Your browser is not supported. Please update it.

6 September 2019

That EV revolution isn’t going to happen unless dealerships get on board

Cox Automotive, the owner of the Kelley Blue Book service, has published some data that illustrates just how far things have to change in the US before EV ownership becomes something that can be properly considered in grid overhaul plans. Of the polled dealerships, only 9% think that their automaker is exerting high pressure to hit EV sales targets.

However, comparing High Support dealerships with Lower Support ones, as defined by the Cox Automotive EV Study, it appears that if the automakers put the effort in, they could turn the boat around. Only 38% of Lower Support respondents think they are prepared for future EV sales, while the High Support outlet figure is 79%.

Currently, EV sales are low – estimated at around 5% of new cars sold monthly, 9% of certified pre-owned (CPO) monthly car sales, and 4% of non-CPO monthly sales. In the Cox study, used sales are not mentioned, but plug-in hybrids are said to be 3.5% of US sales, with fully-fledged Battery EVs (BEVs) also at 3.5%. In total, 46% of dealerships think EV sales will increase in the next two years, with 64% of the Luxury Dealers answering in the affirmative – and are also the ones who report feeling most automaker pressure.

But it seems clear that it is the automakers that must take action to shift more units, because 54% of dealerships see a lower return on investment for an EV sale, and so favor selling ICE cars. The perception of lower profits is hampering enthusiasm, with 24% of the 54% saying that EVs hurt sales of ICE cars – compared to just 8% of the 46%.

This suggests that those who are actually selling EVs are not experiencing the lower ROI. In addition, 49% of the 54% that expect lower ROI say that they are more likely to always sell ICE vehicles, while that number is just 31% for the 46% that don’t expect lower ROI due to EVs.

In terms of longevity, it seems that dealerships that are already selling EVs are going to be successful, while the ones that are opposed to them are going to need the most help shifting their attitude – with that 49% presumably believing that in their profession, they will always sell gasoline and diesel cars.

It’s not just the upfront sales price that has led 54% of dealerships to view EVs with skepticism. Because there are fewer components and moving parts, they require much less servicing work and routine maintenance, and so that post-sales channel is not available to the dealerships. In ICE vehicles, this is often a lucrative way to improve margins, but if there is little need for work on the EV in the first few years of its life, then that avenue is closed to the dealership.

Compounding the issue is a gulf between the kind of sales information that the buyers expect to be available in the dealership, and that which is actually available. Only 64% of dealerships think their salespeople have strong influence on an EV purchase decision, while the owners report this as being 74% – a slight difference, but one that shows how dealerships are underselling themselves. With more information available in the dealership, such as charging network maps, cost comparisons, or in-home charging installation deals, the dealerships could experience much better outcomes.

This gap is again seen when the dealerships are asked about the barriers to purchasing an EV. Both cost and charging concerns received a 79% response rate, while 70% of consumers cited cost as a barrier and 83% cited charging. So then, if the automakers step up and provide more support, it seems that a corner can be turned – but some 66% dealerships report receiving ‘Some to No’ sales and marketing support currently, and of those that are receiving support, only 32% say it is actually helpful.

A report from the California Center for Jobs and Economy illustrates how far things have to come in the US. Of the state’s target of 5mn EVs on the road by 2030, it has found that it is only around 11% of the way there, at 596,566 units. Oddly, it counts hybrids in this figure, and if you were to exclude those, the result is more like 6.7%. This is not good news, given that California has some of the most persuasive purchase incentives in the US.

Colorado has just adopted a similar Zero Emission Vehicle (ZEV) mandate as California, with a target of having 5% of all dealership lineups being EVs by 2023. Currently, just 2.6% of cars in the state are EVs, which is enough to put it among the best performing states in the country, but is hardly worth writing home about. The sales target grows to 6% in 2025, but it is still far too conservative.

As for how the US compares to other countries, the Nordics lead the globe. In terms of the percentage of new car sales, Norway clocks in at 49.1%, and is way out in front. Iceland is in second, on 19.1%, with Sweden at 8%. The Netherlands takes fourth, on 6.7%, and Finland rounds out the top five on 4.7%.

Notably, China is in sixth on 4.4%, but this actually represents some 1mn sales in 2018. The USA is in fifteenth, on 2.1%, but again, like China, this translates into rather a lot of cars – some 361,000 in 2018. For comparison, Norway’s first place finish actually only accounts for 73,000 sales.