There is a lot of buzz (sorry!) around how electric vehicle will soon make up a large share of vehicle sales. While customers seeking a new EV haven’t had a kit if options to date, the range of makes and models will be significantly expanding in the next few dozen months as car makers roll out new lines, including a 400+ mile range 4×4 electric pickup truck that comes with external power outlets and a built in air compressor.
Of the 17.3 million cars and trucks sold in 2017, about 1.2%, or 200,000 of them, were EVs. However, many dealerships appear to be less than enthusiastic about selling them, leading to poor buying experiences and possibly fewer EV total sales. There are multiple reasons for this, including a lack of knowledge and longer sales time, but one major one seems to be that since EVs require less maintenance than conventional vehicles, the dealership service departments stand to lose revenue.
While it might be a downside for dealerships, less maintenance is also one of the biggest selling points of EVs, which cost about one-third per mile to drive (electricity vs. gasoline) and have significantly fewer moving parts. But, since about half of car dealers’ revenue comes from their service departments, and vehicle service is about a $250B per year industry, more EVs could mean billions of dollars in lost service revenue.
Over the recent winter break, my sister and brother in law were looking to buy their first EV. Given their rural location and lack of EV charging infrastructure, they had their eyes on a plug-in hybrid, like a Chevy Volt. However, their experience seemed almost tailored to dissuade them. They went to five dealerships, with no luck. Responses from salespeople included:
“Noooooo! You don’t want one of those, that’s a dinosaur. Let me show you some cars you would rather have.”
“We don’t see those around here much, and frankly don’t want to look for one. We have one we get our mail with and it gets good mileage, but we’re not looking to sell one.”
And they are not alone in their experience.
Some carmakers, like Tesla, don’t sell through 3rd party dealerships – which allows them to cut costs, but also means that in some states, including Texas, you can’t buy a Tesla. If you want a new Tesla in Texas, you have to buy the car out of state and go pick it up, or have it delivered and then have the title transferred to Texas to get your license plates.
Currently, there are about 760 thousand EVs on US roads and roughly 3.1 million on the whole planet. Multiple forecasts have EVs making up the majority of total US car sales within a couple decades. China, which supplies more than half of the lithium-ion batteries worldwide that power most EVs, has doubled down on them and has nearly 500 companies dedicated to EV development. While US-based Tesla sold more units than any other individual EV company this year, China’s biggest EV companies together sold almost three times as many as Elon’s company.
The addition of more EVs will translate into a significant change in how we fuel our mobility. If all 3 trillion light-duty vehicle (the cars and trucks most people drive) miles driven in the US were driven by EVs, 170 billion gallons of gasoline and diesel would need to be replaced with over 1,100 TWh of electricity, an increase of nearly 30% compared to how much we currently use.
Even with this increased electricity use, EVs are still more than twice as clean per mile than gasoline powered cars. And as the electric grid gets cleaner, so do the EVs that are powered by that electricity. This, among other topics, is a focus of the current UT-Austin Energy Institute’s study The Energy Infrastructure of the Future.
If the demand for EVs materializes as the projections indicate, someone will sell them to us. As things currently stand, however, certain key players are resisting change for their own short-term self-preservation. Car dealers will need to change their current business model and figure out how to survive in an increasingly electrified world.
My sister was highly motivated to buy an EV, but couldn’t purchase one without driving to a larger city, many hours away. She ended up going with a gasoline-powered compact crossover SUV instead. Here’s hoping her experience won’t be the norm for too much longer.