The Gen Z EV equation

CURATED READS FOR GEN Z—AND THEIR Z-CURIOUS COLLEAGUES

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Brought to you by Liz Hilton Segel, chief client officer and managing partner, global industry practices, & Homayoun Hatami, managing partner, global client capabilities

first up

An image linking to the web page “The future of mobility for Gen Z in Europe” on McKinsey.com.

Welcome back! This week, we’re talking about Gen Z car ownership.

Last year, we dedicated an edition of this newsletter to Gen Z’s interest in driving, sparked by news that Gen Zers had been getting their driver’s licenses at a much lower rate than earlier generations. In the year since, one big idea (and common refrain) could help explain why Gen Zers aren’t getting behind the wheel of their own cars: Stuff. Is. EXPENSIVE!

Recent headlines about Gen Z’s economic well-being have often centered on the idea that Gen Zers can’t afford homes. Cars are the second-largest household purchase, so it’s reasonable to think that a similar story could hold true here. It’s getting more expensive to own and operate a car , up 13 percent in 2023 from the year before, adding a thousand bucks to an individual’s monthly expenses on average.

Budget limitations don’t mean that Gen Zers aren’t at least interested in car ownership—particularly electric vehicles (EVs). In Europe, half of Gen Z consumers said that their next vehicle purchase, whenever that happens, would be an EV. Still, a car’s purchase price is the top buying factor for half of Gen Z buyers, according to research from McKinsey senior partner Max Flötotto and coauthors. (And for all consumers, cost is the second-most-important decision factor when deciding between EV-charging options.)

The good news for Gen Zers interested in EVs is that prices could start to fall for a couple of reasons. First, the supply shortage that kept prices rising in both the new- and used-EV markets is starting to ease. Meanwhile, some global automakers are finding ways to sell EVs more cheaply than ever by controlling more of their supply chains.

Price isn’t the only thing holding Gen Zers back from buying cars, however. These consumers are generally less familiar with leasing options, according to the 2023 McKinsey Mobility Consumer Pulse Survey. More than half of Gen Z buyers said they would like to start an online car-shopping journey based on their budget considerations, the survey showed. The research also found that the opportunity to get a price quote and secure up-front vehicle financing online before choosing a specific car is among the top three disruptions to car purchasing today. EVs, meet EZ?

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