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When news about electric cars first broke in early 2016, Michael Young, a self-proclaimed “car guy,” knew he wanted to try one. One afternoon he strolled into his local BMW dealer and asked to test drive the BMW i3, a small, sporty car with a range of up to 150 miles. The salesman stopped him. “You can’t drive this car on the highway,” Young recalls the salesman saying the car couldn’t go faster than 45 miles per hour.
“That kind of amazed me,” Young said.
Young knew it could be much quicker – and after convincing the salesman to let him take it for a test drive, I ended up buying the i3. This experience motivated him to start a website that helps consumers shop for electric vehicles.
But the incident highlights a problem that still plagues electric vehicles: Many U.S. buyers say car dealerships, which sell most new vehicles, are unprepared for the transition to electric mobility. The Biden administration aims for up to two-thirds of new cars sold in the U.S. to be electric by 2032; And Automakers have invested hundreds of billions of dollars in electric vehicles. But if car dealers don’t want to sell electric vehicles, the country’s electric transition could be at risk.
Car sales are unlike any other commercial transaction in America. You can buy most products—everything, including shoes and iPhones—directly from the manufacturer or at dozens of other stores. It used to be the same with cars: before the Second World War, people bought private vehicles in large department stores, from the manufacturers themselves and even at gas stations.
But in the 1940s and 1950s, car dealerships—most of which were single-family businesses—argued that powerful automakers could undercut their sales and drive them out of business. Over the next two decades, dozens of states passed laws to protect dealers; Many of them prevented manufacturers from selling directly to consumers.
In recent years, Tesla, which does not use car dealerships, has challenged some of these laws in court. The company has won in some states and received workarounds in others that allow some select storefronts. Still, many automakers must sell their vehicles through one of the country’s more than 16,000 franchised car dealers. And these salespeople often don’t have extensive training on selling an electric vehicle or even the technology itself.
Frustrated customers told The According to the Washington Post, dealers tried to divert attention to gasoline cars or gave incorrect or unclear answers to questions about charging and daily use of electric vehicles.
James Richards, CEO of a water heating company in Davis, California, spent days testing electric vehicles at Volkswagen, Tesla, Chevy and Ford. But the 40-year-old found the experience at the dealership “terrifying” – the dealers didn’t seem to know much about the electric vehicles they were selling. “I felt like I knew more than they did,” Richards said.
Richards originally hoped to purchase an F-150 Lightning, but the truck was backordered. The seller could only get him expensive equipment that came with a high dealer markup. That serve added “insult to injury,” Richards said. He ended up buying a Tesla Model Y. Tesla salespeople “seem like electric geeks,” Richards explained. “All the other dealers: Ford, VW, the GM people – they didn’t seem to be specialists.”
Maya Batres, a 34-year-old consultant for an environmental organization, bought a used Fiat 500e from a dealer in February 2022. The dealer, she said, didn’t know much about electric vehicles but was happy to complete the sale because she and her husband were prepared. But when it came time to sign the papers, the salesman offered her an oil change plan and an extended warranty on a gas-powered car. “I knew we didn’t need that,” Batres said with a laugh.
Which electric vehicle is right for you? Check out our guide.
Electric vehicles are complex. There are three types of charging ports and three different charging speeds for electric vehicles. (Young remembers a salesman telling him he could use Tesla’s charging network for a non-Tesla vehicle long before the company began opening up its fast chargers to other cars.) Electric cars are also often equipped with new features like One-pedal driving and adaptive cruise control equipped. Then there are the maze of federal and state tax incentives that can help drivers afford a new or used electric vehicle — but only if the dealer and consumer understand how they work.
However, some dealers don’t seem to want to offer electric cars: According to a survey conducted by the Sierra Club in late 2022, 66 percent of dealers did not have an electric car for sale. That was at the height of electric vehicle 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.
Because of concerns about a slowdown in electric cars, electric cars are sitting in dealer lots longer than gasoline-powered cars. According to Cox Automotive, dealers began the year with about 50 days’ supply of gasoline and electric cars. The range of petrol cars is now about the same, but the range of electric vehicles has doubled.
Dealers may have less economic incentive to sell electric vehicles. Buzz Smith, a former Chevrolet car salesman who now helps train dealers to sell electric vehicles, says it can cost a lot It takes longer to sell an electric car than a gas car. Selling a gasoline car, he said, might take no more than an hour in a single visit and bring in a tidy commission.
But with EVs, “it typically took four one-hour visits before they purchased the EV,” Smith said. Customers want to make sure they understand the technology, charging and more. “So I’m volunteering to take a 75 percent pay cut — and no salesperson wants to do that.”
Smith said he believes the pay structure for car salespeople isn’t a good fit for the electric vehicle era. Electric cars have lower profit margins, he said, which reduces the commission a dealer can receive. And if a customer returns to the dealership multiple times, salespeople may have to split the commission, which in turn results in a reduction in their take-home pay.
At the same time, car dealerships make most of their overall profits from servicing vehicles – not from selling new cars. According to an analysis by the U.S. Bureau of Labor Statistics, only 16 percent of dealers’ gross profit came from new vehicle sales, while 43 percent came from parts, labor and service. (The rest of the profits come from used car sales and financing and incentives.)
“It’s like giving away the razor to sell the blade,” said Daniel Crane, a law professor at the University of Michigan who studies the laws and economics of car dealerships.
This could also discourage dealers from selling electric vehicles. Gasoline cars have 100 times more moving parts than electric vehicles, and studies show that electric vehicles have lower maintenance costs. For example, the average gasoline car needs an oil change about every six months or every 5,000 to 7,500 miles. However, for many electric cars, major maintenance is only required after around 240,000 kilometers.
“They’re all worried about the maintenance failure,” Smith said.
But electric vehicles are still so new, Smith said, that customers are returning to dealers because they don’t want their neighborhood mechanic trying to service their car.
Some retailers are working to take advantage of the new technology. Claire McDonald, president of a Ford dealership in Waco, Texas, said her salespeople were excited about the training The automaker offered how to sell electric vehicles. “It’s part of our future,” she said.
So far they have only sold about a dozen electric cars, she said, but she sees this as an important part of the future business model. “I’m not here to advocate for or against electric vehicles,” she added. “I’m here to help our customers understand their needs.”
Mike Stanton, president and CEO of the National Automobile Dealers Association, says dealers have invested about $6 billion preparing to sell and service electric vehicles. “The dealers stepped up and did what was necessary,” he said.
But Stanton said the transition to electric vehicles — especially given the Biden administration’s aggressive goals for electric car sales — is moving too quickly. “This is going way too far,” Stanton said. “We have to take the mainstream market into account, otherwise bad things will happen.”
Others — like Crane, who has filed legal briefs supporting direct-to-consumer sales — say the dealer-only model is simply not suited to the electric future — and potentially drives up the price of a car.
“Dealers don’t want to change the model,” he said. “They want to be the gatekeepers.”