The switch to electric vehicles provokes both glass-half-empty and glass-half-full reactions among dealers and the rest of the auto industry.
It’s safe to say that ambivalence will be a big topic of discussion as the nation’s new-car dealers gather in Las Vegas at the annual NADA Show and associated events, Feb. 1 to Feb. 4.
The glass-half-empty view has found new expression in the past couple of months, as new EVs pile up on dealer lots relative to cars and trucks with internal-combustion engines, and resale values for used EVs fall.
Owners representing thousands of dealerships sent the second of two open letters so far to President Biden on Jan. 25, asking the president to “hit the brakes” on the switch to EVs. The group calls itself “EV Voice of the Customer.”
“Since the first letter, the evidence continues to mount that these regulations go too far too soon,” says dealer Mickey Anderson, CEO of Baxter Auto Group, Omaha, NE., who says he organized the letter-writing campaign.
“Every day seems to bring new headlines about auto companies cutting electric vehicle production because of softening demand, rental car companies divesting of EVs and motorists stranded because they are unable to charge their EVs in the cold,” Anderson tells WardsAuto.
Separately, proposed legislation to oppose tougher EV mandates is making the rounds in Congress.
To be sure, there’s glass-half-full optimism, too, as electric vehicles’ market share climbs and dealerships make investments and take practical steps to prepare facilities and staff to sell more and more EVs.
This year’s NADA Show has workshops on the nitty-gritty of EV retailing, like high-voltage safety standards in dealership service bays, and how to price used EVs.
The dealer association used the last two NADA Shows, in Las Vegas in 2022 and Dallas in 2023, to promote the theme, “All In On EVs,” with banners, pins and frequent repetition in speeches.
In part, the intent has been to counter the notion – which has been pushed by some environmentalists and others – that franchised, new-car dealers were refusing to sell EVs, supposedly out of concern that EVs would require less maintenance. (In fact, experts say early data shows EVs are more expensive to maintain.)
This year, while a major portion of the NADA Show is devoted to EVs, the dealer organization won’t bother plugging the “All In On EVs” theme because it’s a foregone conclusion, says Jared Allen, an NADA spokesman.
“We’re not saying, not outwardly saying, we are ‘All In On EVs,’ because it’s obvious. We don’t need to say it out loud this year, because at this point, it goes without saying,” he tells WardsAuto.
Still, NADA acknowledges dealers have concerns, such as affordability, consumer incentives, charging infrastructure, utility capacity, resources for battery manufacturing and model availability.
“There are concerns across the entire auto industry that we just aren’t acknowledging that these factors are real and that they absolutely influence customer attitudes and decisions,” Allen says in a written statement.
In particular, dealers worry they could get stuck with too many EVs on their lots when there’s not enough consumer demand. Federal and state targets could require a two-thirds EV share or more of the U.S. market by 2035.
“It’s just not a practical purchase for most Americans,” says Anderson, the letter-writing dealer. Baxter Auto Group has a total of 20 dealerships in Nebraska, Kansas and Colorado.
Anderson says the first letter was signed by owners representing 3,882 dealership rooftops when it was sent to the president in late November. The second letter represents more than 5,000 dealerships, he says.
Signers include some of the nation’s biggest privately and publicly held dealer groups. The latter include dealerships for Asbury Automotive, AutoNation and Lithia Motors.
Anderson says the White House hasn’t responded, other than to acknowledge receiving the letter.
Anderson insists dealers have nothing against EVs per se; it’s just that in his view customer demand is too thin. “Our favorite car to sell is a car somebody wants to buy,” he says.
In a separate phone interview, Alan Haig, president of dealership buy-sell broker Haig Partners, Fort Lauderdale, FL., compares the “EV Voice of the Customer” letter to the fable about the boy who cries, “The Emperor has no clothes!” when all the adults refuse to state the obvious.
“An EV mandate is not what customers want, and it could be contrary to what a lot of governors want. But the manufacturers are afraid to say EVs are not going to be a significant part of the industry’s near future. They’ve been telling their investors the opposite,” Haig says.
“I think the dealers are really speaking up for the consumer,” he says.
Another dealership buy-sell broker, George Karolis, president of the Presidio Group, Duluth, GA, says he hears similar concerns from dealers.
“I’d say the average dealer today we talk to says essentially the same thing: ‘This was forced on us. The infrastructure is not there. There are certainly consumers that want them, but consumers are not driving the demand; they’re not driving the market as much as the legislation has done,’” Karolis says in a phone interview.
Even the OEMs acknowledge that the ramp-up in EV adoption is hitting bumps in the road.
For example, General Motors Chair and CEO Mary Barra says in a Nov. 29 conference call with investors, analysts and media that she’s “disappointed” with problems GM has had with battery module assembly, but she insists GM is sticking with its strategy of an all-electric future.
“Our strategy hasn't changed. What has changed is our tactics. And our tactics are changing to align with what’s happening in the marketplace,” Barra says.
Meanwhile, Anderson and other dealers cite familiar reasons why in their opinion EVs aren’t practical for most consumers: mainly price and infrastructure. There’s too much of a price premium for EVs vs. internal-combustion models, Anderson says, and in many regions of the country, the public charging infrastructure is inadequate and often unreliable.
“There are tremendous gaps” in the charging infrastructure, and many would-be EV owners don’t have a garage or a driveway for home charging, Anderson says. “And it’s widely reported the reliability is not great. As much as half of the charging stations are experiencing some sort of a disruption.”
As a result, Anderson says EVs are “piling up” on dealer lots. “Once, we had a yearlong wait. Now, we have a six-month supply,” he says.
Cox Automotive says EVs accounted for around 1.1 million new-vehicle sales in 2023, roughly 46% growth year over year. EV market share ended 2023 at about 8% in Q4, up from about 6.5% a year earlier. In the fourth quarter of 2020, it was around 2%.
EV sales have increased as more EVs are introduced. But the days’ supply for EVs is much higher than for non-EVs, according to Stephanie Valdez Streaty, director of industry insights for Cox Automotive.
“The EV market is growing,” she says in a recent webinar. However, “sales are anything but uniform.” EV sales are concentrated in California and another 13 states with emission regulations patterned after California’s.
Cox says there was a 113 days’ supply of EVs at the end of 2023, vs. 69 days for the rest of the industry. Days’ supply is an estimate of how long the supply of unsold new vehicles would last at the current sales rate if it were not replenished.
Not everyone is overly worried that EV demand is insufficient. Tyson Jominy, vice president of data and analytics for J.D. Power, says based on retail sales only, not counting fleet sales, Tesla had the top-selling passenger car in 2023, the Tesla Model 3, and the top-selling SUV, the Tesla Model Y.
“EVs seem to have this downtrend; everyone seems to be picking on them,” Jominy says in a Jan. 16 webinar hosted by the New York-based International Motor Press Assn. “I’m not seeing the same story everyone else sees.”
