Business Strategy and the Environment
Bus. Strat. Env. 10, 53–65 (2001)
MARKETING OF ELECTRIC
VEHICLES
Anita Gärling1 and John Thøgersen2,*
1
Chalmers University of Technology, Sweden,
2
Aarhus School of Business, Denmark
Substituting electric vehicles for
traditional ones could reduce local
pollution and greenhouse emissions from
the transportation system. However,
these societal benefits come at high costs
to the owner of the EV in terms of price,
driving range, availability, loading
capacity, speed and acceleration. In
addition, the usability of an EV is
hampered by the lack of an
infrastructure for recharging. Such a
product hardly sells itself to potential
customers. Besides supportive national
policies, skillful marketing is needed to
get it accepted and diffused throughout
society. This paper outlines a two-phase
strategy for the marketing of EVs based
on a discussion of current and expected
future characteristics of EVs and on a
review of research on early adopters.
Copyright © 2001 John Wiley & Sons,
Ltd and ERP Environment.
Received 24 February 1999
Revised 29 October 1999
Accepted 5 November 1999
* Correspondence to: Dr. John Thøgersen, Associate Professor,
Department of Marketing, Aarhus School of Business, Hasle-
gaardsvej 10, DK-8210 Aarhus V, Denmark.
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment.
INTRODUCTION
T
oday the world’s automobile popula-
tion is growing at a much faster rate
than the human population. In 1950,
there were about 50 million vehicles on Earth.
By 1994 the vehicle population had grown to
almost 600 million, and if the present trend
continue there will be over 3 billion vehicles
on Earth by the year 2050 (Sperling, 1995).
Besides granting vehicle users freedom, pri-
vacy and convenience, usage of the auto-
mobile also threatens our environment.
Particularly, by dumping increasing amounts
of carbon dioxide and other climate-altering
greenhouse emissions into the atmosphere,
internal combustion engine vehicles (ICVs)
cause severe harm to both environment and
humans.
To reduce the harms of automobile usage,
cleaner fuels have been developed and fuel
catalysts have been implemented. However,
these measures do not affect the emission of
carbon dioxide, the major contributor to the
greenhouse effect. Dealing with the problems
associated with the increasing number of ve-
hicles worldwide without curtailing peoples’
freedom of movement and choice – a basic
value of a democratic society – is one of the
greatest challenges of our time. Substituting
current automobiles with an environmentally
sounder fleet seems to be an unavoidable
element in a realistic solution. This could
either be done by increasing the efficiency
and reducing the emissions of ICVs, switching

to less noxious fuels or by finding less pollut-
ing propulsion systems (e.g., Sperling, 1995).
The first two alternatives seem most obvious
and closest at hand, but in practice disap-
pointingly little has happened in terms of
achieving environmental benefits along these
routes. This is one of the reasons why increas-
ing interest gathers around developing vehi-
cles with a less polluting propulsion system,
which could reduce local pollution as well as
greenhouse emissions from the transportation
system. However, compared to ICVs, current
electric vehicles (EVs) still have disadvantages
that make them less attractive. Current bat-
tery technology, not allowing unlimited driv-
ing ranges, relatively long recharging times
and high initial purchase prices are some of
the EVs’ major disadvantages. On the other
hand, fuel for EVs is inexpensive, electric mo-
tors last significantly longer than internal
combustion engines and motor maintenance
is minimal. If the full costs of current environ-
mental pollution were taken into account, EVs
would compare more favourably to ICVs.
Hence, an important challenge for marketers
and policy-makers wanting to create a global
market for EVs is to assure that the market is
adequately informed, not only about the dis-
advantages, but also about the advantages of
this new technology.
Seen with the eyes of a potential customer,
the EV technology is a new (and unknown)
propulsion system, which mainly removes
one of the many non-market disadvantages of
traditional ICVs (local emissions) and reduces
significantly a second (greenhouse gas emis-
sions)1. However, these societal benefits come
at high costs to the individual owner/user of
the EV: higher price, limited driving range,
shorter availability on a daily basis (due to
re-charge time), less loading capacity (because
of the batteries) and lower speed and acceler-
ation. In addition, the usability of an EV is
hampered by the lack of an infrastructure for
refueling (recharging). On top of this, the EV
does not solve other social ills connected with
private transportation: congestion, traffic acci-
dents and the need for a dense lattice of
paved roads.
1
Depending on how the electricity is produced.
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
54
A. GA8 RLING AND J. THØGERSEN
A product like this hardly sells itself to
potential customers. Hence, in addition to
regulation backing the EV, skillful marketing
is needed in order for it to be accepted and
diffused throughout society. A number of re-
searchers have published thorough studies of
national EV policies in Europe and North
America in recent years (Schot et al., 1994;
Kemp et al., 1998; Weber and Hoogma, 1998;
Truffer et al., in press). Studies facilitating the
development of appropriate national and in-
ternational policy for this area fulfill an obvi-
ous and urgent need. However, even if
appropriate policy suggestions aiming at sup-
porting the market acceptance of EVs are de-
veloped and implemented, the effort is in vain
if a skilled and committed marketing effort by
EV producers is lacking. Still, studies aiming
to stimulate and support policy development
by companies in this area are largely absent.
Designing a marketing plan that can make
the market accept the new product and ‘take-
off’ (Tigert and Farivar, 1981; Link, 1997)
requires knowledge and understanding of
both the characteristics of the earliest poten-
tial adopters, and of the new product itself
(Goldsmith and Hofacker, 1991; Hawkins et
al., 1998). In this paper, an outline of a two-
phase strategy for the targeted marketing of
EVs is developed, based, first, on a discussion
of the current and expected future characteris-
tics of EVs and, second, on a review of re-
search on the characteristics of early adopters
of new products. In this endeavour, we
focus solely on general issues that we judge
to be indiscriminately relevant for the market-
ing of EVs in (at least) all developed coun-
tries. EV producers, of course, have to adjust
their marketing strategies to the special char-
acteristics of the national markets where they
operate.
THE ELECTRIC VEHICLE
The world’s first EV was built as early as 1842
in Scotland. In this vehicle a rechargeable lead
battery served as energy source. In the years
around the turn of the century, EVs were in
their heyday. Of some 4000 automobiles
Bus. Strat. Env. 10, 53 – 65 (2001)
MARKETING OF ELECTRIC VEHICLES
produced in the United States in 1900, about
40% were steam powered, 38% electric and
the rest were ICVs. After that, however, bat-
tery technology stalled, while oil was inex-
pensive and abundant. The ICV then came to
rule the automotive world.
However, the invention of semiconductors
in the 1950s and the continuing improvements
in motors and controllers spurred some inter-
est in EVs in the 1960s (Sperling, 1995). At
about the same time the first regulation (the
Air Quality Act of 1967) toward vehicle emis-
sions was adopted, first in the state of Califor-
nia, USA, and then in the whole USA.
Commercial interests in EVs then initiated
some, modest, research and a converted ICV
running on silver-zinc batteries was displayed
at the 1966 auto shows. However, the imple-
mentation of the Air Quality Act of 1967 was
not very successful.
In the US Clean Air Act Amendment of
1970 a technology forcing strategy was imple-
mented to achieve desired reduction of vehi-
cle emissions. In this act, in contrast to former
acts, it was stated that the protection of health
of man and nature was the issue, not techno-
logical feasibility. Technical solutions simply
had to be enforced in order to meet this
position. Spurred by the oil crises in the 1970s
and the 1980s the investment in EVs took
another step forward. However, the major
investments in EVs started as a direct re-
sponse to California’s Zero Emission Mandate
in the 1990s. In this mandate, the California
Air Resources Board required that a growing
percentage of each major automaker’s sales in
California had to be zero emission vehicles.
The mandate covered automaker’s selling
over 35000 vehicles a year in California. In
2003, the threshold will drop to 3000 vehicles
per year, which will affect most auto compa-
nies except specialized companies such as
Rolls Royce and Ferrari. The required percent-
age of zero emission vehicles was set at 2%
for 1998, increasing to 5% in 2001 and 10% in
2003. Later, the requirements regarding the
make years of 1998 to 2002 were dropped
while the 10% requirement for 2003 was kept.
It is obvious from this that the current
regulatory motivation for interest in EVs is
due strictly to one concern – air quality. If
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
EVs were used instead of ICVs, this would
reduce urban air pollution, even if coal-fired
plants were to generate much of the electricity
(Wang et al., 1990). The EVs do, however,
offer other benefits that are often ignored.
One is the reduction in oil consumption and
thereby the dependence on oil exporting
countries. There is also a potential for lowered
greenhouse gas emissions, particularly if elec-
tricity from natural-gas plants, fuel cells or –
more importantly – renewable sources is used
(DeLuchi, 1993).
The future
The EV is, however, still burdened with a
major drawback working against an immedi-
ate full-scale implementation. The expensive
and not fully optimized battery technology
does not allow longer driving distances (Sper-
ling, 1995). Current lead –acid batteries, al-
though low in cost, are not satisfactory
because they last less than two years and
20000 miles and do not store enough energy
to power a full-size vehicle very far or fast.
Batteries such as nickel cadmium, nickel iron
and sodium sulphur are today not among the
most promising due to high cost, high operat-
ing temperature and high risk of corrosive
problems. Nickel –metal hydride and lithium-
based batteries, however, appear to be the
leading contenders for the 21st century, since
they have long life and are nontoxic.
Another promising option is fuel cell tech-
nology. A fuel cell is a device that transforms
hydrogen and oxygen into electricity and wa-
ter. No pollutants or greenhouse gases are
emitted during the transformation, the elec-
tricity is produced continuously onboard, the
driving range is almost the same as that of an
ICV and the technology is almost mainte-
nance free. However, fuel cells are still very
expensive and the reformer technology needs
more elaboration (DaimlerChrysler, 1999).
The future strategies are, however, some-
what worrisome. The goal today seems to be
to develop technologies able to compete head-
on with ICVs, but the question remains as to
whether individuals really are willing to pay
for this, or whether they would rather prefer
an EV with a shorter driving distance and a
cheaper price than an ICV.
Bus. Strat. Env. 10, 53 – 65 (2001)
55

INNOVATIVENESS AND THE
EARLIEST ADOPTERS
Obtaining a good match between product
characteristics and potential customers’ needs
and wants is crucial for gaining market ac-
ceptance of a new product. Rarely do all
potential customers readily embrace a new
product at once. Typically, market penetra-
tion starts with a small segment (Hawkins et
al., 1998) or niche (Schot et al., 1994; Kemp et
al., 1998; Weber and Hoogma, 1998; Truffer et
al., in press) consisting of customers with
particular characteristics, needs or wants.
When a foothold has been established in the
market, learning processes related to the core
product itself and to supporting technologies
and institutions accelerate, and supportive
social, political and institutional networks
crystallize, which may radically improve the
competitive position of the new product
(Schot et al., 1994; Kemp et al., 1998; Weber
and Hoogma, 1998). Hence, it is of tremen-
dous strategic importance for producers of
new products to correctly identify the cus-
tomer segment(s) that contain(s) the most
likely early adopters and to target their mar-
keting effort as effectively as possible to-
wards this (these) segment(s) from the outset
(Goldsmith and Hofacker, 1991; Hawkins et
al., 1998).
In his path-breaking contribution to re-
search on the adoption of innovations,
Rogers (1995, first edition in 1962) suggested
that innovations can be classified along five
dimensions and that the likelihood and rate
of adoption is determined by the potential
adopter’s perception of the innovation on
these dimensions. The five dimensions are
relative advantage (over the entity it su-
persedes), value compatibility (with the
adopter’s values, needs and experiences),
complexity (how difficult it is to understand
and use), trialability (can it be tested without
or with limited costs) and observability (in-
fluences the likelihood that others will adopt).
A number of studies have found that poten-
tial adopters’ perceptions of the innovation
on these dimensions are better predictors of
adoption than personality and demographic
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
56
A. GA8 RLING AND J. THØGERSEN
characteristics (e.g., Ostlund, 1974; Labay and
Kinnear, 1981). Still, personality and demo-
graphic characteristics may offer valuable
supplementary segmentation criteria.
A number of studies have striven to un-
cover personality traits associated with how
early an individual adopts an innovation (‘in-
nate innovativeness’). For instance, innova-
tiveness has been conceptualized as ‘a latent
underlying preference for new and different
experiences’ motivating a search for new
stimulation of the mind and/or the senses
(Venkatesan, 1973; Carlson and Grossbart,
1985; Venkatraman and Price, 1990). How-
ever, Gatignon and Robertson (1985) have
questioned that innate innovativeness exists
across the board. These authors found that an
individual’s degree of innovativeness is al-
ways dependent on product category and
their conclusion is ‘that there is not a general-
ized innovator across product category or in-
terest domains’. Accordingly, Goldsmith and
Hofacker (1991) defined ‘domain’ or ‘product
specific innovativeness’ as a tendency to
learn about and to adopt innovations within
a specific domain of interest. They also sug-
gest that even if it is possible to construct a
measure of a global innovativeness, at least
the measure of willingness to pay for adop-
tion should be concretized with respect to a
specific product concept.
Whether it is referred to as innate or do-
main specific, innovativeness is conceptual-
ized as a personality trait measurable in, for
instance, individual favourable attitude, per-
ceived benefits, willingness to sacrifice and
latent need before, or even without, actual
adoption. In line with this conceptualization,
individuals’ can be grouped depending on
their degree of innovativeness, i.e., on how
early in the diffusion process they are likely
to adopt an innovation. A third concept, ‘ac-
tualized innovativeness’, is a measure of how
early in the diffusion process an innovation is
actually adopted, i.e., it focuses on actual
adoption behaviour. Rogers (1995) define (ac-
tualized) innovativeness as ‘the degree to
which an individual or other unit of adoption
is relatively earlier in adopting new products
than other members of the system’. He pro-
poses a segmentation of the market into in-
novators, early adopters, early majority, late
Bus. Strat. Env. 10, 53 – 65 (2001)
MARKETING OF ELECTRIC VEHICLES
majority and laggards, with typical2 percent-
ages of 2.5, 13.5, 34.0, 34.0 and 16.0, respec-
tively (Rogers, 1995). This relative-time-of-
adoption definition focuses more on the dy-
namics of the diffusion process than on (more
static) individual predispositions.
Most earlier research has characterized the
earliest adopters, or the most innovative indi-
viduals, as less price sensitive, primarily be-
cause they are relatively high in social status
(high income, standard of living, wealth)
(Rogers, 1995). However, other studies have
questioned this. Link and Malm (1994) found
that individuals most willing to pay were not
the most prepared to adopt a new product
first and Goldsmith and Flynn (1992) as well
as Flynn and Goldsmith (1993) found no rela-
tionship between innovativeness and income.
Thus, if some highly innovative individuals
actually pay a high price for adoption, there
seem to be factors other than socioeconomic
characteristics behind their decision to adopt.
Other plausible factors might be a genuine
interest in trying new products, blindness to
prices or a snob effect (Link, 1997).
The hypothesized lower price sensitivity of
the earliest adopters also seems at odds with
their often found greater knowledge and com-
petence in product comprehension and evalu-
ation (Hirschman, 1980). The earliest adopters
are often found to be heavy users of other
products within the area of the target product
category (Gatignon and Robertson, 1985).
Therefore, it cannot be discarded that they in
general are competent enough to evaluate
even very new products (Link, 1997). Compe-
tence is an important determinant in price
perception (Rao and Monroe, 1988). There-
fore, the earliest adopters also should have
well developed internal reference prices based
on their knowledge and competence, which
might make them more, not less, price sensi-
tive (Link, 1997).
In general, products are evaluated in rela-
tion to other known products. A new prod-
uct’s price and benefits are compared to the
2
These percentages should not be taken to literally. It may be
reasonable to operate with more or fewer categories of
adopters, depending on the innovation, and the adopter cate-
gories may make up different proportions of the market, not
forming a nice bell-shaped curve (Hoyer and MacInnis, 1997).
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
prices and benefits of other products within
the individual’s evoked set, i.e. the alternative
products considered by the individual in the
adoption decision (Howard and Sheth, 1969).
Known alternatives thus serve as reference
points in the individual’s perception of a new
product (Monroe, 1990). The price a potential
adopter is willing to pay for a new product
is determined by the difference in per-
ceived quality between the focal product
and the adopter’s reference points (salient
alternatives).
ADOPTION OF ELECTRIC VEHICLES
Under the conditions outlined earlier, who
would be willing to purchase an EV? Vehicle
customers basically fall into two types: private
individuals and (public or private) organiza-
tions (or – as they are often referred to in this
connection – fleet operators). The latter are by
far the largest individual customers, but the
former make up the large majority of the
vehicle market in most countries. As we will
return to later, fleet operators form a market
segment with many desirable characteristics
from the point of view of EV marketing. In
various countries, postal companies, electric
utilities, public transportation companies, car
rental companies and even the military have
been among the first to test EVs (Knie et al.,
1997; Anonymous, 1998a; O’Donnell and
Oxfeld, 1998; Schulz, 1998; Morrison, 1999a,b).
Private individuals have approached EVs
more reluctantly. In 1990 the prediction was
that about 1% of the American population
would consider purchasing an EV (Buist,
1993). Three years later, Power and Associates
(1993) found that 6% of American house-
holds could consider purchasing an EV.
Kurani et al. (1994) found that 16% of a
sample of California households would
choose an EV over of an ICV. Gärling et
al. (1998a) found that the percentage of
interested households depends on the rela-
tive performance and price of the EV com-
pared to ICVs. With the most favourable –
but in no way unrealistic – characteristics
included in the study, almost 30% of a sample
Bus. Strat. Env. 10, 53 – 65 (2001)
57

of households from a large Swedish city could
consider purchasing an EV over an ICV.
Although these percentages are highly un-
certain and difficult to compare, the condi-
tions seem to change in favour of EVs.
However, the question is how EVs should be
marketed in order to attract potential cus-
tomers. Kurani et al. (1994) suggest that there
are many similarities between the introduc-
tion of the microwave oven and the EV. Be-
fore individuals were made aware (e.g.
through special cooking courses) that mi-
crowave ovens were complements of, not sub-
stitutes for, conventional ovens, acceptance
was very low, while it increased dramatically
afterwards. A product such as the microwave
oven is a ‘high learning product’, meaning
that to utilize its qualities individuals have to
make behavioural adjustments. Although
there also are obvious and important differ-
ences between the two products, the mi-
crowave oven and the EV have a lot in
common in this respect (Schot et al., 1994;
Truffer et al., in press).
We believe that the classification by Rogers,
(1995) of innovations along five dimensions
offers the most promising starting point for
segmenting the potential EV market and par-
ticularly for identifying early adopters. Hence,
we suggest that the most likely early adopters
are among those that perceive the balance
between advantages and disadvantages of
EVs as compared with ICVs most favourably,
perceive the EV as compatible with important
values and do not perceive it as difficult to
understand and use (i.e., not high in complex-
ity). A plan for marketing of EVs should both
target potential adopters holding favourable
perceptions and influence the perceptions of
these and other potential adopters in a more
favourable direction. Further, according to
Rogers classification, trialability and observ-
ability are two important characteristics of
EVs that should be used actively in the mar-
keting campaign.
Regarding demographic and personality
characteristics, some of the general traits of
the earliest adopters, unveiled by previous
research, may apply in this domain also (such
as being more educated, higher in experimen-
tation, knowledge and competence, being
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
58
A. GA8 RLING AND J. THØGERSEN
heavy users of similar products and having
the ability to understand the advantages of a
new product compared to old ones). Yet, due
to its unique combination of high costs and
visibility, which makes EVs (like other cars) a
high involvement product, we believe that the
earliest adopters of this particular new
product are best understood in terms of do-
main or product specific innovativeness
(Goldsmith and Hofacker, 1991). It seems rea-
sonable to assume that the most important
source of domain specific innovativeness is a
favourable perception of the EV along the
dimensions suggested by Rogers (1995).
MARKETING STRATEGIES FOR
ELECTRIC VEHICLES
The unique selling proposition for an EV is
that it has less negative impacts on the wel-
fare of other people and nature than an ICV.
However, the prospective buyer is required to
pay a high price for his or her good deed.
And since there are currently next to no pri-
vately owned EVs on the streets there is not
even a social norm backing the selling propo-
sition. The marketing of such a deal is an
uphill battle indeed. Given the current condi-
tions, there is not much hope that enough EVs
can be sold in the short term to cover the
manufacturer’s costs (Thornton, 1999) or to
make noticeable environmental or societal dif-
ference. Hence, it should be realized that a
marketing campaign for an EV is only com-
mercially defensible if a crucial assumption
holds true: that conditions will change radi-
cally in favour of EVs in the longer run. We
believe that this assumption is not too far
fetched, but that it cannot be taken for
granted either.
In order for such a change to happen it is
probably necessary that the learning curve for
EVs is considerably steeper than that for com-
bustion engine (including catalytic cleaning)
technology, leading to a rapid narrowing of
the present price/performance relationship
gap between the two technologies. It is also
necessary that no superior ‘third’ technology
for individual mobility is developed within a
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MARKETING OF ELECTRIC VEHICLES

Table 1. Technologies promising to improve the environmental performance of cars.

Technology CO2 Other emissions Cost Time perspective

Lean burn 8–12% reduction NOx increase 1–2% increase 0–3 years
Gasoline-direct-injection- 15–25% reduction HC and CO reduction, NOx 2% increase 1–3 years
petrol and lean burn increase
Variable intake geometry 10–15% reduction Reduction 2–4% increase 0–3 years
Turbo-direct-injection, 10–15% reduction 0 1–2% increase 0–2 years
diesel
Electric cars 20–60% reduction NOx reduction 100% increase Min. 5–10 years
Down-sizing 25% reduction Reduction 30–50% reduction Now
Best available technology 10–15% reduction Reduction 5% increase Now
Energy-saving tyres 1–2% reduction 0 0–5% increase Now
Better diesel 1% increase Particle and NOx reduction 1–2% increase Now (if required
by law)
Reformulated petrol 1% increase HC, CO and NOx reduction 1–2% increase Now (if required
by law)
Bio-fuels 10–50% reduction HC, CO, NOx and particle 3–5 times ordi- More than 10
reduction nary fuels years
Hybrid cars 10–15% reduction Reduction 10–20% increase 5 years
Catolytic retrofit 0 HC, CO and NOx reduction DKK 2–5000 1–2 years
increase

Source: Transportrådet (1997).

foreseeable future. Table 1 shows a recent
assessment of the most important of the com-
peting technologies, including EV technology.
According to this assessment, EV technology
offers the greatest promises for environmental
improvement, but also the longest time-lag to
cost competitiveness. Governmental support,
including subsidies or tax relief for EVs or
restrictions on the use of ICVs (Bernard, 1981;
Kemp et al., 1998; Weber and Hoogma, 1998),
can facilitate the process; it is probably even a
prerequisite for a successful marketing of EVs,
but it is hardly sufficient (or will hardly be
strong enough to suffice).
If faith can be had in a technological fore-
cast3 predicting a rapid narrowing of the
price/performance relationship gap, it makes
sense to plan a long-run marketing strategy
where the losses that are inevitably incurred
in the initial phase are recovered in the longer
run. Economies of scale and learning curve
effects depend on the volume of production4.
Getting many EVs on the market has the
added advantages of demonstrating the vi-
3 5
Which a responsible management would need to perform
much more rigorously.
4
For instance, nickel–metal hydride battery producer Pana-
sonic EV Energy Co. estimates that if it could increase produc-
tion fivefold it could slash its prices in half (Thornton, 1999).
ability of the technology to more reluctant
potential customers, creating positive word of
mouth (provided that the initial customers are
satisfied with what they get), and creating a
push for the establishment of the necessary
infrastructure. A successful market penetra-
tion strategy probably should include a fairly
low introduction price5 based on introduction
rebates or ‘learning curve pricing’ (Kotler,
1991), focusing first on achieving market ac-
ceptance by a few carefully selected segments
(Hawkins et al., 1998).
That hardly anyone buys a new car without
a test drive demonstrates the importance of
trialability for consumer choice in this market.
When the car is based on a new technology
whose most important limitations only show
up in relatively extreme situations, the inter-
ested first-time customer is bound to have a
desire to try the EV for an extended period
before final commitment. Hence, a generous
return policy or possibilities for leasing6 an
EV for a period before a final decision to
purchase it would help in bringing interested
This opinion seems to be shared by the large car companies
that have made the first serious attempt to build a market for
electric (and hybrid) cars (Thornton, 1999).
6
In the USA, GM has decided to only lease out their first EV,
the EV1 (Murphy, 1997; Dipert, 1999).

Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment Bus. Strat. Env. 10, 53 – 65 (2001)

59

Figure 1. Distribution of car stock on major owner groups in Denmark and Sweden: percentages
potential customers the last step from interest
to actually buying an EV.
The primary advantage of the EV is its
environment-friendliness compared to the
ICV. Hence, an EV is bound to appeal more to
potential adopters the more they value envi-
ronment-friendliness (see Truffer et al., in
press). However, it is also evident that the
private car is perceived as an important
lifestyle item in many other respects (Jensen,
1997), as reflected in the wide variation in
price, style, size and many other characteris-
tics of cars. Current EVs share most character-
istics with small, relatively fuel-economical
cars. Hence, car drivers who – for various
lifestyle reasons – prefer prestigious, sporty
or off-road cars are less likely to perceive an
EV as a satisfactory substitute.
Technology policy researchers have sug-
gested that the early phase of innovation dif-
fusion depends primarily on niche-specific
factors, while systemic factors are more influ-
ential in later phases (Weber and Hoogma,
1998). Consistent with this view, but from a
marketing perspective, we suggest a two-
phase strategy for the marketing of an EV. We
suggest that the following organizations and
private consumers (with some qualifications
which we will return to shortly) represent
particularly promising segments to be
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
60
A. GA8 RLING AND J. THØGERSEN
targeted in phase 1 of the marketing plan7: (i)
public sector organizations, (ii) ‘green’ compa-
nies and (iii) multi-car households whose
transportation need regarding the second car
is within the present generation of EVs’ tech-
nical capabilities and whose values and
lifestyle are compatible with owning an EV.
Evidently these segments all represent small
fractions of the (huge) total car market, but
we are confident that together they offer a
potential market well above the 2.5% of the
potential adopters that are typically assumed
to be ‘innovators’ (Rogers, 1995). As an illus-
tration, Figure 1 presents a rough estimate of
the relative size of various car customer seg-
ments in Denmark and Sweden (based on
Bilindustriföreningen, Bilstatistik, Gamlin and
Zeipel Kommunikation, 1998, and Trans-
portrådet 1997). Clearly, not all cars in any of
the three segments can be substituted with
current generation EVs. For instance, public
sector cars include police cars and company
cars include executive luxury cars. The reason
multi-car families are considered a promis-
ing segment is that some of the most im-
portant disadvantages of current EVs are re-
duced if the owner also has an ICV. Hence,
the number of cars owned by multi-car
7
On this issue we are in broad agreement with at least some of
the front-runners in the EV industry (Anonymous, 1998b).
Bus. Strat. Env. 10, 53 – 65 (2001)
MARKETING OF ELECTRIC VEHICLES
families strongly overestimates the potential
market for EVs in this segment. The propor-
tion of households owning more than one car
(12% in both Sweden and Denmark) tells
more about the potential size of this market
(but still is an overestimation due to the
value-compatibility problem). Single-car
households are of course the most attractive
segment in the car-market. A larger propor-
tion of these households than usually as-
sumed can cover their transportation needs
with current generation EVs (Gärling et al.,
1998b; Truffer et al., in press). Still, except
maybe for a few people that perceive environ-
ment-friendliness as the most important self-
defining concept, these households are likely
to perceive relying on an EV as too risky
under current conditions. Hence, the overall
marketing strategy for EVs should include a
marketing campaign targeted at the most
promising single-car households in phase 2,
when the technology has improved more and
demonstration effects from the successful
adoption by the segments targeted in phase 1
can be reaped.
The public sector
The public sector is a large fleet operator and
vehicle customer in most countries, both con-
cerning freight and person transportation. For
instance, the public sector owns about 3% of
the family-sized cars in Denmark and 2% in
Sweden (see Figure 1). A number of countries
also have official ‘green purchase’ policies for
public sector purchases (value compatibility).
The green purchase policies are now extend-
ing also to vehicles (CARB Mobile Source
Division, 1995), and if specific acquisition
policies for ZEVs (zero emission vehicles) are
decided, not only in California, but world-
wide, a large market for EVs will emerge.
Most vehicles owned by public sector organi-
zations are used for short trips and during
normal working hours, which makes this
market less sensitive to the technical limita-
tions of current EVs (relative advantage)
(Schot et al., 1994; Nesbitt and Sperling, 1998).
Many public sector organizations, though,
live within a tight budget constraint, which
makes it unlikely that they will voluntarily
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
pay a substantially higher price for an EV
than for a similar ICV. Hence, success in this
market segment depends heavily on it either
becoming mandatory for such organizations
to buy a certain percentage of ZEVs or that
EVs become price competitive (due to promo-
tional pricing or subsidies).
Green companies
This segment consists of private companies
with (a desire for) a high environmental pro-
file (value compatibility). There are no good
estimates of the share of companies that per-
ceive themselves as ‘green’. However, there is
much documentation that an increasing num-
ber of firms use ‘green’ arguments in their
marketing and even larger numbers are keen
to build a ‘green’ corporate image (Peattie,
1995). For companies wanting to bolster a
‘green’ corporate image, a non-polluting EV
has – at least potentially – a substantially
higher value than it has for the average per-
son (or company) (relative advantage) (Schot
et al., 1994). Like cars owned by public sector
organizations, many corporate cars are used
only for fairly short trips and only within
normal working hours. Hence, this segment is
likely to be less sensitive than private house-
holds to the functional deficits of EVs (relative
advantage) are. Of course, not all ‘green’ com-
panies perceive the promotional value of an
EV to be high enough to compensate for their
functional deficits and premium price. The
proportion of such companies finding the deal
attractive (and the share of their vehicle fleet
that they find it attractive for) depends on the
EV manufacturers’ price policies as well as
governmental support in the form of subsi-
dies and/or tax relief. As with the other seg-
ments, the proportion will increase with
further improvements in EV technology.
Multi-car households
The main reason why multi-car households
are considered a particularly promising mar-
ket segment is that EVs’ functional disadvan-
tages are assumed to be much less important if
the household has an additional ICV at its
disposal (relative advantage). Consistent with
Bus. Strat. Env. 10, 53 – 65 (2001)
61

this assumption, most studies of EV use by
private households in various countries have
found that a majority of these early adopters
own an ICV as well (Kurani et al., 1996; Knie
et al., 1997; Harms and Truffer, 1998; Truffer et
al., in press). However, the fact that the func-
tional disadvantages of an EV are less prob-
lematic for a multi-car household does not
change the fact that an EV is currently a
functionally inferior product at a higher price.
Hence, some sort of promotional pricing
is particularly important regarding this
segment8.
The multi-car segment has the disadvantage
that it is likely to contain some of the most
enthusiastic car-owners; people who are likely
to react strongly and defensively against ar-
guments meant to convince them about the
environmental menace of car-driving. Such
‘car-lovers’ are not likely to go for an EV,
even as the second car (value incompatibility).
However, this segment also contains house-
holds who own more than one car out of
need, because current work and living condi-
tions demand it. Some of these people may
even feel bad about having more than one car,
because they are concerned about the envi-
ronmental hazards of car-driving, and they
may welcome ways of relieving their bad
consciousness (value compatibility). However,
many in this segment are also bound to expe-
rience their transport expenses as a heavy
burden. Such families are likely to dismiss
further considerations about buying an EV if
it is more expensive than a similar ICV.
FROM PHASE 1 TO PHASE 2
The initial marketing campaign for an EV
could sensibly target these three market seg-
ments; the public sector, green companies and
multi-car households. Promotional pricing is
obviously a necessary part of the strategy in
most segments and, as already mentioned, it
is important that EV manufacturers realize
that it will take a while before they can expect
to earn a profit on EVs. As has been amply
8
This was confirmed by the Swiss Mendrisio experiment
(Harms and Truffer, 1998).
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
62
A. GA8 RLING AND J. THØGERSEN
demonstrated by many bankruptcies, without
rich and patient investors small companies
stand few chances of making it in this busi-
ness, in spite of high levels of creativity and
enthusiasm. Political support in the form of
subsidies or preferential tax treatment can re-
duce the loss and may even be perceived as
necessary for being able to reduce prices to a
competitive level, even with regard to the
mentioned target segments. Governmental or
other support for research and development,
infrastructure and market development may
also greatly influence the speed of maturation
of the EV market, particularly at the national
level (Mackenzie, 1997; Weber and Hoogma,
1998). Hence, a sensible long run marketing
plan for an EV should include tight coopera-
tion with governmental bodies, perhaps even
lobbying.
Successful marketing towards the target
segments of phase 1 is the key to successful
marketing of EVs to the wider public, particu-
larly the single-car households. Drivers of
EVs, at work or in private, will promote EVs
in their social networks (Darley, 1977/78;
Bernard, 1981; Darley and Beniger, 1981; Mur-
phy, 1997), provided they are satisfied with
the product. Also, by just being in the streets
the EV technology is demonstrated for poten-
tial customers outside the social networks of
initial drivers. This may raise curiosity and
interest. In addition, people who feel bad
about the negative environmental impact of
their car use are more likely to perceive that
there exists a social norm about changing to
an EV the more EVs they encounter.
Given the importance of word of mouth
and demonstration effects for long-run suc-
cess, it is crucial that EVs are not ‘over-mar-
keted’, particularly if this result in selling EVs
to people who are bound to get trouble with
them or in other ways become dissatisfied.
This has, at least, two important implications
(Murphy, 1997). (i) The selling of an EV in the
early phase should be based on thorough
scrutiny of the interested customer’s needs
and on information about both the pros and
cons of the EV. An interested customer whose
needs cannot be properly solved by an EV
should explicitly be advised not to buy one.
(ii) The EV offer should include measures to
Bus. Strat. Env. 10, 53 – 65 (2001)
MARKETING OF ELECTRIC VEHICLES
reduce feelings of uncertainty about whether
the driving range of the bought EV actually
covers desired driving range. Such measures
could be a generous return policy and/or a
service package including, for instance, free
leasing of an ICV once every second month or
so during the first years after purchase. Alter-
natively, EVs could be leased rather than sold,
which is currently GM’s preferred solution in
the USA (Murphy, 1997; Dipert, 1999). Simu-
lation of own vehicle use pattern by means of
a computer program could be cheap way of
reducing initial scepticism and might be suffi-
cient to convince the most interested con-
sumers that an EV is a possible solution to
their transport needs (Hoyer and MacInnis,
1997).
CONCLUDING REMARKS
The first two segments suggested in phase 1,
the public sector and ‘green’ companies, are
already targeted to some extent in some Eu-
ropean countries, but much more intensive
and systematic marketing targeted at these
segments is needed. An example of what
could have been (part of) a marketing cam-
paign targeted at government organizations
(but is rather a customer initiative) is demon-
stration projects including personal vehicles,
light duty vehicles and buses that are cur-
rently running in the three major cities in
Sweden. Similar projects have been run in
many other countries in Europe (Knie et al.,
1997) and North America (Morrison, 1999a).
In most cases based on their own and NGO
– rather than on producers’ – initiative, gov-
ernments of many countries also support EVs
in different ways, such as subsidies and/or tax
relief, preferential treatment of EVs in cities,
demonstration projects, research projects fo-
cusing on private use of EVs and battery
exchange programmes (in which changing in-
stead of recharging empty batteries is tested)
(Knie et al., 1997; Mackenzie, 1997). Many of
these programmes have the added advantage
that the EV at least to some extent is made
visible to the general public. Furthermore, ini-
tiatives such as these mean that the new tech-
Copyright © 2001 John Wiley & Sons, Ltd and ERP Environment
nology is tested in real-life situations and that
the further improvement of still immature
parts is stimulated. Hence, they should be
considered an important element of the mar-
keting programme for an EV, even though
they are difficult to plan and control.
From a societal point of view, targeting the
multi-car household segment is somewhat
precarious. The promotion of the EV as a
second car could, at least in countries where
the large majority of households still are sin-
gle-car households, result in an increasing
percentage of two-car-households with a re-
sulting increase in congestion and other traffic
related problems. If they are perceived as
promoting a multi-car lifestyle, the credibility
of companies marketing EVs as an environ-
ment-friendly alternative to the ICV will also
suffer. Hence, EV producers should not ex-
plicitly advertise the EV as ‘the second car’.
Instead they should attempt to position the
EV based on its differential advantages (docu-
mented environment-friendliness9 as well as
other advantages10) and rely on those value-
compatible consumers perceiving the relative
advantages most favourably (which we be-
lieve will disproportionally be multi-car
households) to be most receptive to this type
of advertising.
The next challenge for EV marketers, when
the phase 1 segments have been successfully
served, is the huge single-car-household mar-
ket. The marketing campaign directed to-
wards this segment will not be much different
from the one targeting multi-car households,
but the conditions will be more favourable.
Successful marketing depends, also in this
phase, on identifying the most likely first
adopters (in this segment), and again value
compatibility is crucial. No doubt, promo-
tional pricing and tax relief will still be impor-
tant in this phase, albeit to a decreasing
degree, and so is the opportunity of actually
trying an EV for a longer period than just a
test drive.
9
For ethical, legal and efficiency reasons claims about environ-
ment-friendliness should be specific and well documented
(Davis, 1992, 1993).
10
For instance, GM has chosen to position its EV1 as the car of
the future (Kelly, 1999), perhaps in an attempt to appeal to the
innovative personality.
Bus. Strat. Env. 10, 53 – 65 (2001)
63

The most serious barriers to ‘take-off’ for
the EV market are the current uncertainty
regarding the development of the EV technol-
ogy, car manufacturers’ and oil companies’
pushing of technologies to reduce the envi-
ronmental impacts of the ICV and insufficient
governmental support. Lack of consensus
about which EV technology to enhance may
extend the uncertainty and the same may
attempts by car manufacturers and oil compa-
nies do to defend ICVs’ market dominance.
More certainty about governments’ commit-
ment to support implementation of EVs on a
larger scale would surely help, as would more
restrictions for using ICVs in cities.
ACKNOWLEDGEMENTS
The research was financially supported by a grant from
the Swedish Communications and Transport Research
Board (No. 93-315-22). An earlier version of this paper
was presented at the 5th Workshop of the Nordic Busi-
ness Environmental Management Network: The Role of
Theory, Gothenburg Research Institute, Göteborg, 14 – 16
January 1999. We are grateful for helpful suggestions
from Sylvia Harms, Daniel Sperling and two anony-
mous reviewers.
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BIOGRAPHY
Dr. Anita Gärling, Associate Professor, De-
partment of Water, Environment and Trans-
port, Chalmers University of Technology,
SE-412 96 Gothenburg, Sweden.
Tel +46 31 772 2397.
Fax +46 31 189 705.
E-mail: Anita.Gerling@road.chalmers
Dr. John Thøgersen, Associate Professor, De-
partment of Marketing, Aarhus School of
Business, Haslegaardsvej 10, DK-8210 Aarhus
V, Denmark.
Tel +45 8948 6440.
Fax +45 8615 3988.
E-mail: John.Thogersen@asb.dk
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