The latest Gallup report sheds light on the current state of the electric vehicle (EV) market. Currently, only 16 percent of Americans are engaged with the EV market, either as owners or potential buyers, a figure that has remained stable over the past two years. This small number has prompted some automakers to scale back their EV investments while dealers struggle with moving units off their lots.
There has been slight momentum in 2024. According to Kelley Blue Book, nearly 269,000 electric vehicles were sold in the U.S. in the first quarter, a 2.6 percent increase from the same period last year, but a 7.3 decrease from the final quarter of 2023.
What’s behind this lackluster adoption? Industry analysts agree on three specific roadblocks: price, infrastructure concerns, and range anxiety. According to the Kelley Blue Book Report, EV ownership is currently skewed towards upper-income Americans with 14 percent owning an EV and 61 percent of lower-income respondents expressing disinterest in EVs.
According to a J.D. Power Customer Service Satisfaction survey released this month, customer service satisfaction among owners of BEVs is 42 points lower than for owners of internal combustion engine (ICE) vehicles. The two leading factors are recall rates for BEV parts and poor service advisor knowledge.
“As the electric vehicle segment grows, service is going to be a ‘make or break’ part of the ownership experience,” said Chris Sutton, Vice President of automotive retail at J.D. Power. “The industry has been hyper-focused on launches and now these customers are bringing their electric vehicles in for maintenance and repairs. As training programs for service advisors and technicians evolve, EV service quality and customer experience must address both the vehicle and the unique customer needs. The EV segment has the potential to spur massive convenience improvements in how customers service their vehicles—but we’re not seeing the benefits yet.”
While you can’t solve the recall issue, you can address the knowledge issue when it comes to EVs – not just in the service department but throughout your entire dealership. There is no doubt that EVs are coming. Savvy dealer owners who are ‘early movers’ and embrace these new vehicles will reap significant benefits. But there are some factors to consider when adding EVs to the lot.
Contributing Author: Eric Fifield Chief Sales Officer EFG Companies
Electric vehicles (EVs) are gaining traction in retail automotive. According to Forbes, the U.S. passed 1 million total EVs sold in 2018. Looking forward, consumers expect to have more choices in EVs, as automakers announce expansions of their product offering. 2019 marks the first year the average battery range for all models is greater than 200 miles. While analysts do not believe 2019 will be an inflection point for EVs, they do expect costs to continue to drop. Lithium-ion battery prices have decreased an estimated 80% since 2010, and are expected to fall another 45% by 2021. As battery prices decline, vehicle prices should decrease, especially since battery costs currently compose nearly half the price of an EV.
In the F&I office and service drive, EVs pose a different challenge. Historically, warranty administrators underwrite the risk of mechanical breakdown in automobiles so that consumers don’t have to worry about those unanticipated financial shocks. Service contracts are priced based on the likelihood of each part failing times a projected cost to replace the part. In other words, the price of the service contract implicitly includes an assumption around the probability that, say, a fuel injection pump might fail and what it would likely cost to replace it.
For traditional internal combustion engines (ICEs), administrators have decades of data on part failure specific for every vehicle model. Every time an OEM rolls out a new drive train, administrators reprice the risk in the coverage and begin building loss history. EVs are a different story, with far fewer mechanical parts and a tremendously expensive battery that can stop the vehicle in its tracks. Because ICEs are totally different technology from EVs, offering the same coverage on both really doesn’t make sense. Because of this, EFG Companies recently released a new Motorist Assistance Plan for Electric Vehicles (MAP® Electric Vehicle Protection) to exclusively cover the unique technology of EVs.
