Slowing the EV Trend

Mar 1, 2024 | Industry

New car dealers have been saying for years there’s not enough consumer demand to justify U.S. government targets aimed at switching quickly, and completely, to electric vehicles – and now that the switch to EVs is on in earnest, thousands of dealers have become more vocal about those concerns.

What’s changed is that EVs from “mass-market” brands, and in popular body styles, like pickups and SUVs, have started to arrive on the U.S. market in greater numbers.

Until recently, most EVs were predictably from luxury brands, high-tech start-ups, and/or priced like luxury brands, the prime example being Tesla.

Exhibit “A” for the would-be popularization of EVs is the Ford F-150 Lightning, a battery-powered version of America’s most popular vehicle, which went into production in April 2022.

As a result of that and many more introductions since then, EV sales and market share are way up. According to Cox Automotive, EV share in the U.S. market was 7.9% of total light-vehicle sales in the third quarter, up from 6.1% a year ago.

The U.S. market should exceed sales of 1 million EVs in 2023, vs. only 250,000-plus in 2020, Cox Automotive said, based on sales through the third quarter.

[NOTE: https://www.coxautoinc.com/market-insights/q3-2023-ev-sales/]

PILING UP

That sounds great, but dealers say the new, somewhat more popularly priced EVs are piling up on their lots, and that’s got them worried.

“Customers showed a lot of initial interest. The Ford Lightning comes to mind,” said Mickey Anderson, CEO of Baxter Auto Group, Omaha, Neb. The group has 20 dealerships in Nebraska, Kansas and Colorado.

“We had a waiting list of 200 interested buyers when it was first announced. What we noticed this summer was, those initial hand-raisers – now, it’s a great vehicle, and the customers who have taken delivery are delighted with the vehicles – but those waiting lists were evaporating,” he said.

REDUCE SPEED AHEAD

Against that background, Anderson said he came up with the idea to gather dealer signatures on an open letter, which the dealers sent to President Biden in late November, asking the president to take a slower approach to EV adoption.

The owners who signed the letter say they represent 3,882 dealership rooftops – about 21% of the U.S. total. The dealers insist they are all for reducing emissions, and they have nothing against EVs per se, it’s just that the switch is happening too fast considering the level of consumer demand.

The dealers insist they are all for reducing emissions, and they have nothing against EVs per se, it’s just that the switch is happening too fast considering the level of consumer demand.

“We had no trouble,” persuading dealers to sign, Anderson said. Listed among the signers are hundreds of dealerships for big retailers including AutoNation, Asbury Automotive, Lithia Motors, and many privately held groups.

“We are deeply committed to the customers we serve and the communities where we operate, which is why we are asking you to slow down your proposed regulations mandating battery electric vehicle (BEV) production and distribution,” the letter says.

The dealer group calls itself “EV Voice of the Customer.” According to the group, proposed federal rules, “would essentially mandate a dramatic shift to battery electric vehicles (BEVs), increasing year after year until 2032, when two out of every three vehicles sold in America would have to be battery electric.”

FAMILIAR ARGUMENTS

The dealers cite familiar arguments for why consumer demand is insufficient:

• Affordability, since EVs cost more than similar internal-combustion models;

• Range anxiety, especially in hot or cold weather;

• Charging infrastructure, with too few publicly available chargers in good repair, and too many consumers who don’t have a garage, or anyplace else convenient, for at-home charging.

“With each passing day, it becomes more apparent that this attempted electric vehicle mandate is unrealistic based on current and forecasted customer demand. Already, electric vehicles are stacking up on our lots, which is our best indicator of customer demand in the marketplace,” the letter said.

The dealer group is also troubled that EV sales rely so heavily on a federal tax credit of $7,500 for buying an electric vehicle, independent of underlying consumer demand.

“The dealers are always enthusiastic about new technologies and new offerings … but we have never ever sold a car simply because it was manufactured,” Anderson said. “The government is demanding that they be manufactured, but not necessarily sold.”

POLITICAL FOOTBALL

Separately, the National Automobile Dealers Association (NADA) said it’s not affiliated with the “EV Voice of the Customer” dealers. However, the dealer association shares many of the same concerns, according to a spokesperson for NADA, Jared Allen.

“Any significant EV penetration into the mass market – which is where we are seeing stalled EV growth and all this new model inventory start to pile up – will require a broad, unified strategy that considers the vital importance of factors such as affordability, consumer incentives, charging infrastructure, utility capacity, resources for battery manufacturing, and model availability,” he said in an email.

Meanwhile, the dealer association said it supports an open letter congressional members, led by U.S. Rep. Lisa McClain (R-Mich.), sent on Dec. 6 to House Speaker Mike Johnson (R-La.) and Senate Republican Leader Mitch McConnell (R-Ky.) proposing a one-year “stay” on the Environmental Protection Agency using funds, “to finalize or implement its unrealistic 67.5% EV mandate.”

The dealer association said new-vehicle dealers have spent an estimated $6 billion-plus on training and equipment to switch to electric vehicles.

“We strongly oppose the EPA’s misguided attempt to force the production of a vehicle mix that fails to meet the transportation needs or fit within the budgets of American families,” wrote the Members of Congress, led by Rep. Lisa McClain (R-Mich.).

“Apart from the lack of charging infrastructure, EPA’s EV mandate will significantly reduce consumer choice and make vehicles less affordable,” said NADA President and CEO Mike Stanton. 

Jim Henry is a New Jersey-based, veteran freelance reporter covering the U.S. auto industry, writing for trade magazines Automotive News and WardsAuto, plus Forbes and others. Concentrations include U.S. light-vehicle sales, dealership Fixed Operations and Finance & Insurance, mergers and acquisitions, publicly traded dealer groups, OEM financial results, and Connected, Autonomous, Shared, Electric Vehicles. He is also the former department manager, corporate strategy and market research for Mercedes-Benz USA, and a former president of the International Motor Press Association.

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