Some vehicle dealerships in the United States are hesitant to carry or sell electric vehicles (EVs), but they shouldn’t be. The future will arrive whether people are ready for it or not, and it’s always better to be prepared.
Steady adoption
The adoption of EVs in the USA continues to be on a steady incline.
More and more people are looking for dealerships that sell EVs. If the dealerships stock them, the people will come.
Why the hesitancy?
Before considering why dealerships may be reluctant to focus on EV sales, it is worth noting how EVs are sold.
Unlike internal combustion engine (ICE) vehicles, which legally have to be sold via franchised dealerships, exclusive EV manufacturers, like Tesla, don’t have to follow this arrangement.
Tesla prefers to sell its vehicles directly to consumers – either from its showrooms or online – and other EV exclusive companies, like Rivian and Lucid, want to sell this way, too.
The major vehicle manufacturers; like Ford, Stellantis, and GM; still sell their EVs through the dealership model.
Now, let’s look at some reasons why these dealerships may be reluctant to carry EVs and why they shouldn’t be.
Perceived lack of consumer demand
It’s true that EV adoption in the United States started slow, but it has continued to pick up steam and will continue to grow in the future. According to a Car and Driver article, new EV registrations rose by a whopping 60% at the beginning of 2022, even though overall new vehicle registrations were down by 18%.
Part of the reason EV registrations are up may be due to the new types of EVs coming out. While EVs were often in the domain of small coupes in the past, many more full-size cars, trucks and even sports cars are now available.
The federal and many state governments are taking steps to make EVs more affordable for people via rebates and tax incentives, along with plans to install more EV charging stations and making it more financially viable for private enterprises to install them.
Demand will continue to rise in the future as the US pushes forward with its EV transition. It’s better to get on board now than wait and get left behind.
Salespeople lack specialized EV knowledge
EVs are drastically different from ICE vehicles; therefore, the people tasked with selling them will require knowledge about them. Consumers will want to know about their ranges, how and when to charge them, how the rebates and tax incentives work, where publicly available chargers are located, how to install a charger at home, and a whole host of other specialized knowledge.
There is an opportunity to train salespeople and get them up to speed on EVs so they can confidently talk about them. This isn’t 2012, where you may only get a single customer all year asking about EVs. More people are interested in learning about them and purchasing them now than ever before.
The National Automobile Dealers Association, which represents the thousands of franchise dealerships in the United States, has new products, services, and training platforms available to help dealerships educate staff about EVs so they can help the US with its transition from ICE vehicles to EVs.
Dealerships should help their salespeople become experts on EVs. The more they know, the better they will be able to help customers. Educating them now will ensure both the salespeople and the dealership are prepared for the EV future.
Blink Charging and our original EV charging equipment manufacturing partners have all kinds of training material to help educate anyone interested in EVs, including dealership staff. The more we all understand EVs and EV charging, the better off everyone will be.
EVs have less after-sale value to dealerships
In a letter to the editor of the LA Times, co-founder of National Drive Electric Week, Zan Dubin-Scott, claims that dealerships push customers towards ICE vehicles because “they make virtually nothing on parts and service” for EVs.
EVs have fewer moving parts and fluids, which leads to less maintenance. This is one of their main selling points. Less maintenance means people don’t bring their EVs in for servicing nearly as much as ICE vehicles.
While this may represent a lost source of revenue for dealerships in the form of ongoing maintenance, it is important to remember that the initial sticker price for an EV is often more than a similar ICE vehicle, which would help offset some of this lost maintenance revenue.
EVs also do require some maintenance, and dealerships may be able to price this in a way that would be comparable to the more frequent maintenance required for ICE vehicles.
EVs take longer to sell
In an article from way back in 2014, when the EV boom was still very much in its infancy, Green Car Reports stated that salespeople want to sell the most cars in the least amount of time to maximize their commissions. Therefore, they steer people toward ICE vehicles because most people (having grown up with them) instinctively understand ICE vehicles, while EVs require more time to sell.
Also, today’s buyers may know just as much – or more – than the salesperson, so if the customer has specific questions about an EV, other people may have to be brought into the sales process, which adds even more time to it.
Most of the vehicle buying public in the US in 2022 are still probably much more knowledgeable about ICE vehicles than EVs, so this argument likely still holds today.
In the article mentioned above, it says selling an EV takes three to five times more than selling an ICE vehicle (although it doesn’t say where that statistic comes from).
The world is evolving with its transition from ICE vehicles to EVs, and every aspect of the vehicle supply chain is going to have to evolve along with it. This means the way vehicles are sold will also have to evolve.
Dealerships may have to reevaluate how their salespeople are compensated. Tesla, for example, doesn’t just rely on commissions for its salespeople (which the company calls “advisors”). Rather, they make an hourly base pay with bonus incentives in place that may include company stock.
The company has also changed the way vehicles are sold. Advisors advise customers rather than pressure them into buying. (Hence the title.)
To be fair, Tesla’s way of compensating its advisors has changed over the years, and it hasn’t always been smooth. Still, the company is trying new ways to compensate the people who sell its cars and franchise dealerships will likely have to start testing new ways of compensation for their salespeople as the EV boom continues to flourish.
As mentioned, the future arrives whether or not people and businesses are prepared for it. Rather than shrink from the inevitable, franchise dealerships would be better served if they started to prepare for it and face it head on with an adaptability mindset.