Government official: Dealers' EV stress will be short-lived

The industry's rapid transition to electric vehicles is causing stress and adding cost at dealerships across the country. But the U.S. government has some reassuring words: It's all very necessary.

The point of the government efforts to drive the content of EVs sold in the U.S. is not to control the market, Michael Berube, the Department of Energy's deputy assistant secretary for sustainable transportation in the Office of Energy Efficiency and Renewable Energy, said Thursday. The point is to make U.S. industry self-reliant as quickly as possible.

"In the short term, in the first few months, I get it. It's painful. It's not ideal," said Berube, who spoke at the J.D. Power Auto Summit. He was answering criticism that the new Inflation Reduction Act is tough on some import brands for withholding federal EV tax credits on models that are assembled outside North America and that source their batteries and critical materials from overseas.

"We need to make clear that the tax bill has built into it provisions to help bring about a supply of domestic critical minerals and materials. And that is in all of our interests," he said.

"We want to be in a position later in the decade, when we start having 40 to 50 percent of new vehicles being electric, that we have a secure, resilient supply of those critical materials here in the U.S.," he said. "We learned our lesson over time with oil and oil price volatility."

Berube has been an influential voice in the government's strategic moves on EV technology and incentives to spur EV sales. He said that part of his purpose in participating in the J.D. Power event was to also speak privately to dealers during the NADA Show.

He said his office will create an EV advisory committee with retailers to provide input on how government policies are working.

Last year's tax bill changed the conversation about how new EVs will enter the U.S. Automakers are now scurrying to produce future vehicles in North American plants with domestically sourced battery modules.

On the same panel, NADA President Mike Stanton noted that dealers have been perceived as resistant to EVs, but that impression is wrong.

"Dealers are all in," Stanton said. "They're invested. Collectively, we've spent over $3 billion preparing to sell electric vehicles. That's a big risk these entrepreneurs are taking because we don't know what the demand will be. But they're doing what they've been asked to do."