$473 billion Gen Z demands EVs, seamless connected car services and in-car payments - are automakers taking them seriously enough?

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Gen Z is the ‘future generation of technology decision-makers’, according to the CTA, the association representing the $398 billion American consumer technology industry that organises CES, the largest global technology showcase, with the automotive industry playing a greater role there each year, moving to its own dedicated hall in 2024. The Gen Z population, born between 1997 and 2012, already makes up more than 20% of the US population at 70 million people, outnumbering both Gen X (born between 1965 and 1980) and Baby Boomers (born between 1946 and 1964). With Gen Z drivers now classed as the car buyers of tomorrow, automakers must keep their priorities at the forefront when planning and implementing their connected services or risk losing significant sales to rival brands that offer better in-car experiences.

Gen Z is currently aged between 11 and 26 years old and will play an increasingly important role in shaping the cars we drive. These drivers now have $473 billion of purchasing power, according to Tracy Fred, senior vice president of dealer solutions at Cox Automotive, speaking at the 2024 NADA Show, and their influence on the new car market is only set to increase. 

Consequently, this is the key generation that automakers need to keep in mind when planning to grow market share in the coming years, with connected car services playing an increasingly influential role in convincing drivers to choose one brand over another. Gen Z consumers are predominantly considered ‘early adopters’ with a significant desire for new technology, owning on average 13 tech products, 94% owning a smartphone and typically using six devices daily for around 12 hours. 

Gen Z may only purchase a relatively small proportion of new vehicles today, but the cohort’s automotive importance is quickly growing, with younger drivers also playing an influential role in the purchasing decisions of family members with vehicle-sharing options heavily utilised. Gen Z drivers expect high-quality connected services, even in older models, so OEMs need to consider retrofit and OTA options for rolling out their services to nearly new and older models to start building brand loyalty among younger drivers - especially as this is the demographic that is the most open to purchasing subscription services and particularly important to OEMs looking to maximise revenue for the lifetime of the vehicle.

Low Gen Z driving licence levels reflect limited affordability, not reduced interest in driving itself

Despite headlines highlighting that US teenagers are driving less than previous generations, this is actually a reflection of reduced affordability due to the increasing cost of driving, rather than a lack of desire to drive and the liberation it provides, states Bloomberg. While in 1997, 43% of 16-year-olds and 62% of 17-year-olds had driver’s licences, these figures had reduced to just 25% and 43% respectively by 2022, according to Federal Highway Agency figures. 

As with Gen X and Millennials, however, the proportion of Gen Z driving is likely to increase as they get older and are better positioned to afford to own and run a vehicle. Around 90% of Americans aged 25-79 in 2022 have a driving licence and Gen Z will likely reach similar levels as it ages, moving into the 25-29-year-old age bracket and above. Additionally, Gen Z drivers will likely be looking for more high-tech vehicles at this stage in life, with in-car tech playing a significant role in vehicle choice with this generation accustomed to tech featuring throughout their daily lives.

Gen Z - ready for EVs, demands improved tech and is willing to pay for it

Gen Z’s readiness for EVs is growing faster than any other age group’s, with a 6 percentage point year-on-year increase seen in the 2023 JD Power US Electric Vehicle Consideration (EVC) study. This openness to going electric can also be seen in the 2023 Parkopedia Global Driver Survey, where Gen Z motorists typically have lower levels of concern about perceived barriers, such as public charging, range anxiety and charging costs.

Not only is Gen Z's interest in EVs increasing quickly, but Gen Z has an extremely high desire for new and improved technologies, taking pride in being early adopters, changing devices more often than older consumers and being happy to pay a premium for the best technology, according to the CTA Exploring Technology Preferences Among Gen Z report. Added to this, Gen Z consumers have more subscriptions than other generations - demonstrating the highest openness to making monthly payments for value-added services focused on convenience and safety. These younger consumers also play a significant role in influencing the tech purchases of others which should be a key consideration for automakers monetising the SDV with subscription models for their services while aiming to attract entire families and generations to their brands. 

The next decade will see Gen Z hitting 21 to 36 years old, moving through several substantial life stages, transitioning from children to adults, students to workers and offspring to parents, in time becoming household decision-makers. Technology is more essential to Gen Z than any other generation, according to the CTA report, with technology even making Gen Z consumers ‘feel good’ and this generation more likely to splurge on technology-based purchases than any other age group - provided quality, durability and features live up to expectations. Younger Gen Z consumers see even more value in technology, suggesting that this trend will continue as Gen Z gets older.

OEMs must prioritise valuable connected car services to address Gen Z expectations

New cars are packed with ever more connected car features, but a number of these offer no real value to most drivers, according to the TechInsights Connected Features Interest Report, such as in-car games and calendar management, which were the lowest rated, only of interest to a fifth of all drivers. 

As a result, OEMs can serve their customers better by prioritising the connected features that drivers truly want - typically driving-related features, such as parking or charging availability information, wanted by nearly 70% of drivers worldwide. This would enable OEMs to simplify their in-car interfaces and make core services, such as parking information - selected as the most important feature for Gen Z drivers - more accessible and easy to use.

US drivers aged 18-24 years old rank finding parking space availability information near their destination as their top connected car priority, as do those aged 35-44 years old, highlighting how crucial this functionality is to a large proportion of motorists. Young drivers are also the most interested in paying for tolls, fuel and parking directly from their vehicle, demonstrating that in-car commerce is a highly significant growth area for the future and is becoming an important differentiator upon which Gen Z drivers will choose which vehicle to buy and which brand to associate with if the service delivers and appears across the model range. 

It’s not just young American motorists who rate parking information as the most valuable connected car feature. European drivers aged 18-24 years old demand in-car parking information, with it also being the feature they’re most likely to choose to have and they value being able to pay for tolls from their vehicles even more than young US drivers. Parking is Chinese motorists’ most important connected car feature, too, with all age groups ranking parking as either their highest or second-highest priority.

US Gen Z drivers want to use in-car navigation to find and pay for parking and charging

Gen Z motorists don’t just value in-car parking information but also want to be able to pay for parking, charging, tolls etc. from their in-car media systems, demonstrating that younger drivers very much expect seamless in-car experiences, in particular for payment use cases. More than half of US 18-24-year-olds currently use in-car navigation to search for parking, according to the 2023 Parkopedia Global Driver Survey - a greater proportion than those who use a mobile application to do so. 

This is likely to reflect the fact that using third-party mobile apps can be very distracting while driving with limited usability compared with well-designed built-in connected car services. In addition, much of the parking and charging data available in phone apps is inaccurate, which is a particular deterrent for Gen Z drivers, who expect technology to simply ‘work’ when required and may not have the same ‘local knowledge’ as previous generations, for services such as parking and optimised route planning. Half of 18-24-year-olds also intend to use in-car navigation to search for parking in future, making it the most popular format again and it’s the same story with using in-car navigation to search for EV charging, which 55% of young US drivers intend to use in future.

More than this, 43% of US Gen Z drivers also want to pay for EV charging using in-car payments - the most popular option - with 25-39-year-olds and 40-54-year-olds also favouring in-car payment over other payment methods. Accurate in-car data and seamless transactions are valued by all age groups in the Global Driver Survey, though Gen Z drivers place the greatest value in EV Charging functionality - which enables drivers to find, navigate to and pay for parking and charging through their vehicle. A very high 93% of 18-24-year-olds worldwide want this functionality, which is higher than any other age group and the overall average of 84%.

Conclusion

Connected car services are undoubtedly more prevalent in vehicles than ever before. However, industry data suggests that the services and usability available still lag far behind what Gen Z consumers want and expect. With the quality of technology playing a very significant role in the buying or influencing decisions of Gen Z consumers, along with many older Millennials and Gen X drivers, OEMs need to be aware that putting valued, user-friendly services at the heart of their vehicle strategy is increasingly important as these generations get older and make up a larger share of the automotive market. 

While Gen Z drivers may only make up a small proportion of new car sales currently, now is the time for OEMs to win their loyalty via their connected and subscription services, showcasing the value they can add to the driving experience, with these offering OEMs significant potential new revenue and securing tech-savvy younger buyers by also making high-quality connected services available to existing models to increase this loyalty in future. 

In summary, it’s imperative for automakers to future-proof their vehicles if they are to succeed, potentially by rethinking the connected services included from new, how long these are supported and paid for by the OEM and making a greater range of retrofit or over-the-air updates available to existing models to cater to this valuable demographic. Find out more about Parkopedia’s seamless in-car services in our Products Section.