Are car dealers slowing adoption of electric vehicles?
“Dealers don’t want to change the model. They want to be gatekeepers.” That’s according to Daniel Crane, a University of Michigan law professor who studies the laws and economics of car dealerships. He was quoted in A Washington Post Article Warns: “Electric Vehicles Hit a Roadblock: Car Dealers.”
Former Chevy salesman Buzz Smith tells the newspaper that selling electric cars can take longer (with multiple visits and questions about the technology and their chargers) — which actually reduces what the salesman earns per hour. But more importantly, he believes the pay structure for auto salespeople isn’t right for the electric vehicle era.
Electric cars have narrower profit margins, which reduces the commission a dealer can take, he said. If a customer returns to the dealership multiple times, salespeople may have to split the commission, again reducing their take-home pay. Meanwhile, car dealerships make most of their gross profits from servicing vehicles — not selling new cars. According to an analysis by the U.S. Bureau of Labor Statistics, only 16 percent of dealers’ total profits came from new vehicle sales, while 43 percent came from parts, labor and services. (The rest of the profits come from used car sales, financing, and incentives…)
This may also discourage dealers from selling EVs. Gas cars have 100 times more moving parts than electric cars, and studies show that electric vehicles have lower maintenance costs. For example, the average gas-powered car needs an oil change approximately every six months, or every 5,000 to 7,500 miles. But many electric cars don’t require major service until about 150,000 miles.
“They’re all terrified of losing maintenance,” Smith said.
One woman complained that after purchasing an electric car, her sales representative offered her “an oil change plan and an extended warranty for a gas car,” The Post reported.
But is there something bigger 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 mail “Many automakers now have to sell their cars through one of the country’s more than 16,000 authorized auto dealers,” he points out. “These salespeople often don’t have extensive training on how to sell an electric car or even on the technology itself.” ”
Frustrated customers told The Washington Post that dealers tried to redirect their attention toward gas cars, or provided incorrect or unclear answers to questions about charging and daily use of electric cars… Then there is the maze of federal and state tax incentives that can help drivers buy a car. New or used electrical equipment – but only if the dealer and consumer can understand how they work.
However, it appears that some dealers are unwilling to offer electric vehicles: according to a Sierra Club survey conducted at the end of 2022, 66 percent of dealers do not have an electric vehicle available for sale. It was at the height of EV supply chain problems, but 45 percent of those dealers — or 30 percent of all dealers surveyed — said they wouldn’t offer an electric vehicle even if they could. Amid concerns about electric vehicle slowdowns, electric vehicles are staying longer on dealer lots than gas-powered cars. According to data from Cox Automotive, dealers started the year with about 50 days’ supplies of gas and electric vehicles. Now the supply of gas vehicles is roughly equal, but the supply of electric vehicles has doubled.