Brand Loyalty Takes a Backseat as New Electric Vehicles Hit the Market

As more car makers roll out electric vehicles, they are discovering an important trait among early customers: They are far more willing to try new brands. This is a great opportunity for new brands to enter the market and gain a foothold.

Kia Corp's 000270 stock has seen a nearly 80% decline in value.

The EV6 electric crossover has been popular with customers trading in non-Kia vehicles, according to research from Edmunds. 61% of EV6 buyers came from other brands, compared to an average of just over one-third for all Kia models. Ford's F-Series trucks remain the most popular vehicles in the US, with a market share of just over 41%.

According to Edmunds data, Mustang Mach-E electric sport-utility buyers had non-Ford trade-ins, compared with Ford’s 42% brand-wide average. This indicates that Mustang Mach-E buyers are more open to trading in non-Ford vehicles than the average Ford buyer.

Rivian Automotive Inc., a startup truck-maker, has seen its stock price drop 7.31%.

According to Tesla, its customers come from such a wide range of car buyers that those who purchase its trucks and SUVs, which start at around $70,000, are just as likely to own a $30,000 Subaru Outback station wagon as they are a $100,000 Porsche 911 sports car.

As traditional auto makers and startups compete for early adopters in the EV market, the insights gained from this research underscore the importance of this market. Tesla Inc. currently dominates this market, but as competition increases, it will be interesting to see how this landscape changes.

As supplies of electric vehicles (EVs) are limited, people who want to purchase one are shopping around at multiple brands.

As car companies race to introduce electric cars, they are feeling pressure from investors and tougher emissions rules. Strong demand for many early models has made it a priority for auto executives to get new EV models to market quickly.

"We're seeing a lot of trade-ins lately," said Beau Boeckmann, president of Galpin Motors Inc. in Los Angeles. "People are trading in all sorts of vehicles, from BMWs to commuter cars to trucks."

Even though car makers might only have a limited window to pursue EV buyers who are willing to shop around, Doug Betts, president of automotive at research firm J.D. Power, said that an influx of new plug-in models is coming to U.S. showrooms. Even though the selection remains relatively narrow, some EV buyers have little choice but to explore other brands.

"The EV market is still relatively new and undeveloped compared to the overall vehicle market," Mr. Betts said. According to J.D. Power, there are currently 53 EV models on the market or soon to be rolled out, compared with 625 overall vehicle models that will be sold in the U.S. in 2022.

Auto makers have traditionally relied on customer loyalty to maintain market share. According to research firm S&P Global Mobility, on average, about half of the people who own a certain vehicle brand return to buy another one.

Auto makers have long sought to increase sales by attracting buyers from outside their own brands. Car executives sometimes refer to so-called conquest vehicles, entries that are aimed at poaching a specific slice of a competitor’s customers. For example, when Ford released a new Bronco off-road SUV last year, many dealers said they were targeting loyal owners of the Jeep Wrangler.

As General Motors Co. prepares to roll out several new electric vehicles, it is counting on interest from new EV customers to boost market share. Executives have said they expect the influx of plug-in models to lift the popularity of GM’s brands in coastal areas, where electric-car sales are strongest but where GM historically has underperformed competitors.

EV buyers are willing to broaden their searches largely because of slim availability across the industry, said Steve Majoros, Chevrolet’s head of marketing. A traditional car buyer’s first consideration tends to be price, followed by manufacturer and model, he said. In contrast, EV buyers’ priority is purchasing an electric—their main concern is simply finding one, he said.

"The game is changing pretty significantly," Mr. Majoros said.

Jason Kint had trouble finding his EV of choice when he went shopping to replace his 10-year-old Chevrolet Volt plug-in hybrid car.

After reading positive reviews, Mr. Kint zeroed in on the ID.4 from Volkswagen and the Kia EV6. However, he had trouble finding either of these cars and ended up purchasing a Hyundai Ioniq 5 after a dealer in Long Island called to say that a sale had fallen through.

My friend was telling me about how he'd recently bought a Hyundai and how much he loved it. He said that he could see himself sticking with Hyundai for his next purchase if things go well. I have to admit that I was definitely still partial to Volkswagen at first, but after hearing my friend rave about his Hyundai, I'm definitely considering giving Hyundai a try.

All-electric brands like Rivian, Lucid Group Inc. and Fisker Inc. are looking to capitalize on EV buyers' willingness to switch to something new. These upstart brands are positioning themselves to take advantage of this growing market.

Rivian's CEO RJ Scaringe said last month that around half of the people buying the company's R1T pickup truck have never owned a truck before. He said that some of them are coming from small cars, station wagons, and even minivans.

According to J.D. Power, car companies that are able to attract early EV adopters could have a good chance at converting them into long-term customers.

According to a recent study, 64% of people who own an electric vehicle and who buy a new vehicle stick with the same brand, compared with the overall industry average of about 50%. This suggests that EV owners are generally satisfied with their current brands and are unlikely to switch to a different one.

Kia America Vice President of Marketing Russell Wager said that the company's recent influx of EV6 buyers bodes well for the future. In two or three years, he said, Kia will have a larger, three-row electric SUV and hopes to upgrade some EV6 customers to that vehicle. "That's how we keep them safe," he said.