Otis Singleton
Electric vehicles (EVs) are becoming increasingly popular, with sales in the US rising. However, there is some concern that car dealers are slowing down the adoption of EVs. This is due to a variety of factors, including a preference for traditional gas-powered cars, a lack of understanding of EV technology, and the complex web of federal and state tax incentives. Dealers have also expressed concerns about the affordability of EVs for the average consumer, with high interest rates and steep entry prices being potential barriers to wider adoption. Despite these challenges, the EV market is expected to continue growing, with advancements in battery technology and an increasing number of consumers recognizing the environmental benefits of EVs.
| Characteristics | Values |
|---|---|
| Dealers' interest in selling EVs | Dealers are less interested in selling EVs than gasoline cars. |
| Reasons for less interest | Dealers face challenges with the sales model, inventory pile-up, and affordability issues. |
| Sales model | Dealers are resistant to changes that cut them out as the middleman. |
| Inventory pile-up | Dealers are dealing with an increasing number of EVs in their inventory, which are selling more slowly than gasoline cars. |
| Affordability issues | Dealers struggle to sell EVs due to high prices, with some models costing $45,000 or more. |
| Customer preference | Some customers prefer to buy EVs directly from the manufacturer, bypassing dealers. |
| Dealer tactics | Some dealers try to redirect customers towards gasoline cars or provide unclear information about EVs. |
| Dealer understanding | Dealers may not fully understand the benefits of EVs, such as lower maintenance costs due to fewer moving parts. |
| Dealer incentives | Dealers may be discouraged from selling EVs due to the complex web of federal and state tax incentives. |
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What You'll Learn
Dealers are steering customers towards gas cars
Electric vehicles (EVs) are facing a roadblock in the form of car dealers, who are steering customers towards gas cars. Dealers are trying to redirect customers' attention towards gas cars, providing unclear answers to questions about EV charging and use. This is occurring despite the fact that EVs are piling up at dealerships, with a supply of 97 days in October 2023, and selling far more slowly than their gasoline counterparts. This indicates that dealers are not offering EVs to customers, even when they are available.
A survey by the Sierra Club found that 66% of dealerships did not have an EV available for sale, and 30% of all dealers surveyed said they wouldn't offer an EV even if they could. Dealers are struggling to adapt to the changing market, with one law professor commenting that "dealers don't want to change the model. They want to be the gatekeepers." This is further supported by the fact that EVs are taking longer to sell, with former Chevy salesman Buzz Smith noting the multiple visits and questions about EV technology that can lengthen the sales process.
Affordability is another factor, with the average electric car sold for $58,683 in 2023, a steep entry point for many buyers. Dealers are facing challenges with the higher prices, as they struggle to sell cars that have depreciated significantly in value over time. Additionally, the complex web of federal and state tax incentives for EVs can be difficult for both dealers and consumers to navigate, further hindering sales.
The sales model for EVs is also evolving, with direct-to-consumer options like Tesla bypassing the traditional dealership model. This shift threatens the role of dealers as middlemen, prompting them to resist changes that could make EVs more accessible to consumers. Overall, while dealers ultimately sell what customers want, their resistance to change and the steering of customers towards gas cars is contributing to a slowdown in EV adoption.
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Dealers are unsure about tax incentives
Electric vehicles (EVs) are taking longer to sell than their gasoline counterparts, and dealers are unsure about tax incentives. Dealers are struggling to understand the maze of federal and state tax incentives that can help drivers afford a new or used EV. This is a problem when it comes to selling EVs because if the dealer cannot explain how the incentives work, it becomes harder to sell the vehicle.
In addition to this, dealers are facing a new type of customer. After several years of early-adopter interest in EVs, a more traditional shopper is becoming the norm. This means that dealers are having to adapt to new sales strategies, which can be challenging.
Some dealers are also facing issues with the price of EVs. Dealers are finding it difficult to sell EVs when the entry point is $45,000 or more. This is a steep price for many customers, and dealers are unsure how to convince shoppers to take the plunge. The high prices of EVs are causing dealers to lose customers to Tesla, which offers lower prices and a simpler buying process.
Furthermore, dealers are struggling with the fact that EV prices are dropping. A car that was $70,000 in a dealer's inventory last year might be worth $40,000 this year. This is causing frustration for dealers, who feel they are being forced to mark down their inventory.
Overall, dealers are facing several challenges when it comes to selling EVs. The tax incentives that are meant to help drive sales are actually creating confusion, and dealers are unsure how to adapt to the changing market and customer base.
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Dealers are reluctant to change their business model
Dealers are slowing the adoption of electric vehicles, and they are reluctant to change their business model. This is due to several factors, including a preference for traditional sales models, a lack of understanding of federal and state tax incentives, and the higher cost of electric vehicles compared to gasoline-powered cars.
Firstly, dealers have a financial incentive to stick to the traditional sales model. Electric vehicles have lower maintenance costs due to fewer moving parts, but they typically have a higher upfront cost. Dealers make more money from the sale of gasoline-powered cars with their higher maintenance requirements and associated services. The higher upfront cost of electric vehicles can also make sales more challenging, as dealers have to navigate a larger bid-ask spread, affecting their profit margins.
Secondly, dealers may be hesitant to change their business model due to a lack of understanding of electric vehicles and the associated tax incentives. A survey by the Sierra Club found that 66% of dealerships did not have an electric vehicle available for sale, and 30% of all dealers surveyed said they wouldn't offer an electric vehicle even if they could. Dealers may be unsure of how to advise customers on the maze of federal and state tax incentives available for electric vehicles, making it more challenging to close sales.
Additionally, some dealers may be actively redirecting customers towards gasoline-powered cars. This could be due to a bias towards traditional vehicles or a lack of training and understanding of electric vehicle technology. Dealers may also be concerned about the longer sales process associated with electric vehicles, as customers often have multiple visits and questions about their technology and day-to-day use.
The reluctance to change is also reflected in the sales strategy. Dealers are marking up prices and adding unnecessary options, which further discourages customers from purchasing electric vehicles. This is evident in the comments from frustrated customers, who feel they are being steered towards gasoline cars or given unclear answers about electric vehicle use and charging.
Overall, dealers' reluctance to change their business model stems from financial incentives, a lack of understanding of electric vehicles and associated incentives, and a preference for the traditional sales process. However, as the market demand for electric vehicles continues to grow, dealers will need to adapt to remain competitive.
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Dealers are facing affordability issues
Dealers are also facing issues with canceled reservations due to rising interest rates. For example, the CEO of Magic City Auto Group, a Virginia dealership group, said that they had a hundred-plus reservations for the electric F-150 Lighting, but by the time it was the customers' turn to order, interest rates and vehicle prices had increased, leading to fewer orders than expected. This is a significant issue for dealers, as it means they are left with inventory that they may not be able to sell.
The sales model for electric vehicles is also changing, and dealers are struggling to adapt. The traditional dealership model involves dealers acting as gatekeepers, but this model is becoming outdated as more and more customers become informed about electric vehicles and their benefits. Dealers are also facing issues with the time it takes to sell an electric car, as customers often have multiple visits and questions about the technology. This is in contrast to gas-powered cars, which are selling more briskly.
Overall, dealers are facing a number of affordability issues that are slowing the adoption of electric vehicles. These issues include the high cost of electric cars, markups, competition from direct-to-consumer sales, canceled reservations due to rising interest rates, a changing sales model, and the time it takes to sell an electric car.
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Dealers are struggling to sell non-Tesla EVs
The traditional dealership model is also a factor in the slow adoption of EVs. Dealers act as gatekeepers, and their salespeople may not be incentivized to sell EVs, especially if they require more time and effort to explain the technology to customers. Additionally, dealers are locked into franchise agreements with car companies, preventing them from pivoting to direct sales like Tesla.
The slow sales of non-Tesla EVs at dealerships are further evidenced by the growing inventory of EVs on dealership lots. In 2023, it took twice as long to sell an EV in the US compared to the previous year, while gas-burning vehicles continued to sell briskly. This trend suggests that dealers are indeed struggling to sell non-Tesla EVs, even as consumer interest in EVs grows.
However, it is important to note that the EV market is still expanding. Dealers will ultimately sell what consumers demand, and as EV technology improves and becomes more accessible, dealers will have to adapt or risk being left behind.
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Frequently asked questions
Yes, according to multiple sources, car dealers are slowing the adoption of electric vehicles. Dealers have tried to redirect customers' attention towards gas cars, or given unclear answers to questions about charging and day-to-day electric vehicle use. Dealers have also expressed that they are not interested in selling electric vehicles.
Car dealers are slowing the adoption of electric vehicles because they are hesitant to change their business model. Dealers also face challenges in understanding the federal and state tax incentives available for electric vehicles, which can make the buying process more complicated for customers. Additionally, some dealers have expressed concerns about the higher entry price point of electric vehicles, making them less affordable for some customers.
To address this issue, it is important to streamline the buying process for electric vehicles and provide clear information about available incentives. Dealers should also adapt to the changing market demands and offer electric vehicles that meet customer expectations. Additionally, addressing affordability issues and production cuts can help improve the adoption of electric vehicles.
