It's no great secret that on the whole, America's car dealers aren't exactly thrilled about selling electric vehicles. That's been true for almost two decades now. But even with the ups and downs that the EV market has had in 2023, that dealer trepidation doesn't square with all the trends that point to a largely electrified new-car future just around the corner.
It's why I find thousands of car dealers imploring President Joe Biden to "slow down" the EV transition for the good of "the consumer" to be more than a little disingenuous. And at worst, their latest pushback could represent a blow to wider EV adoption that America, and our climate, really can't afford.
Let's recap a bit. Earlier today, a website called "EV Voice of the Customer" appeared online with an open letter to the Biden Administration signed by more than 3,800 U.S. car dealers. In it, those dealers say "enthusiasm has stalled" for EVs, and the fact that many of them are piling up on their lots is evidence that this White House's goal of having 50% of all new vehicle sales be electric by 2030 is unrealistic and untenable. Automotive News reported today that a dealer magnate with stores in Nebraska, Kansas and Colorado is behind the effort.
The list of dealers involved probably isn't surprising. Most have Toyota dealerships. Nearly 400 are Ford dealers, more than 300 are Chevrolet and Honda dealers, and more than 200 sell various Stellantis brands. The list goes on from there. Many sell brands committed to going all-electric in the next few years, like Volkswagen, Audi and Volvo.
(Very curiously, four of the signatories represent Polestar dealerships; someone needs to go check on those folks and make sure they're doing okay.)
The thing is, there are grains of truth scattered throughout this letter. EV sales have had dramatic ups and downs this year. Some legacy automakers, in particular General Motors and Ford in the U.S., have struggled with production challenges and transitioning their businesses to a battery- and software-driven one. EVs remain expensive, our public charging networks aren't where they need to be yet, and a lot more education needs to be done from automakers and salespeople alike to help people break up with gasoline.
But concerns from car dealers shouldn't be mistaken for consumer advocacy. Many dealers—but certainly not all, to be fair—have never wanted to traffic in EVs. They don't want to threaten their lucrative revenue from parts and repairs, they don't want to have to invest in on-site charging and dealer education and they don't want to change the enshrined-into-law tactics that have made many of them extremely wealthy over a century of gasoline car sales. (This is also why Tesla has always had a direct-to-consumer sales model, and why most EV startups have followed suit.)
As a result, it's not terribly hard to dismantle this argument if we take it line by line:
Your Administration has proposed regulations that 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. Currently, there are many excellent battery-electric vehicles available for consumers to purchase. These vehicles are ideal for many people, and we believe their appeal will grow over time. The reality, however, is that electric vehicle demand today is not keeping up with the large influx of BEVs arriving at our dealerships prompted by the current regulations.
I'll give them credit for the "their appeal will grow over time" part, because I think that's true too. But I take issue with the idea that these new EVs are prompted solely by "current regulations" and are not products that have been in the works for many years, including during the regulatory Wild West that was the Trump Administration.
These dealers omit the fact that these are global car companies; they may have localized operations and localized product portfolios (some more than others, certainly) but America's EPA-driven zero-emission vehicle isn't far off what the European Union, the United Kingdom and China are all doing too. Granted, it's possible that at least some of those goals could get pushed back. The UK just did that, in fact. But most automakers don't want wildly different standards across the world. It's not great for their ability to make cars at scale or to prepare for a zero-emission future. Perhaps these dealers should take this up with their automakers, not the White House. Moving on:
Last year, there was a lot of hope and hype about EVs. Early adopters formed an initial line and were ready to buy these vehicles as soon as we had them to sell. But that enthusiasm has stalled. Today, the supply of unsold BEVs is surging, as they are not selling nearly as fast as they are arriving at our dealerships—even with deep price cuts, manufacturer incentives, and generous government incentives.
While the goals of the regulations are admirable, they require consumer acceptance to become a reality. 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.
I am sympathetic to the dealers who can't move these EVs, even if their conundrum means great deals for those who want them. But their data is awfully selective. In the U.S. alone, this year will be a record one for EV sales; that's true of nearly every automaker, even the struggling ones. The rate of adoption may not be as fast as these dealers want, but it is skyrocketing. Appealing to the Biden Administration to change the rules doesn't seem likely to change that demand.
(There's also no mention of sky-high interest rates hurting EV sales, but that's a can of worms not worth going into.)
Mr. President, no government agency, no think tank, and no polling firm knows more about the automobile customer than us. We talk to customers every day. As retail automotive dealerships, we are agnostic as to what we sell. Our business is to provide customers with vehicles that meet the needs of their budgets and lifestyles.
Oh, for sure! Americans have no truer friends than the car dealerships, with their five- and six-figure markups, infamously predatory sales tactics and massive lobbying power that has written their business model into law in every state in the union.
I would ask this to the car dealers: if you're on everyone's side, why does everyone hate you so much?
Some customers are in the market for electric vehicles, and we are thrilled to sell them. But the majority of customers are simply not ready to make the change. They are concerned about BEVs being unaffordable. Many do not have garages for home charging or easy access to public charging stations. Customers are also concerned about the loss of driving range in cold or hot weather. Some have long daily commutes and don’t have the extra time to charge the battery. Truck buyers are especially put off by the dramatic loss of range when towing. Today’s current technology is not adequate to support the needs of the majority of our consumers.
Many of these challenges can and will be addressed by our manufacturers, but many of these challenges are outside of their control. Reliable charging networks, electric grid stability, sourcing of materials, and many other issues need time to resolve. And finally, many people just want to make their own choice about what vehicle is right for them.
Again, I don't completely disagree with much of this. It's reflective of the very valid concerns that many drivers have, and I have never ascribed to the idea that someone is a bad person if they don't run out and buy a Tesla or something tomorrow. But the dealers neglect their own role in driver education here; remember that recent Washington Post story about the salesperson who insisted a BMW i3 couldn't be driven on the highway? That's why it's so hard to take this argument seriously. It's disguised as looking out for the little guy, from a group of people who have consistently fought against the capital improvements, education and changes in best practices that would help ensure their role in this technological shift.
It's why GM and Ford both have tried cracking down on their dealers. Their executives won't ever admit it, but it's probably why Hyundai is trying to sell cars on Amazon next year. It's why Polestar employs a hybrid-direct sales model to get around the challenges involved with both. It's why Rivian and Lucid never bothered with car dealers.
And hanging all of this on "regulations" makes even less sense in closing:
Mr. President, it is time to tap the brakes on the unrealistic government electric vehicle mandate. Allow time for the battery technology to advance. Allow time to make BEVs more affordable. Allow time to develop domestic sources for the minerals to make batteries. Allow time for the charging infrastructure to be built and prove reliable. And most of all, allow time for the American consumer to get comfortable with the technology and make the choice to buy an electric vehicle.
First and foremost, developing domestic battery operations, mining and a more robust charging infrastructure is exactly what the Biden Administration is doing. All of those things were part of the goals of the Inflation Reduction Act and Bipartisan Infrastructure Act, even if the end results often fell short of those lofty goals.
But let's think a little deeper about giving this transition more "time." What does "time" mean here, anyway? Years? Decades? What's appropriate there, and at what cost? Do automakers punt their EV goals down the road to keep making internal combustion vehicles forever? Besides GM, almost none of them are doing this.
Even many industry experts I speak to think hybrids have an eventual expiration date, and besides, not every automaker can even be bothered to sell those right now. And wouldn't tough regulations force the car companies to move fast, get creative and stay competitive in the EV race?
As I've written before, this is a technological transition—less a test of EVs and more a test of automakers' ability to make them at scale, at affordable prices and profitably. The auto industry has always chased performance and efficiency, even when it needs to be dragged there kicking and screaming by regulatory forces, and EVs represent the apex of both. The fact that hybrids are selling so well right now proves Americans would love to ditch gasoline if you gave them the chance.
The biggest risks this entire industry faces with wanting more "time" are BYD building factories in Mexico so it can sell cutting-edge EVs in America at fire-sale prices, and our looming climate disaster. (Which, of course, isn't mentioned in their letter at all.) Transitioning new cars to zero-emission vehicles won't entirely fix climate change, but doing so creates a path to a vastly less disastrous future than we're facing now.
To borrow a phrase from a friend in the policy side of the EV space, "Dealers claiming to be the voice of the consumer is like fishermen claiming to be the voice of the fish." If America is in a moment of uneven EV sales, it is one that will eventually pass. This country's car dealers will have to decide if they're going to be a part of what's coming next or not.
