NO WAY OUT! EVs Hurting Dealers More Than Anyone Expected!

NO WAY OUT! EVs Hurting Dealers More Than Anyone Expected!
Hey everyone, welcome back to the channel! Today, we’re diving deep into the reality behind electric vehicle (EV) sales and the struggles car dealers are facing. The EV market has been booming over the past few years, but recently, things have started to change. Car makers are still pushing EVs onto dealers, but sales are slowing, investments are increasing, and many experts believe dealers won’t survive if they’re forced to sell EVs. Let’s explore the top seven reasons why this is happening.
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Reason #7: The EV Market Is Slowing Down
Let’s start with the most obvious reason why dealers are struggling: the EV market is no longer growing at the rapid pace it once did. During the peak in 2021 and 2022, we saw year-over-year growth rates exceeding 90%. But that momentum has stalled. By the end of 2023, growth had slowed to around 50%, and in January 2024, the growth rate dropped to just 15%.
Why is this happening? Simply put, the phase of early adopters is over. We’re now entering the phase where middle-class buyers are expected to start adopting EV technology. However, this group is driven by practicality and value for money, not by the excitement of being early adopters. For the average buyer, EVs are still too expensive, too inconvenient, and have limited autonomy. Dealers know this, and they’re worried that the continued push for EVs will hurt their businesses.
Reason #6: EVs Are Hard to Sell
EVs are becoming harder to sell, not just because of the slowing market, but also due to a massive imbalance between supply and demand. During 2021 and 2022, supply chains were disrupted, but now that they’ve stabilized, car makers have ramped up production. Unfortunately, they based their production plans on the unsustainable growth seen during the boom years.
According to some reports, the production of EVs has increased fivefold over the past year. Yet, the demand just isn’t there to match this output. As a result, dealer lots are filling up with unsold EVs. By late 2023, the average market day supply for EVs was already over 110 days, meaning it would take nearly four months to sell the stock on hand. Dealers are stuck with inventory they can’t move, and that’s a financial disaster waiting to happen.
Reason #5: Massive Investments Required for EV Eligibility Programs
Dealers aren’t just struggling to sell EVs; they’re also being forced to make massive investments in order to be eligible to sell them. Car makers like Ford and General Motors are requiring dealers to invest in charging infrastructure, staff training, and other costly upgrades to support the sale of electric vehicles.
For example, Ford’s Model E Certified Elite program requires dealers to spend between $500,000 and $1.2 million, depending on the level of certification they choose. This includes building 24/7 accessible charging stations, training staff on EV technology, and more. GM is asking Buick dealers to invest around $400,000. Faced with these huge expenses and the uncertainty of the EV market, many dealers are questioning whether it’s worth the investment.
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Reason #4: The North Carolina Rebellion
Dealers aren’t taking these forced investments lightly. In North Carolina, 46 dealers filed a petition against Ford’s Model E Certified program, arguing that it’s an excessive intrusion into their day-to-day operations. They claim the program forces them to spend huge sums of money unnecessarily just to continue selling vehicles they’re already authorized to sell.
In their petition, the dealers stated that Ford’s program would reduce the number of dealerships and restrict consumer access to EVs, particularly in rural areas. This rebellion is a clear sign that dealers feel backed into a corner, and they’re pushing back against the forced electrification.
Reason #3: Buick Dealers Taking the Buyout
GM dealers, particularly those selling Buick models, are also pushing back. Buick plans to become an all-electric brand by 2030, but many dealers are not on board with that plan. GM has given them an ultimatum: invest in electrification or take a buyout and stop selling Buicks altogether.
What’s interesting is that Buick currently doesn’t have a single EV on the market, which makes the push for electrification feel premature. Not surprisingly, many dealers opted for the buyout. Buick started 2023 with 1,958 dealerships, but by the end of the year, nearly half had accepted the buyout. This dramatic reduction in dealerships is a sign that many dealers simply don’t see a future in selling EVs.
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