Electric Currents

Here's What Car Dealers Need to Tell You About Buying An Electric Car

Oct 06, 2015

Cheap gasoline prices appear to be driving the sales of larger, less fuel-efficient automobiles over spring and summer in the United States, with sales of hybrids and plug-ins slumping to a five-year low of just over 3 percent of total U.S. car fleet.

But cheaper gasoline isn't the only reason for slower hybrid and EV sales. A new study by Roland Berger, in collaboration with Forschungsgesellschaft Kraftfahrwesen Aachen, also suggests that carmakers, themselves, and their dealers are also responsible, pointing out...

"The lack of coherent sales concepts is partly responsible for the weak sales figures. OEMs are not doing enough to win customers over to BEVs and PHEVs. Strategies are lacking for creating lasting incentives for dealers to sell low-emission vehicles."

It's no surprise that car dealers aren't all that excited about selling electric cars for a host of reasons from lower profit margins to fewer repairs. Tesla CEO Elon Musk has famously observed that he has no desire to set up franchise-like dealerships because of their lack of enthusiasm for the technology. Writing in an open letter to the people of New Jersey in 2014, he explained why Tesla is not interested in setting up third party dealerships:

"The reason that we did not choose to do this is that the auto dealers have a fundamental conflict of interest between promoting gasoline cars, which constitute virtually all of their revenue, and electric cars, which constitute virtually none. Moreover, it is much harder to sell a new technology car from a new company when people are so used to the old. Inevitably, they revert to selling what’s easy and it is game over for the new company."

Six months later, however, in the wake of Tesla's failed efforts to set up direct sales showrooms in Texas, the company's tone began to moderate slightly. As noted by the Consumerist, Elon Musk kept the door open for the possibility of using third-party dealerships someday, quoting him as saying:

"At some point we’d consider franchised dealers but we want to first establish a few stores of our own... It is hard to sell electric cars; it’s a lot more effort to sell it than a gasoline car. There’s a lot more education needed.

"We can transition later, if we find the right partner. We would only do this if we were sure the customer would have a really good experience. If you’re a jerk to us, we’re not going to turn around and try to do a partnership later.”

So, what would a third party Tesla dealership look like? Given Elon's comments about education, obviously, the emphasis would be on customer education by dealer staff. In particular, points out "Jeff", an EV World reader, the emphasis should be on answering three key buyer questions:

  1. What are the federal & state rebate/tax incentives in my location?
  2. What is the cost of installing a home charger?
  3. Where/what are charging location options in my town and cross country?
All three of which are easily found online, as another EV World reader (Jomamma) pointed out in a follow-up posting, to which I've linked in the above list. As Jomamma points out every EV and PHEV comes with a 110V Level 1 AC charger, which for many people will be sufficient for keeping their cars charged.

To this education process I would add cost of operation calculations and an intensive education on how to use the car's information system to get the best performance and range out of it. If the customer lives in a Time of Use (ToU) electricity rate community then you'd want to emphasis how to take advantage of lower, overnight electricity rates. And, of course, you'd want to help the customer determine if installing solar on their home makes sense.

If the customer lives in a multi-residential community like an apartment or condominium, more hand-folding is going to be required, and that can impact dealership profitability, but it's also the cost of doing business.

What other elements should the EV dealership of the future include? Share your thoughts below.

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