As electric vehicles (EVs) continue to gain traction in the automotive market, dealerships across the U.S. are grappling with the challenges of adopting and selling this new technology. Despite growing support for EVs, many dealerships remain uncertain about their future in this space, largely due to shifting customer interest, lack of infrastructure, and financial concerns. CDK Global’s recent study provides valuable insights into the current state of the EV transition from the perspective of U.S. dealerships.
Dealer Sentiment: Pessimism and Optimism Divided by Geography
The overarching sentiment among U.S. dealerships about the EV transition is one of pessimism. A significant 65% of dealership leaders reported feeling either somewhat pessimistic (36%) or very pessimistic (29%) about the future of EVs and their business viability. Much of this negative sentiment can be attributed to the lack of interest from customers, with 34% of dealers citing customer disinterest in EVs. However, these views vary significantly by geographic location.
In states with traditionally high EV adoption rates like California, Washington, and Oregon, dealers expressed more optimism. For instance, in the Pacific region, 55% of dealers expect EVs to account for half of all vehicle sales within the next 5-15 years. Conversely, dealers in rural regions, particularly in the Mountain and West South Central areas, predict a much slower transition, with 25% saying they don’t see EV parity for several decades.
The Role of Government and Infrastructure
One of the primary barriers to EV adoption and dealer enthusiasm is the perceived lack of infrastructure, especially in rural and less densely populated areas. Dealers in these regions, such as those in the Midwest and South, often cite the absence of adequate charging stations and the long charging times as major challenges. Moreover, the infrastructure that is available is often limited, with North Dakota and its neighbors having some of the lowest numbers of public EV charging ports.
Government incentives and policies are crucial in accelerating the adoption of EVs. However, the outlook for continued subsidies and support for EV infrastructure is uncertain. President-elect Trump has expressed intentions to curb subsidies for EVs and related infrastructure, which could significantly impact dealers’ ability to support EV sales and service.
EV Sales and Financial Concerns
Despite the increasing presence of EVs in dealership inventories, the sales volume remains disappointingly low for many. According to the study, 41% of respondents reported that EV sales made up less than 1% of their total sales volume. Even in regions with a higher concentration of EVs, such as the Pacific and New England, dealers still face challenges in moving units. This is primarily due to customers' concerns about range, charging infrastructure, and the higher upfront costs of EVs compared to traditional vehicles.
The financial impact of EVs on dealerships has also been underwhelming, with 53% of dealers believing that EVs will negatively impact both front- and back-end gross profits. A significant portion of dealers (57%) also reported that transitioning to selling and servicing EVs has been a complex and difficult process, with challenges ranging from training staff to upgrading facilities.
The Future of EVs in the Dealership Network
Looking ahead, there is hope that the EV market will eventually gain momentum, but many dealership leaders are not expecting the shift to occur rapidly. Most respondents (45%) predict that EVs will reach parity with gasoline vehicles in sales within the next 5-15 years. Some dealers, particularly in the Midwest and South, expect the transition to take much longer.
As the U.S. faces a divide in EV adoption, the future of dealerships will depend on their ability to adapt to changing market conditions. However, as the study suggests, there is a need for stronger support in terms of infrastructure and incentives to ensure that dealerships can successfully make the transition to EVs.
What’s next at US Dealerships?
The EV transition presents both challenges and opportunities for U.S. dealerships. While some dealers are optimistic about the potential of EVs to become a significant portion of their sales, many remain uncertain due to concerns about infrastructure, customer interest, and the financial viability of selling and servicing EVs. As the market continues to evolve, dealerships must navigate these challenges and look for ways to adapt their business models to meet the growing demand for electric vehicles.
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