Want To Sell More Electric Vehicles? Let The Salespeople Drive Them — Literally
Many automotive dealerships, which sell the majority of new vehicles, are not prepared for the electric transition. Auto salespeople as a general rule seem not to know much about electric vehicles (EVs), so their ability to generate EV sales is commensurately lower than their internal combustion engine (ICE)-powered vehicle sales. What can be done to increase the background EV knowledge that automotive salespeople have?
Back in 2018, one of our favorite CleanTechnica writers, Kyle Field, bemoaned the consumer experience at automotive dealerships when shopping for an electric vehicle (EV). Calling the lack of profit-making service potential of EVs a disincentive to sell vehicles, Kyle forecast that “a learning curve that can easily be used as an excuse for lagging sales” would hinder traditional automobile dealerships from moving plug-in vehicles.
Wow. Kyle was certainly prescient. Here we are, 6 years later, and, unfortunately, not a whole lot has changed. Staff at US automotive dealerships continue to push ICE-powered vehicles and to pooh-pooh EVs. Many dealers claim that consumers don’t want EVs. But, as CNN states, “To be clear: The American market for EVs is not collapsing. In the last quarter of 2023, EV sales were up 40% from the same quarter a year before.” Indeed, EV sales in the US hit a record last year, topping 1 million for the first time.
Yet, despite the accelerated EV sales, it’s still almost impossible for some consumers to purchase EVs from traditional dealerships, according to the Sierra Club. Their 2023 report found that 66% of car dealerships in the US did not have a single all-electric vehicle or plug-in hybrid vehicle available for sale. “There’s been an increase in the number of electric vehicles that manufacturers are making. But it’s still challenging to purchase an electric vehicle,” said Katherine Garcia, director of the Sierra Club’s Clean Transportation for All campaign and an author of the report.
What’s the problem, then, with dealerships and EVs?
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The Pervasive Problems with Dealerships & Electric Vehicles
Auto dealerships seem to be having a lot of turmoil as they bring the first few EVs onto their showroom floors.
Ramping up production has been tough for legacy manufacturers whose production lines were originally built for making ICE-powered vehicles. Many EV models are back ordered, or those that are available on the showroom floor for immediate delivery are overloaded with extras that have a high dealer markup. Without enough EVs in stock, consumers looking to purchase a car aren’t able to test drive their model of choice, which lowers the likelihood that they’ll buy one at all.
Dealers complain about the lack of charging infrastructure. However, in 2022, Tesla invited charging network operators and vehicle manufacturers to put the Tesla charging connector and charge port, now called the North American Charging Standard (NACS), on their equipment and vehicles. Every major US automaker agreed to switch to NACS, which means that soon nearly all EVs sold in the US will feature the same type of charging port and use the same type of charger.
Management doesn’t seem to know much about the EVs they are selling. Salespeople haven’t been trained and, as a result, often improvise EV facts and stats when consumers ask questions. Customers want to make sure they understand the technology, how to charge it, what the anticipated costs over the life of the vehicle may be, and lots more.
For example, tax credits from the Inflation Reduction Act include very appealing incentives for car buyers. Now available at point-of-sale, these rebates reduce the sticker price of EVs. However, someone who wants to buy an EV has to really come prepared to self-advocate for the price reduction, as many dealerships haven’t made it a point to learn the rules nor to train their salespeople.
One rationale for the reluctant showroom posturing is the pay structure for auto salespeople. Add to that the numerous times that potential EV customers return to a dealership before sealing the deal — again, probably because so few of their questions are answered on the first trip — salespeople may have to split the commission. That cuts into their overall pay.
Of all the reasons that dealers aren’t selling enough EVs, one stands out. The best sources of auto dealer profit come from servicing ICE vehicles. EVs cars have narrower profit margins, which cuts into the commission a dealer can get and pass along to staff. According to an analysis from the US Bureau of Labor Statistics, just 16% of dealers’ gross profits came from new car sales, while 43% came from parts, labor and service. (The rest of the profits come from used car sales and financing and incentives.) So ICE-vehicles have a kind of planned obsolescence, and that reality is preventing dealers from selling more EVs — which require many fewer service calls.
The Washington Post outlined how gas cars have 100 times more moving parts than electric vehicles do, and EVs have lower maintenance costs. An average gas-powered car, for example, needs an oil change about every 6 months, or every 5,000 to 7,500 miles. But many electric cars don’t require a major service until around 150,000 miles.
Consumers are researching EVs, but that leads to a list of questions brought to a salesperson. The salespeople are not likely to be able to have answers to their EV questions. Most salespeople don’t drive EVs themselves and may be less familiar with electric vehicles and less able to promote them.
One Solution: Assign Salespeople EVs to Drive
Salespeople are the point of contact for buyers who want a new vehicle. However, data from a JD Power report showed that people who bought ICE-powered cars reported that they were much more satisfied with the buying experience than those who bought an electric vehicle.
A report by the Washington Post confirms those findings: many keen adopters of electric vehicles find that car dealers and their salespeople are uneducated and unenthusiastic about learning about this new technology. What can be done?
The answer is simple. Salespeople have to be given the opportunity to drive EVs. A lot. Daily and in different weather and travel scenarios. Think of it as immersive learning for adults. The active learning will translate into better EV sales knowledge and sales.
General Motors agrees. They’ve landed on this option that’s a cost-effective way to educate their salespeople about EVs: let ’em drive ’em. The newest GM EV models use the Ultium propulsion system, and GM has opened these vehicles to eligible employees to drive. Those include the Cadillac Lyriq, Chevrolet Blazer EV, Chevrolet Equinox EV, GMC Hummer EV, and “additional models as they are released over time,” GM said in a statement to the media.
According to a government filing, GM’s Company Vehicle Operations program allows senior management to drive company-owned vehicles of their preference, and they are encouraged to use their assigned vehicles to promote GM’s line of products. Managers below the senior level are assigned vehicles.
“To help support this initiative for employees who do not currently drive an EV, the company is taking a number of actions to help ensure a more seamless transition to an all-electric lifestyle,” the automaker said in a statement. “This will include providing eligible and interested employees with a complimentary Level 2 PowerUp home charger, a one-time credit which can be used toward the installation of a Level 2 charger, as well as reimbursements for other home charging expenses over time.”
Asked if the program includes both salaried and hourly workers, GM spokesman Mark Lubin told the Free Press by email that “specifics of the program are internal to GM,” but the company wants to “ensure that more GM employees are able to experience the benefits of an all-electric lifestyle, and that the experience is as seamless as possible.”
In the meantime, for you consumers out there who are gaining interest in EVs, I have a challenge for you: make it a point to test drive an EV. Rent one on your next vacation. Ask your neighbor to take you for a spin. Grit your teeth and head to a showroom. The hands-on EV experience will be quite illuminating.
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