Dealers' questions swirl as EV demand rises

Demand for electric vehicles is growing, but it still seems outpaced by some automakers' ambitious plans for such products.

That leaves lots of questions for auto retailers, who want to be prepared for the future while capitalizing on the present, dealers and industry observers said during an Automotive News Retail Forum: Dealer Discussions panel last week.

But one development is clear: EV customers are no longer just eco-conscious shoppers who have already made up their minds about the kind of powertrain they want, panelists said.

John Luciano, owner of Street Volkswagen in Amarillo, Texas, said all kinds of shoppers express interest in EVs at his store.

"We probably sold an equal amount of cars ... to the guy that specifically knew he wanted electric [as we did] to the guy that just came in looking for great transportation that made sense," Luciano said.

Robert DiStanislao, owner of RDS Automotive in Pennsylvania, said that of the seven brands his stores carry, the only full-electric offering is the Porsche Taycan. Those buyers are a bit more specific.

"We're finding that these people are adding the car to their fleet of cars, and they're buying it for its performance characteristics," DiStanislao said. They are customers who also like the "cachet that they'll be saving the planet."

DiStanislao, however, questions whether there's much benefit in the overall carbon footprint for EVs vs. vehicles with internal combustion engines.

Ed Williamson, CEO of Williamson Auto Group in Florida, said customers of his General Motors brand stores adored the Cadillac ELR, the short-lived plug-in hybrid luxury coupe that was built with a version of the Chevrolet Volt's extended-range powertrain before being discontinued in 2016.

"Almost everybody leased it, and almost everybody that leased one of those bought it at the end of the lease. And a lot of them still have them [and] are waiting for Lyriq now," he said.

The Cadillac Lyriq electric crossover, due early next year, quickly sold out after online ordering began, Williamson said.

But EV penetration is still low across the industry.

Doug Miller, chief revenue officer at Cars.com, citing recent registration data, said 2.8 percent of all retail registrations are for EVs. But a Cars.com survey showed 32 percent of the company's website users were interested in becoming first-time EV buyers.

"There's demand that's there," Miller said. "We see it on the site; we see it in local conversations with our dealer partners."

Glenn Mercer, a consultant and president of Glenn Mercer Automotive, noted the growing complexity of EV customers. Two decades ago, they might have been almost entirely eco- conscious shoppers — the types that would try out GM's EV1 electric car, he said. Ten years ago, many EV buyers were "tech bros" buying Tesla cars.

Now, performance-hungry customers such as those noted by DiStanislao are looking, along with people considering EVs as an addition to their fleets and utilitarian-minded buyers interested in electric pickups.

"So if I were a dealer, one of my challenges for my sales force is discerning which kind of customer is coming in the door, either digitally or physically, and how to sort out which pitch they need," Mercer said. "This is no longer a simple story, marketing wise."

Is there even money to be made selling EVs?

DiStanislao said that so far he'd had an "excellent experience as it relates to the profit per unit relevant to the rest of our line."

And concerns about lower maintenance requirements for EVs — and thus lower service lane revenue — so far have not panned out, dealers said. It helps that EVs use relatively new technology, and customers have more needs around understanding it.

That has led to dealers such as Di Stanislao and Luciano to hire new EV-focused specialists.

At the same time, automakers have seemed eager to help with issues that arise with EVs, those two dealers said.

But retailers still have questions about how EV sales play out in areas such as finance and insurance. For example, what kind of responsibility — or opportunity — do dealers have to help EV buyers get charging stations installed at their homes?

"That becomes an F&I issue; that becomes part of the F&I menu," Di- Stanislao said. Asked whether it's a growth opportunity, he said it's "both a growth and a liability issue" because the dealer has to find personnel capable of such work.

Payment-aware EV shoppers also are wary of the low residuals seen on some of the vehicles, DiStanislao said.

And, ultimately, money matters to most shoppers.

"It still is going to go back at some point, to a lot of people, to overall cost of ownership," Luciano said. "What's the total cost of it daily? What's it going to cost me to drive it?"