EV test drives are supposed to boost adoption—but they can backfire

One of the biggest obstacles to wider adoption of electric vehicles (EV) is completely invisible and unquantifiable. It's the belief in many consumers' minds that the range restrictions of EV make it a bad option for them. Doubts about mobility, whether or not they are well-founded, can run neck-and-neck with curiosity in the minds of consumers, keeping them from making the switch from ICE (internal combustion engine) to EV.

These doubts are beyond the remedial reach of automakers and sustainability-minded policymakers. Within the EV ecosystem, auto dealerships are the ones most directly responsible for allaying buyers' concerns. Newly published research by Ioannis Bellos and Hang Ren, professors in the information systems and operations management area at Costello College of Business at George Mason University, focuses on one of the main levers at the dealers' disposal: extended test drives. Bellos and Ren's paper in Production and Operations Management was co-authored by Vishal Agrawal of Georgetown University.

Test drives have become a standard addition to the EV dealer's toolkit. For example, BMW's Extended Test Drive Program lets customers use an EV for several days, and Volvo's Test Drive+ lends cars for up to four days. In some cases, government-sponsored initiatives such as Drive Electric USA (a partnership with the U.S. Department of Energy) have worked at the local level to facilitate test drives intended to educate consumers about EV.

"A car's advertised range is public, but the range a driver actually gets depends on personal habits and conditions they can only learn through hands-on experience-which is why dealer demonstrations like extended test drives matter," say Bellos and Ren. In other words, test drives can prevent range-based doubts from overtaking curiosity. Indeed, if consumers are pleasantly surprised by their experience with the EV, they can leave doubt in the dust, as they zoom ahead all the way to an accomplished sale.

But it can also work the opposite way, as the researchers found using a game-theoretic model of plausible buying conditions. Included in the model were buyers with a range of mobility needs. In the hypothetical scenario, consumers' natural (pre-test drive) inclination was to favor EV if their needs were high, since high-needs drivers spend more on fuel and EV is gas-free. As in real life, however, even these simulated consumers would not purchase an EV if their overall impression was unfavorable.

"Offering demonstration service does not always mean that you'll be convincing the customer to switch to EV," Bellos says. "As a matter of fact, it may do the opposite-if the test drive convinces the customer that the achievable range is not enough to meet their need."

The reseachers' model shows that as EV technology begins to mature, becoming cheaper to produce and thus more profitable, the dealer's incentive is to offer as many extended test drives as possible to boost sales. But once production costs fall below a certain threshold, the profit potential of EV becomes so high that dealers would be wise not to risk turning a percentage of customers away (or toward conventional ICE vehicles) by offering test drives.

In addition to implications for dealer profits, this dynamic has environmental significance. "If we consider two customers-one who takes a test drive and decides EV is not a good fit, and another who is convinced to purchase an EV after a test drive-the net effect on adoption is zero. They cancel each other out," says Ren. "Yet the net emissions can increase, because that first customer probably drives more-that's the reason they were interested in EV in the first place."

Test drives, then, can be net-negative for the planet to the extent that they deter heavy-use drivers from switching to EV by resolving their range-based doubts.

The researchers also found that test drives can negate the impact of tightening CAFE standards from the U.S. Department of Transportation, which set mandated fuel-economy levels for all automakers. One result of CAFE standards is to encourage production of more fuel-efficient EV as opposed to ICE vehicles. CAFE does not apply to dealers, however. As higher fuel-economy standards pressure automakers to raise wholesale prices for ICE vehicles, the expected switch from ICE to EV is inhibited by the unfavorable impression left in some consumers' minds by the test drive. The researchers found this can flip the policy's intended effect: Without test drives, tougher CAFE standards reliably push EV adoption up, but once dealers offer test drives, a strict-enough standard can actually leave adoption lower than it would otherwise be.

Bellos and Ren conclude that "dealer demonstration is a powerful but double-edged lever that must be deployed strategically." The environmental and financial benefits of try-before-you-buy are likely tied to the EV market's growing pains, and may diminish as it matures.

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