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Luxury brands can challenge Tesla

News, 26 September 2016

NEW YORK: Affluent consumers are more likely to buy electronic vehicles manufactured by "incumbent" high-end automakers rather than purchase a model made by Tesla, according to a new survey.

UBS, the financial-services provider, polled 9,400 people in six markets to determine their attitudes and preferences when it comes to battery electric vehicles (BEV).

And it found that for members of high-income households – that is, residences earning over $100,000 per year – between 41% and 52% would select an "incumbent" high-end manufacturer if buying a BEV, versus 20% to 29% opting for a Tesla offering.

Such a finding will offer encouragement to legacy automakers seeking to progress in this space, as high-end models are expected to be the first BEVs to gain significant traction.

"Given that we believe high-income households are more likely to purchase a Tesla, these results suggest that Tesla will face stiff competition as other premium OEMs [original equipment manufacturers] begin to launch their own EV models in 2018," Colin Langan, a UBS analyst, reported.

By contrast, when looking across the entire sample, between 13% and 31% of contributors cited a preference for legacy car manufacturers. This range stood at 20% to 44% for Tesla.

Additional findings showed that 54% of participants expect electric vehicles to be cheaper than traditional alternatives – an outcome at odds with current industry forecasts, which indicate BEV models will command a premium of between 11% and 20%.

Similarly, a clear gap separates the anticipated price of replacement batteries for BEVs among consumers and industry insiders respectively.

Consumers from the US, for instance, pegged this figure at a weighted average of $4,200, but the actual total is likely to be meaningfully higher in the short-to-medium term.

Data sourced from Street Insider; additional content by Warc staff