Beyond the Car Lot: How Dealerships Can Pave the Way for Electric Mobility
In 2023, a new record was set when 1.2 million U.S. vehicle buyers chose to go electric, marking both a milestone and serving as an indicator of the momentum of the electric vehicle (EV) market. Despite occasional headlines about a softening EV revolution or stories about some automakers scaling back EV initiatives, electric transportation is rapidly crossing the proverbial chasm between 'early adopters' and 'early majority.' As the market matures, the EV industry's challenges evolve, shifting the focus from novelty to scaling.
Within this chasm lurk many chicken-and-egg challenges, including those cited by automotive dealerships, who have reported some EV apprehension among the car-buying community. In this demographic, EV purchase hesitancy arises from high prices and interest rates, limited familiarity with the technology, and the perception that charging infrastructure is immature. Regardless of whether perceived or actual, auto dealerships are in the ideal position to address these issues and harness them as economic drivers. With a little bit of strategic rethinking, dealerships can propel themselves into the epicenter of the EV economy.
Instead of resisting the tide of electrification, dealerships can seize the opportunity to become the local authority on EVs, relieve pre-purchase anxiety, spearhead EV culture, and build new revenue streams. By embracing this transformation and thinking more like an EV institution, strategic investments in EV sales, services, and amenities can position dealerships for success in the rapidly growing sustainable mobility ecosystem.
Becoming an Institution of Higher EV Learning
For most consumers, car shopping is already stressful. Shopping for an EV can be an even more stressful experience due to the abundance of new concepts. As such, sales departments must improve their customer experience by adding insightful educational services and support throughout purchasing. Revamping the sales process for EVs starts with a new approach to test drives. A routine part of the traditional car-buying journey, test drives are an essential opportunity for prospective EV owners to experience the differences between operating an EV and an ICE vehicle firsthand. For example, a simple explanation of regenerative braking and its benefits–recapturing energy–will make the sensation of lifting off the accelerator make sense and meaningful.
Sales reps on the lot should also be able to offer detailed information about the benefits of EV ownership, such as lower operating costs and available government incentives while addressing common concerns regarding range anxiety, battery degradation, and general EV upkeep. While one might assume that this approach is the norm, it's alarming that less than half of dealers feel sufficiently prepared and informed to sell EVs. This knowledge gap is further evidenced by the many anecdotes from consumers who sometimes know more about EVs than the sales representatives, such as declining suggested oil change plans.
Unlike the early adopters who researched every aspect of the EVs they bought, the current wave of car buyers have usually not informed themselves as vigorously and often require additional guidance. By becoming authorities on the EV landscape, dealerships can instill greater confidence in consumers' current purchases and foster return visits and referrals.
Fueling Financial Growth Through EV Charging
Beyond vehicle information, dealerships can alleviate EV ownership uncertainties by guiding customers about charging at home and using public charging infrastructure, including best practices for finding and using charging stations ‘in the wild.’ To truly embrace the e-mobility movement, however, dealerships must integrate robust, multipurpose EV charging on-site. To start, on-lot charging keeps inventory charged and ready for test drives. The chargers can be used as hands-on educational tools for new EV owners to improve the off-the-lot experience.
With free or discounted charging services deployed on the lot, dealerships also have the opportunity to attract potential customers by using the charging time to showcase their latest EV models, service offerings, and EV incentives. Beyond enhancing the customer experience, this more strategic approach to EV charging sets up a quid-pro-quo opportunity for sales interactions on the lot. It creates new revenue streams around charging and charging-related amenities. Dealerships with a creative approach to experiential charging will position themselves as central hubs and gathering spaces in electric transportation.
In Dallas, Texas, Friendly Chevrolet has built the kind of EV charging infrastructure that could become a model for dealerships everywhere. Since 1956, Friendly Chevy has continually raised the bar for the dealership, becoming a fixture in the Dallas automotive scene. In response to the growing demand for EVs–and the desire to maintain and deepen bonds with EV customers–the dealership built what it has named its EVHQ Charge Park. This prototypical ‘experiential charging’ area goes far beyond simply setting up a row of chargers in some corner of the lot. The EVHQ Charge Park exemplifies General Manager Chris Herbig's commitment to innovation at the dealership level, which mirrors the advancements in technology on the vehicle side. To redefine the EV charging experience in Dallas, Herbig has seamlessly integrated cutting-edge EV technology into its operation, positioning the organization to continue garnering accolades such as Chevrolet's Dealer of the Year and GM's Mark of Excellence Award, which it has earned for the past decade.
Inspired by examples of unique EV amenities at European dealerships, the EVHQ Charge Park stands out with eight covered 120kW fast-charging ports, 24/7 on-site attendants, and a comprehensive service experience. The installation’s six-month usage statistics speak for themselves, with a remarkable 55% monthly revenue growth–surpassing $59,000/month in charging revenues–and station utilization nearing 40%. These impressive numbers underscore the park's undeniable success and reflect the region's demand for high-quality EV charging infrastructure. Moreover, EVHQ's premium pricing strategy, at $0.69/kWh, has not deterred customers; instead, it has cultivated a loyal community of EV drivers who value the attentive service and amenities available while charging at Friendly.
Reimagining the Service Department
Within the maintenance and repair department, dealerships encounter another instance of a chicken-and-egg challenge. Unlike ICE vehicles, EV motors have fewer parts requiring regular maintenance, such as oil changes, transmission tuning, etc. These routine procedures have historically been a leading source of revenue for dealerships, earning the average business $8.2 million in 2022 and making up 12% of sales. In contrast, EV maintenance costs are 15-20% less than those of ICE vehicles, deterring many dealerships from investing entirely in-service training for electric cars–so much so that fewer than half of dealers felt equipped to provide EV maintenance in 2023. In addition to these issues, there is a global shortage of certified EV technicians, with only 1.5% or 3,400 automotive service technicians and mechanics possessing EV-specific certifications in 2022, and the opportunity only becomes more apparent.
EV owners, however, continue to prefer dealer maintenance, with 57% visiting franchise dealers and 41% visiting independent dealers. Unfortunately, drivers too often experience notoriously long service wait times, given the lack of adequately trained technicians and, to a lesser extent, parts availability. Unlike installing EV chargers on site, dealerships can become dependable EV repair and maintenance destinations by reskilling technicians and updating facilities to accommodate an electricity-fueled industry. Qualifying more technicians will help reduce maintenance delays, create new revenue opportunities for dealerships, and make drivers more confident in going electric.
Dealerships: The Key to Paving an Electric Future
Dealerships have a unique opportunity to adapt to and thrive because of the growing electric vehicle market. By understanding and addressing the challenges cited by the 'early majority' and the industry, dealerships can position themselves as essential hubs of knowledge, support, and infrastructure for EV adoption. By proactively offering educational services, integrating on-site charging infrastructure, reskilling service departments, and fostering partnerships with the right technology providers, dealerships can meet the needs of today’s EV drivers and pave the way for a sustainable future.
The success stories of dealerships like Friendly Chevrolet and its EVHQ Charge Park underscore the potential held for dealerships that lead the charge in the transition toward electric mobility. The dealers that seize on the opportunities in the short term all have a few things in common: the spirit of collaboration to bring new technology onto the lot, the imagination that powers innovation in what the dealer lot can be, and the motivation and gumption to help shape the future of car-buying and customer relationships.