasoning behind reducing the €5,000 BEV grant was to enable Government investment to prioritise public charging infrastructure. This was at a time when the number of electric vehicle models was increasing, their prices reducing and anticipation of price parity between petrol/diesel cars and electric cars was imminent.

What's the story globally?

Globally, sales of electric vehicles were up 25% during Q1 2024 . According to the International Energy Agency, 95% of EV sales in 2023 were in China, Europe and the United States, though this share is reducing as some of the fastest growth happens in Southeast Asia and Brazil. China’s increasing share of global sales means it now has over 50% of the global stock of electric vehicles (up from 0% in 2013).

In Europe, EV sales in Q1 2024 were up 5%. There is some evidence that 2024 growth is slowest in countries where grants were recently reduced (e.g. Ireland) or eliminated (e.g. Germany). In China, where many EV subsidies were removed in 2023, purchasing preferences have shifted slightly from PHEVS to BEVs, though it’s not clear how (or whether) these two trends are related.

Early adopters vs mass market

Many analysts have cited the difference between early adopters and mass market participants to make sense of the changes in growth rates and purchase preferences. The language of early adopters comes from Everett M. Rogers' 1962 book Diffusion of Innovations. Initial evidence for the diffusion of innovations came from studies of farmers adopting agricultural innovations and teachers adopting educational innovations. When the book’s fifth and final edition was published in 2003, the research field had expanded to include public health studies, popular music, the adoption of home energy technologies, the role of the internet in communications and many other topics.

Diffusion of innovations theory actually makes a distinction between five types of adopters: innovators, early adopters, early majority, late majority, and laggards. While studies have found evidence to distinguish these five categories, a number of scholars have simplified the five categories into two: early and mainstream adopters.

From CNBC's Squawk Box, former Ford boss Mark Fields on why mass market EV adoption is proving to be a lot harder than selling to early adopters

What does the theory and evidence say are the differences between early adopters and mainstream adopters? Studies point to differences in level of wealth; motivations; ways of getting information; level of peer influence; attitude to risk; comfort with unique or mainstream solutions; perception of benefits; and minority/majority positioning as being significant.

How this apply to electric cars?

As can be seen from the proliferation of articles about EV market trends, this distinction has (to borrow a term) gone mainstream. The characteristics of early adopters is quite a good description of those who've already purchased a BEV. The theory suggests early adopters are more likely to be wealthy (important for the higher upfront cost to date of BEVs). Their motivation is more likely to be driven by environmental concerns (e.g. reduced CO2 emissions).

They are more likely to actively investigate a diversity of sources (e.g. serious newspaper articles, talking to experts, using tools such as Lifetime Total Cost of Ownership, etc) to best inform their decisions. This gives early adopters confidence in their own decision making and they tend to be less influenced by their peers.

Early adopters tend to be more comfortable with a certain level of risk (e.g. range anxiety, sometimes having to queue at public charge points) and are happy with products or solutions that are unique or different to the mainstream (e.g. changing their re-fuelling routine to home instead of at a fuelling station). They perceive the benefits of their preferences strongly ("I love my EV!" "I’d never go back") and are comfortable being in the minority.

For mainstream adopters, their suggested characteristics also tally quite well with emerging trends for BEV purchasing. Mainstream adopters are less likely to be wealthy (thus perceiving the reduction of grants negatively). Instead of environmental concerns, they are more likely to be motivated by a need to comply with standards or simple economic decisions. For example, most taxi drivers I ask say they’ll buy an BEV when they’ve no choice. Mainstream adopters tend to passively acquire knowledge and information restricted to standard products (making them more vulnerable to false claims in advertising).

Mainstream adopters are more risk averse. The fact that many BEV models are relatively unfamiliar Chinese brands could be a liability, as could be the perception of an inadequete public charging network. Finally, mainstream adopters are more strongly influenced by their peers. This means change can be slow, but also, once a tipping point occurs, change can be very fast.

The different preferences of early and mainstream adopters could account for why EV sales are changing in Ireland. But is there any evidence for this neat theorising? Data on the share of sales throughout the year provides a clue. A strong established pattern in Irish car sales is the peak in sales in January and July, consistent with people maximising their resale value.

Until very recently, sales of BEVs did not fit this pattern: sales were often higher in later months of the year than in January. This suggests early BEV purchasers were less price conscious than the norm. However, this year, BEV sales patterns have started to approach the mainstream with a higher share in January.

While the diffusion of innovations theory does provide some insights, more research is needed to both test the theory for the Irish case and develop policy options that can successfully adapt to the characteristics of mainstream adopters. Watch this space.