Some stories lay out a conundrum so well, they provoke additional observations.
A WardsAuto article, “Car Dealerships Fail EV-Selling Test, Mystery Shopping Study Indicates”, is such an article.
It points out: a) Americans are largely uninterested in buying EVs, and b) this partly may be due to car dealerships not doing a good job at selling them. (That’s according to a Ipsos RDA market research study.)
Whether one disputes the findings of the mystery-shopping study or not, one can’t ignore the fact that while few EVs are selling now, quite a few (to put it mildly) will be on the market from many manufacturers soon.
Tesla’s whole claim in not using the franchise dealership system is that EVs would not get proper attention and treatment within the typical dealership, and the Ipos study suggests the EV shopping experience at a typical Tesla store is better (but does anyone remember Tesla’s sales-performance scores. (They are consistently not too good).
In any event though, no one seriously thinks Tesla will sell the majority of EVs in the coming years. This task is for the major manufacturers and their dealers. So what’s the solution to this current lack of sales attention?
Everyone who has ever been involved directly in showroom training knows what the problem is, and it is not all that complicated to figure it out. With a few outlier exceptions, all real money made in the current auto retail business comes from internal combustion SUVs, trucks and truck-like vehicles.
That money flow includes the manufacturer, dealer and sales consultant. There are tangible reasons why major manufacturers are turning, big time, to EV production and development. But these involve strategic, long-term goals. That makes sense for these OEMs.
But why would any dealer, let alone a sales consultant who needs to earn an income now – not in the distant future – divert focus from what makes money today, to vehicles that frankly take more time to sell, with details that are more difficult to master and that produce less gross profit than your average pick-up truck?
There, I’ve identified the elephant in the room. It makes no economic sense, today, for a dealer or sales consultant to concentrate on EV selling (except in some markets where natural demand is high), to the distraction or diversion of maximizing their return on vehicles that make far more gross profit for far less effort.
All the support training in the world and EV focus from manufacturers will not currently overcome this powerful showroom motivational fact.
I’m not sure what the answer is here, as many more EVs are coming from almost every automaker, and some “green” states mandate a level of EV sales.
An obvious intermediate solution would be more financial incentives from the manufacturer to the dealer to foster concentration on the showroom floor, but this is only a temporary fix. No manufacturer (including Tesla) seems to be making any money from EVs, so how long can any subsidy take place?
I recently spent a day at Wharton School of Business as one of their “Entrepreneurs in Residence.” I met Gabe Elsner, an astute MBA candidate with experience both in founding a clean energy think tank (Energy and Policy Institute) and working at Tesla.
He has an interesting solution. He proposes, through his startup company, ZEV, to provide interactive software that’s embedded on the dealership website and used by salespeople in the showroom. It educates and guides the prospective EV buyer through comprehensive, unbiased education and purchasing assistance. It educates customers and provides technical advice that a first-time EV buyer seeks.
ZEV’s vision is to supply all the EV information and customer handholding. It would help shoppers compare electric vs. gasoline, provide sales staffers with tools and help the cause of customer satisfaction.
With all the money that is currently spent on EV production and development, it might make sense for manufacturers to subsidize something like this.
Solving the dealerships’ EV sales problem is an uphill battle in uncharted territory. I’m not sure this one idea completely satisfies the conundrum. I’m sure there are other creative ideas out there. What do you think?
John F. Possumato is an attorney, the founder of Automotive Mobile Solutions and a graduate of the Wharton School of Business at the University of Pennsylvania. He can be reached at [email protected]