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Home›Art Investment›The market share of newly registered electric vehicles is expected to reach 40% by 2031; Distinct buying patterns emerge for this group

The market share of newly registered electric vehicles is expected to reach 40% by 2031; Distinct buying patterns emerge for this group

By Roland Nash
July 20, 2022
4
0

Trans Union

TransUnion study compares buyers of electric vehicles and traditional internal combustion engines

CHICAGO, July 20 2022 (GLOBE NEWSWIRE) — The market share of newly registered electric vehicles is expected to increase from 5% at the end of 2021 to around 40% by 2031. A new TransUnion (NYSE: TRU) studyconducted in conjunction with S&P Global Mobility, revealed that the growing popularity of these vehicles will have a marked impact on the auto finance industry, as the credit risk profile of consumers who purchase them differs significantly from those who purchase vehicles traditional gasoline.

For the purposes of this research, only fully battery-powered electric vehicles (EVs) are included, not plug-in hybrids. Traditional internal combustion engine (ICE) vehicles include gasoline, diesel, and ethanol fueled vehicles. The study also considered luxury and mainstream vehicle types. About 76% of electric vehicles are classified as luxury compared to 16% of ICEs.

“Consumer interest in electric vehicles from Tesla, Ford, Nissan and others will only grow over the next decade, and meeting the unique demands of these buyers will become a business imperative for auto dealers and lenders,” said said Satyan Merchant, senior vice president. and Automotive Business Leader at TransUnion. “Our research clearly shows that EV buyers have excellent credit risk profiles, but this group also has varying preferences, including a greater appetite for financing vehicles through digital means.”

Electric Vehicle Buyer Credit Profile

The TransUnion study looked at the credit risk of EV and ICE buyers. The average credit scores of EV buyers — whether buying mainstream or luxury vehicles — were higher than those of all ICE buyers. In addition, EV buyers obtained lower interest rates for their car purchases. This is partly because they have better credit risk profiles and because they have lower loan-to-value (LTV) rates than typical ICE buyers. The loan to value ratio is a ratio that is determined by dividing the amount borrowed (including sales tax, title and license fees) by the total cost of the vehicle.

EV buyers typically have stronger credit profiles and larger down payments

car buyer

Average credit score

Average APR

Average LTV

Consumer ICE

735

4.3%

102.2%

Consumer EVs

775

2.8%

91.6%

ICE Luxury

769

3.1%

95.3%

Luxury EV

775

2.8%

88.8%

Controlling for credit quality, traditional and luxury EV buyers have lower severe defect rates than traditional and luxury ICE buyers. For example, the 60+ day overdue rate after 12 months for ordinary loans issued in 2020 was 0.72% for EV and 0.92% for ICE. For luxury vehicles in the same period, EV had a delinquency rate of 0.27% compared to 0.67% for ICE.

“It is clear that buyers of electric vehicles have a higher credit risk profile than consumers who buy traditional automobiles,” said Eric Kohn, study co-author and vice president of automotive business. of Trans Union. “In fact, credit performance as measured by severe delinquency rates for consumer electric vehicle buyers is more like traditional luxury buyers. This indicates that the overall EV market is both less risky for lenders and a more competitive market to secure consumer business. »

Electric vehicle buyers are making more purchases online

The TransUnion study also included a survey of 1,480 U.S. vehicle owners for their thoughts on electric vehicles and financing. The survey found that consumers who own or plan to buy an electric vehicle are more interested in online car buying and financing experiences.

More than a third of EV owners (35%) and those considering buying an EV (36%) research vehicle makes/models online, while this percentage has dropped to 28 % for all other vehicle buyers.

When it comes to understanding financing and monthly payments and realizing financing, there has been an even more dramatic shift in online usage for those who own or are considering electric vehicles compared to all other electric vehicle owners. cars. About 36% of EV owners said they go online to figure out financing/monthly payments, with 32% doing the financing online. For all other vehicle owners, the percentage going online to understand financing/monthly payments dropped to 24%, with only 16% doing financing online.

“Electric vehicle owners and buyers are much more likely to want to understand what they can afford online and they are more likely to want to arrange financing online. Online prequalification early in the buying process will help lenders attract more EV buyers. Therefore, end-to-end digital retail in partnership with dealerships will be critical for lenders,” concluded Merchant.

A quick guide to the study and information on what auto lenders can do to identify, target and capture electric vehicle consumers can be found here.

About TransUnion (NYSE: TRU)

TransUnion is a global information and knowledge company that enables confidence in the modern economy. We do this by providing an actionable picture of each person so they can be reliably represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call it Information for Good®.

A leading presence in more than 30 countries on five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.
http://www.transunion.com/business

Contact

Dave Blumberg

Trans Union

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[email protected]

Telephone

312-972-6646

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