The auto industry’s march toward electrification is not just underway; it’s in full swing. IHS Markit has estimated that battery-electric vehicles alone will represent between 25% to 30% of the new vehicle market in 2030.
The push for more electric vehicles (EVs) is coming from most automakers and, in some cases, governments. In the U.S., the Biden administration has set a goal of having half of all new vehicles sales consist of zero-emission or low-emission cars and trucks—or those that have battery-electric, plug-in hybrid, or fuel cell electric powertrains—also by 2030. And EV sales have been quickly growing, even amid slower new car and truck sales.
So, how are automakers responding? And where are dealers in this massive market shift, and what should they be doing? Outlining manufacturers’ plans and analyzing the current market provides insight into how dealers can adjust to this changing market in the showroom, in fixed operations, and in terms of how this affects the shortage of service technicians.
The Futurecast for EVs
Most automakers are shifting toward electric fleets to varying degrees, and some are even replacing older electrified models with new ones. The upcoming plans of most major original equipment manufacturer (OEMs) are bold and green-energy focused. Here are just a few examples of legacy automakers heralding this new era of EVs:
- General Motors (GM) plans to stop selling internal combustion engine (ICE) vehicles by 2035 and to be carbon-neutral by 2040.
- Mercedes-Benz plans to make all new vehicle platforms EV-only by 2025. The company hopes to have an all-EV lineup by 2030.
- Honda plans to phase out ICE vehicles by 2040.
- Stellantisis investing more than $35.5 billion in vehicle electrification through 2025. The company expects to have 40 all-electric and 15 plug-in hybrid models in the U.S. and Europe in that same timeframe.
- Toyota Motor Corp., which has been hesitant to go all-electric, plans to have 70 electrified models globally by 2025.
- Volvo will only make electric cars by 2030 and, no doubt to the chagrin of most dealers, says it will only sell them online. This “test case” of a new agency model—a direct customer-brand relationship that could lessen the perceived importance of dealerships and salespeople—will be watched very closely over the coming years by other OEMs to see whether they can get away with it, too.
The Current EV Market
Even as overall new vehicles sales fell during the coronavirus pandemic, EV sales climbed significantly. According to the International Energy Agency (IEA), EV sales hit a record of 4.6% of all new vehicles sold in 2020, a year when overall vehicle sales declined by about 6% across the world. Further, in a Global EV Outlook report from 2021, IEA predicts the number of EVs globally will increase from 10 million to 145 million by 2030. Even though overall sales are slim in the U.S., EV sales did grow by 85% from 2020 to 2021 while the sale of plug-in hybrid electric vehicles (PHEVs) grew 138% in the same period. And potential EV buyers are out there, according to Pew Research, which has reported that about 40% of Americans are somewhat likely to seriously consider buying an electric vehicle.
Meanwhile, the U.S. government is pushing for more EV infrastructure. With the passage and signing of the Infrastructure Investment and Jobs Act near the end of 2021, the federal government is setting aside $7.5 billion for a network of 500,000 EV chargers.
The bottom line? EVs are here, and more are coming, whether dealers are ready or not.
How Should Auto Dealers Respond to the Rise of EVs?
The most pressing elements for automotive retailers are to prepare both practically and culturally, which can be difficult to do for multiple reasons. So, where should dealers begin?
Opt In to Training and Customer Education Opportunities
Both educating staff on EVs and learning about the EV customer are important. Dealers should understand that new customers will be coming to them for EVs, and that customers coming to buy EVs now will be different from the early adopters. Increasingly, EVs appeal to everyday people who are looking for new daily drivers, and owning one is no longer the countercultural lifestyle statement it was in the early 2010s.
Aside from learning about this new customer base, staff need to understand EVs themselves. Dedicated training on new EV models and features should be spearheaded by automakers to make staff feel more comfortable with these new products. A major component of EV resistance is simply a lack of information. Equipping dealer staff with the knowledge they need will likely quell the concerns of anyone still on edge or reluctant toward EV adoption.
Additionally, dealer staff also need to be aware of how to respond to the average consumer’s fears about EVs. A consumer concern not nearly discussed enough is the ease and safety of charging an EV. Dealer staff should be knowledgeable about local EV charging infrastructure, and it should be top priority for dealers to be able to explain the charging process of EVs—how it’s like plugging your phone in at night—to quell any charging-specific hesitations.
While it is becoming a great priority of automakers and dealers alike to train and familiarize sales personnel with EV products as soon as possible, generating excitement is a bit more subjective. There are, however, simple things that can be done to begin piquing interest if it isn’t already there.
Outside of simply educating others, creating community is pivotal. One way to garner excitement over this massive market shift is for dealership personnel to join relevant, local EV clubs and associations. These can be active, knowledgeable groups that could help auto retail personnel get accustomed to any culture that may be budding up or already exist around certain EV models.
To help further build community buy-in, dealers should consider creating a charging area for customers that serves as a welcome environment. Charging areas could be a communal destination to encourage not just EV service customers but EV owners in general to come and power up. This could be monetized at some point, but for the near future, it’s important to get owners to return to the dealership for simple charging needs, especially in the case that charging stations are compatible with multiple brands and models. Keeping EV owners close to the vest this way can provide dealers with an opportunity to entice owners of competitor vehicles to consider switching brands and, beyond that, continue to build the sense of community around EVs needed for long-lasting adoption.
Planning for the EV Future
While automakers are blazing a path for EVs, dealerships should consider not just how to prepare culturally, but also how fixed operations and even independent service shops will change. Franchise dealers have an advantage in being prepared to service their brand-specific EVs over independent shops that have, for a century, been servicing mostly ICE vehicles. Many OEMs are also building and only selling custom tools and providing service training to their own dealership technicians.
At the same time, auto retailers should anticipate that some service of EVs may not even need to take place in the service bay or at the dealership; they could easily happen at the customer’s home with a mobile unit. This could help dealers reduce infrastructure or at least not worry about building out a lot of new square footage or designated space for EV-specific vehicles.
In any case, the rise in EVs is coming at an uneven and uncertain time for the fixed ops departments as they deal with ongoing technician shortages. While EVs will likely lower the volume of repairs and service needed on vehicles, there will always be a need for service technicians, and the rise of EVs will not make this issue any less pressing.
As the exciting future of the automotive industry unfolds, properly planning and preparing will be key. All facets of the auto industry will experience a multitude of changes, and those who adapted, responded, and prepared as best they could will stand apart from those who simply braced themselves.