Quick take: The thrill of passing gas... stations
Quick take: The thrill of passing gas... stations
Behavioral economics & using “anti-transaction utility” to drive EV adoption
I don’t experience paying for electricity
-me
Marketers and product owners are going to have a whole line of new tools to get people excited about the benefits of decarbonization… and I hope that a story about my experience will be thought provoking. A lot of electric or low-carbon products are going to just be… well… different than what they’re trying to displace (think of the old apocryphal chestnut about Henry Ford & the “faster horse”), and we’ll need new tools to get folks excited about them. Like driving past gas stations. And I wrote this BEFORE the gas shortage.
So what’s the story? I recently bought my first electric car. At this point, not a big deal. That doesn’t make me a super early adopter, since electric cars are nearing 15% of new cars globally, though a vanishingly small percentage of cars on the road today. I’ll tell you about it - though there’s no shortage of people commenting on Teslas - but the actual car I got has nothing to do with this article. The insight I had has to do with behavioral economics and the relationship between cutting coupons and not finding a wad of receipts in my wallet.
I can summarize my Tesla Model Y review in one sentence: It’s basically an extremely nice if possibly somewhat overpriced Honda CRV that is very fast, has a great technology stack, and doesn’t create nearly as much range anxiety as I was expecting. There, now you know what I think. But that’s not the part that surprised me - and what surprised me has nothing to do with it being a Tesla.
Key insight: Every single time I drive past a gas station, I find myself smiling
No gas. But here is the important thing for marketers of EVs: every single time I drive past a gas station, I find myself smiling. I get a sense of “I don’t have to pay for that thing called gas, and I couldn’t if I wanted to. If I pulled in there, I wouldn’t have any place to put the stuff they sell - or at least not any place safe.”
Not just because buying & burning gasoline emits carbon dioxide1, and I prefer not to. But I smile because I feel like I’m getting a freebie. Now I know that I’m not actually getting a freebie, I pay for the electricity to charge the car at home or at a supercharger. Lots of people have totted up the costs, and most places would say that at nearly any cost of electricity you can pay in the US the total cost of owning an electric car is less than an ICE (internal combustion engine) equivalent, but not substantially less - it’s surely cost-saving but it’s not like electricity is free.
However, here’s the subtle difference between energy sources: I don’t experience paying for electricity. At least i don’t when I plug my car in any more than I think about how much I’m paying when I turn on a light. (To be fair, I haven’t used super chargers or public chargers at all, except when I’m on a road trip). It’s not as though I have to feed quarters or my credit card into a slot to get the lights going or to charge my phone or my car2. But I did have the experience of putting my credit card in the pump every time I filled up my car, and I noticed it. So now that I don’t and can’t have that experience, I feel like I’m getting a little freebie every single time I drive past the gas station.
“Anti-transaction utility”? For economists, this is related to the feeling that coupon clippers get when they cut out a slip of paper from the Sunday paper. Coupon clippers even get a double thrill - both when they cut out the coupon and then when they redeem it. This is called “transaction utility” - it feels like beating the system when you hand over a coupon instead of cash. And the amazing thing is that retailers the world over have been manipulating this since the beginning of, well, retail. Richard Thaler won a Nobel prize for this, people who work in e-commerce make fortunes off this.
So why does this matter to EVs? Now when I drive past a gas station, I feel like I’m getting a deal. And in this case, I don’t even need to buy anything to get that feeling. In fact, the deal I’m getting is by not buying anything at all. All those gas receipts that used to accumulate in my cup holder or pocket? None. Every time I open my top drawer or my wallet, there are so many fewer receipts in there. Not that I minded pumping gas, but the feeling of not pumping gas is great. I’ll get used to it over time, and as EVs become more the norm. But having grown up in an ICE world, I don’t think I’ll ever forget the experience of going to the gas station weekly, and what it feels like not to go anymore. I’ve asked others (friends and strangers) who’ve recently bought electric cars, and this feeling is familiar and common.
Electric car manufacturers should be exploiting this - the “anti-transaction utility” of switching to electric cars. I’m not a sloganeer - I’m definitely not sure whether an image of a person smiling or saying “ah freedom” while driving past a gas station is a great idea. It might underscore the smug stereotype of a first generation EV owner so much that it’s counterproductive. But I’m sure there’s a clever way to do it3.
Whether this phenomenon is strong enough to translate to other categories remains to be seen. I’m not sure if “one less bill to pay” is enough to give most people a psychic thrill from switching from oil or gas to an electric heat pump. There are only so many categories where we buy high energy density stuff frequently and we might be able to switch to a different energy source. Maybe propane for my grill, though I only fill it up once a year.
If I was in the business of selling electric cars, I would be making a big deal out of the sensation of driving past the gas station. And I bet that those whose job it is to write slogans can come up with a much more clever (and less middle-school humor) turn of phrase. And that’s just one of the examples where clever marketers need to leverage the user experience of a renewable and low-carbon transition. Companies are just not going to be able to sell products that beat their high-carbon-intensity equivalents on every single aspect of performance and price - they will just perform differently in some ways, and marketers can & will need to find these blue oceans in which to sell these products as they understand them and establish preference. I don’t know yet if air source heat pumps will have an easier job maintaining a constant temperature or if they’ll allow you to keep your house colder because they’ll heat it up faster, but I guarantee they’ll do something different that people will like. And marketers can exploit some of it using the principles of behavioral economics, like transaction utility. Or anti-transaction utility.
Keep an eye out for me, driving past the gas station. Except when I’m in our other car, which uses gas. I notice that a lot more now.
Did you know that burning a single gallon of gas emits nearly 20 pounds of CO2? Burning 100 gallons of gas amounts to a ton of CO2 in the atmosphere? Surprising right? But it’s because each carbon atom (C) in the gasoline bonds with 2 oxygen atoms (that’s the O2), and each oxygen atom is heavier than the carbon atom, and the result is a lot of weight/mass of CO2. If you want the details, here’s an explanation for kids from NASA.
Though it’s not that many decades since in England in some multi-occupant flats you had to put coins in your gas meter to get heat out of your radiator.
If I were really cynical, I might turn Ford’s old “It’s not just your car, it’s your freedom” on it’s head and have a “It’s not just your (electric) car, it’s your freedom (from pumping gas)” campaign, but I think that’s one tick too clever to go beyond a niche audience.