Capture the Electric Vehicle Auto Loan Market. The electric vehicle (EV) market is booming, with a surge in consumer interest in sustainable transportation options. Over 2.3 million electric cars were sold in the first quarter, about 25% more than in the same period last year. We expect to see 14 million in sales by the end of 2023, representing a 35% year-on-year increase, with new purchases accelerating in the second half of this year. As a result, electric cars could account for 18% of total car sales across the entire calendar year (Global EV Outlook 2023 Executive Summary.) As more people switch to EVs, credit unions have a unique opportunity to capture a significant share of the auto loan market. How can credit unions position themselves as leaders in financing electric vehicles, taking advantage of the growing demand for eco-friendly transportation?
First, understand the EV Market:
By knowing this market, credit unions can better understand consumer needs and goals as they make car-buying decisions and build the benefits of an EV auto loan offer:
- Environmental Awareness: The global push for sustainability and ecological responsibility has increased interest in electric vehicles, which produce fewer emissions and reduce carbon footprints. Many consumers seeking EVs want to contribute to the effort to “save the planet.”
- Technological Advancements: EV technology has advanced significantly, resulting in longer battery ranges, faster charging times, and more affordable pricing. And don’t overlook the cool factor. Many EV buyers take substantial pride in their purchase and the cool new features in these cars.
- Government Incentives: There may be government incentives, tax credits, and rebates to encourage consumers to switch to electric vehicles, making them more accessible and affordable. Learn these incentives and become the subject-matter expert for your members to take advantage of all available when they purchase an EV.
- Lower Operating Costs: Electric vehicles typically have lower operational costs than gasoline, attracting budget-conscious consumers. But also, the credit union might consider different debt ratio guidelines for EV purchases, making the EV purchase more possible for some members.
- Consumer Demand: As consumers become more environmentally conscious and seek cost-effective transportation options, the demand for EVs continues to grow. Recognize this growth and develop a plan to capture the credit union’s fair share of the EV market.
Understand the Challenges in Capturing the EV Market
To capture the EV market, the credit union must address these challenges:
- Competition: Traditional lenders and specialized auto financing companies aggressively target the EV market, making competition fierce. Auto dealers may offer factory incentives such as lower interest rates or cash discounts. Consider focusing on the resale and refinance EV market to combat the dealer incentives. Also, consider that these factory/dealer incentives are primarily available to the “A” credit consumer. The credit union may find real potential for lending with the “B” and “C” members.
- Education: Many consumers do not fully understand the benefits and challenges of electric vehicles, making it essential for credit unions to educate their members about EVs and the financing options available. By becoming EV subject-matter experts, the credit union can distinguish itself as a source of this information. This might include providing links to educational blog posts on your website, social media, and print and digital advertising.
- Infrastructure: Access to charging infrastructure is still a concern in some areas, so credit unions should consider financing options for at-home charging solutions. A credit union might consider a package bundle for the EV loan and a charging station loan. This kind of offer could be an essential differentiator for the credit union.
Build a Strategic Marketing Plan to Capture the EV Market
Lending and marketing should collaborate to design a marketing plan focusing on the EV buyer. Here are some ideas to consider:
- Education and Promotion: Become EV subject-matter experts. This includes the branch and lending staff. Use conversations between the branch staff and lenders, social media, and blog posts to educate members about the benefits of electric vehicles and the financial advantages of buying an EV. These resources, webinars, and information can help consumers make informed decisions.
- Competitive Rates and Terms: Offering competitive interest rates and flexible loan terms for electric vehicle purchases can make credit unions an attractive choice for potential buyers. As mentioned above, consider a loan bundle with an at-home charging station.
- Collaborations and Partnerships: If the credit union is an indirect lender, consider partnering with dealerships to offer exclusive financing, giving members additional incentives to choose an electric vehicle.
- Green Loan Programs: The credit unions should consider using the EV loan as a gateway to holistic green loan programs that offer favorable terms for environmentally friendly purchases, including energy-efficient home improvements, solar panels, electric bikes, home solar storage batteries, and xeriscaping projects.
- Incentives and Discounts: Consider offering discounts on loan interest rates or other incentives for members who choose electric vehicles as a part of a sustainable lifestyle. These incentives and discounts could include solar, solar batteries, energy-efficient home improvements, and xeriscaping bundles. An EV loan package with a recharging station and a Home Equity Loan or Line might attract many EV buyers.
- Streamlined Loan Application Process: Simplify the loan application and approval process to make it quick and hassle-free, ensuring members can quickly obtain financing for their EVs. The EV buyer is typically a tech-savvy member, so a seamless, frictionless, and fast process will be vital.
- Member Engagement: Encourage engagement and feedback from electric vehicle members to continually improve the credit union’s EV financing offerings. The credit union could also provide charging stations at their branches.
The electric vehicle market is increasing, and credit unions can capture a significant portion of the auto loan market by catering to this eco-conscious, tech-savvy demographic. Credit unions can establish themselves as leaders in financing electric vehicles by offering competitive rates, educating members, and partnering with manufacturers and dealerships. Promoting sustainability and providing tailored solutions will attract new members and contribute to a greener, more sustainable future.