Despite the threats posed by climate change, the U.S. remains deeply divided on electric cars. A J.D. Power report from 2023 suggested that even in the long term, electric cars will constitute only a small percentage of new vehicle sales in dozens of U.S. states. Whereas in states like California, Colorado, and New York, EVs are on track to comprise the majority of new sales by 2035. One of the biggest drivers of this division is car dealers.
Of the roughly 17,000 car dealers in the U.S., about 30% have formally urged President Biden to “hit the brakes” on EVs. His administration announced last week that he intends to slow down the EPA regulations. One of their pressure tactics is writing letters to the president—two have been written so far and signed by thousands of dealers—demanding a pushback against the EPA’s proposed rules that mandate two-thirds of new light-duty vehicle sales to be electric by 2032.
While some concerns surrounding range anxiety and inadequate and unreliable charging infrastructure are true, the argument against hitting the brakes on EVs contradicts the urgency posed by climate change.
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America's EV transition has a dealer problem.
Nearly one-third of U.S. car dealers are urging President Biden to stop the EPA from implementing its strict upcoming emissions standards. However, experts think dealers could play a bigger role in the climate movement by systemically embracing EVs.
After President Biden signed the Bipartisan Infrastructure Law and Inflation Reduction Act in 2021 and 2022, the groundwork was laid for the U.S. to move toward EVs, with hundreds of billions of dollars allocated to establish a local supply chain and ecosystem. However, experts say that successful EV adoption requires more than just policy support. They stress the need to reinvent how dealers sell cars and the pivotal role they can play in promoting them, which could lead to fewer political, socio-economic, and cultural divisions around EVs and accelerate decarbonization.
Tu Le, the managing director of market research and management consulting firm Sino Auto Insights, told InsideEVs that leveraging EV technology was a great tool at the dealers' disposal to drive EV sales. “[U.S.] car dealers should shift their attention towards being brand stewards and using the technology to get more folks in the showroom,” Le said. He added that sales reps need to think of EVs as less of a threat to their jobs, and more of how they could contribute to the larger goal of reducing emissions.
Certain temporary roadblocks can indeed be dealbreakers for consumers. The fear of getting stranded with a dead battery in the middle of nowhere, software hiccups, or out-of-order charging dispensers can be major headaches. But the industry is trying to solve these issues. Leveraging the technology now could help consumers adopt it in the long run. Let's face it, the advantages of EVs are remarkable: lower operating costs and carbon footprint, better energy efficiency, explosive off-the-line performance, etc. If dealers believe in the tech, their customers will follow suit.
"Dealer groups and sales reps look at the OEMs wanting to use the technology to replace them and that's certainly true in some cases but it's time to re-negotiate the dealer-OEM relationship.” He continued, “[dealers should] reinforce the brand promise, and product positioning and continue to build that trust and excitement [in what they are selling].” In reality, it seems like dealer groups are building anything but trust. And that fear-mongering could trickle down to customers.
The National Association of Dealers has vowed “to get the president to bend this policy in a more realistic direction.” It's something the Biden administration seems on track to do this election year to garner more voter support. The Alliance For Automotive Innovation (AAI), representing 42 car brands including General Motors and Ford along with dozens of suppliers, has said that the EPA’s goals are “neither reasonable nor achievable in the timeframe provided.”
Consequently, the EPA has tremendous pressure to revise its proposed guidelines. An EPA spokesperson told InsideEVs, “The draft final rulemaking titled ‘The Multi Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles’ is currently in the interagency review process. EPA has received more than 250,000 public comments for the proposed rulemaking and the Agency will address those comments as part of the final rule.”
The EPA refused to comment on the final ruling, but the Biden administration has signaled that it intends to relax the rules until 2030 and make them stricter from there on, the New York Times reported.
Environment groups think any rolling back of policy would exacerbate public health problems caused due to vehicle emissions. Katherine Garcia, the director of the Clean Transportation For All campaign at the non-profit Sierra Club, told me, “Slowing down the policies would be unacceptable. Voting down the policies would be a disservice to Americans. We need to act on climate now. We need to make sure that we are protecting public health.”
Sierra Club and dozens of other environment and clean transportation groups under the umbrella of what's called the Auto Accountability Coalition have written a sign-on letter to the AAI to forego "obstructive anti-climate lobbying efforts" and support the EPA's proposed mandates.
However, unlike the dealers, AAI adds greater nuance to its argument. Regardless of the alliance's position, its members are forging ahead with new mass-market EVs and domestic battery manufacturing plants. Currently, the rules propose that 67% of new light-duty vehicle sales be electric by 2032. The AAI recommends that the figure be 40% to 50% by 2030, including BEVs, PHEVs, and FCEVs. It also recommends the EPA align President Biden's goals with California's LEV IV standards for “criteria pollutants.”
The California Air Resources Board’s (CARB) LEV IV standards focus on removing specific hazardous pollutants from the air as opposed to imposing a blanket EV mandate. The standards include reducing nitrogen oxides, non-methane organic gases, particulate matter, and carbon monoxide emissions in a phased manner. The regulations set limits on the amount of these pollutants that vehicles can emit, with progressively tightening rules over time.
Regardless of where the EPA lands with its final ruling, the dealers are inextricably intertwined in this puzzle. If American dealers have to replicate even a small percentage of China or Norway’s success, they’d have to work with manufacturers and policymakers to embrace EVs. “It takes a combination of dealers and a strong online presence to attract customers to the [legacy] OEMs' products. The ones who can crack that code will be much better off,” Le said.
He suggested that there are currently "too many" dealerships in the U.S. and that it's the correct time to "right size." However, he warned that refusing to embrace EVs would be detrimental to their survival. “[the dealers] aren't a very innovative bunch, but that's because they haven't had to be and from their pleas to Biden, they are kicking and screaming about having to sell a 'new' product that they say people don't want.”
Le's last point regarding consumers not wanting EVs has caused a quagmire in the industry. 2023 was a record year with 1.2 million EV sales in the U.S. Experts disagree on the slowdown narrative.
When I asked Andrew Cornelia, the CEO of Mercedes High Power Charging about what he thought of the “slowdown” during a roundtable with reporters, he said, “The number of different EVs that are coming to market year-over-year and the consumer demand and feedback are leading indicators [of sales].” He added, “We will continue to see growth within the market. The ‘slowdown’ is a zeitgeist that is biased and incorrect.”
Le indicated that the dealers needed to be more in sync with what the product offers, and what the policy intends to achieve. “Isn't that the entire point of a dealer? To convince a consumer to buy X or Y product?” he questioned. “They need to become far more customer-focused. Embrace the technology to make your job easier or it'll likely go away,” Le concluded.
