Are car dealerships slowing adoption of electric vehicles?

by MMC
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“Dealers don’t want to change models. They want to be the gatekeepers.” That’s according to Daniel Crane, a law professor at the University of Michigan who studies the laws and economics of car dealerships. He is cited in a Washington Post article warning that “Electric Vehicles Hit a Roadblock: Car Dealers“.

Former Chevrolet salesman Buzz Smith told the Post that selling electric cars can take longer (with multiple visits and questions about their technology and chargers), reducing a salesman’s hourly wage. But more to the point, “he thinks the pay structure for auto salespeople is not fit for the electric vehicle era.”
Electric cars have narrower profit margins, he said, which reduces the commission a dealer can earn. And if a customer returns to the dealership multiple times, salespeople may have to split the commission, reducing their take-home pay. At the same time, car dealerships make most of their overall profits by providing vehicle services, not by selling new cars. According to a analysis According to the U.S. Bureau of Labor Statistics, only 16 percent of dealerships’ gross profits came from new car sales, while 43 percent came from parts, labor and service. (The rest of the profits come from used car sales, financing and incentives…)

It could also discourage dealers from selling electric vehicles. Gasoline cars have 100 times more moving parts than electric vehicles, and studies show that electric vehicle maintenance costs are lower. The average gasoline car, for example, needs an oil change approximately every six months, or every 5,000 to 7,500 miles. But many electric cars don’t require major maintenance until around 150,000 miles.

“They’re all terrified of this loss of maintenance,” Smith said.
The Post reports a woman’s complaint that after she bought an electric car, her salesman “offered her an oil change plan and an extended warranty for a gas car.”

But is there something more serious going on? Since the 1950s, dozens of states have passed laws protecting car dealerships, and many of these laws prevent manufacturers from selling directly to consumers. THE Job notes that now “many automakers must sell their vehicles through one of the country’s more than 16,000 franchise networks.” car dealers. And these salespeople often don’t have extensive training on how to sell an electric vehicle or even the technology itself. »
Frustrated customers told the Washington Post that dealers tried to redirect their attention to gas-powered cars or gave incorrect or unclear answers to questions about charging and daily use of electric vehicles… Then there’s the labyrinth of federal and state tax incentives it can help drivers afford a new or used electric vehicle – but only if the dealer and consumer can understand how they work.

However, some dealers do not seem to want to offer electric cars: according to one investigation that the Sierra Club realized at the end of 2022, 66% of dealerships did not have an electric vehicle available for sale. This was at the height of the electric vehicle supply chain problems, but 45% of these dealers – or 30% of all dealers surveyed – said they would not offer an electric vehicle even if they did. could. Due to concerns about the slowdown in electric vehicles, electric cars are staying on dealerships longer than gasoline cars. According to data from Cox Automotive, dealerships started the year with about a 50-day supply of both gasoline and electric cars. Today, the supply of gasoline cars is about the same, but the supply of electric vehicles has doubled.

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