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Auto Dealers Wake Up To The Impact Of EVs On Their Lots

Carolyn Fortuna

Jul 13, 2023

Most dealers have reconciled themselves to the fact that EVs are important to the growth of their dealerships. Now they need to come up to speed on what it means to own an EV so they can be gentle guides for a whole new consumer base.

Dealers look out onto their showrooms and now see EVs joining their inventories. With the additions come pressure to turn over supplies — in late June, 2023, the days’ supply of EVs was over 100, whereas industry-wide inventory levels were closer to 53 days. The impact of EVs on US auto dealerships has never been more keen than right now.

EV sales keep growing. Global plugin vehicle registrations were up 70% in April 2023 compared to April, 2022; plugins represented 14% share of the overall auto market. By June, the average price paid for an EV was down nearly 20% year over year.

A confluence of effects is creating buzz in the EV world.

  • New battery production facilities are popping up around the country, inspired partially by government incentives.

  • Automakers are retooling their factories in order to support EV production.

  • The United Auto Workers will be negotiating their labor contracts later this year, with EVs as a core topic of common interest.

  • Consumer interest in EVs is at an all-time high.

A June, 2023 Cox Automotive survey shows trends continue to place EVs in an increasingly favorable light.

For example, 91% of consumers who walked into a showroom had pre-selected their vehicle of choice. Fewer consumers than ever are concerned about battery replacement costs (27%) or lack of charging stations in their area (32%). The most significant data point shows a dramatic increase in consumers who are considering an EV purchase within the next 12 months: 51% vs. 38% year-over-year (YoY).

While 53% of consumers agreed that EVs will eventually replace traditional ICE-powered vehicles, dealers were more cautious, with only 31% agreeing on an all-EV future. In fact, 45% of dealers feel that EVs have yet to prove themselves in the automobile marketplace.

Despite concerns, 57% of dealers seem to have reconciled themselves to the fact that EVs are important to the growth of their dealership. The majority expect to integrate them in less than 2 years. Perhaps that expectation of EV growth and importance derives from the fact that 82% of dealers are now required by their OEM to make an EV investment.

Meanwhile, dealers need to learn more about battery lifecycle, battery health, and overall servicing of an EV, according to the Cox Automotive survey. 63% of dealers are slightly or or not at all familiar with battery diagnostic tools.

The key takeaways from the survey are:

  • EV consideration is growing more rapidly than sales: While 51% of vehicle shoppers now indicate they are considering an EV, the EV share of total sales in the US in 2023 is anticipated to be less than 8%. Affordability continues to be the top barrier for many shoppers.

  • There’s a large gap in EV readiness between consumers and dealers: Consumer adoption of EVs is expected to grow as more models hit the market, but dealers are not yet prepared to support an influx of customers in sales or service.

  • Support from OEMs is needed to close the readiness gap: Dealers are thirsty for EV information to ensure they are the go-to resource for customers and look to OEMs for guidance in learning more about EVs, specifically in the areas of charging and batteries.

  • Sales will come, but equipping dealerships with EV servicing capabilities is crucial in the near term: The likelihood that an EV buyer has made the purchase decision before visiting a dealership is high. Still, current owners prefer dealerships for servicing and maintenance, where over half of dealers are not fully prepared.

Cox Automotive concludes that EV sales growth and filling the gaps in infrastructure to support EV mobility continue to be the industry’s leading story.

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