This is the second in a series of articles analyzing the results from this year’s Urban Science Dealership Transformation Index™ survey – conducted alongside The Harris Poll – on auto-buyer perceptions about the impact of electric vehicles on the automobile dealership model.
Just as automotive retailers begin to recover from the chip shortage that left most U.S. dealer lots empty, manufacturers have introduced a new wrinkle: a focus on electric vehicles.
That has required dealers to retrain their staffs – particularly employees in the sales and service departments – and spend millions upgrading their facilities. This comes at the exact time of economic turbulence in the U.S. that has resulted in high interest rates, skyrocketing new-vehicle prices and a downturn in loan approvals.
But dealers are committed to the cause – and with good reason. At least half of the auto-buying public and 70% of dealers believe EVs are the primary driver of change in the future of automobiles, according to a 2023 survey conducted by global automotive consultancy and technology firm Urban Science in collaboration with The Harris Poll. Respondents see EVs as more impactful than vehicle-to-vehicle communications, full online purchasing and other popular innovations.
The survey also shows more than half of dealers are most concerned about economic conditions as they contemplate the future of their businesses, a potentially critical factor in the transition toward sales of BEVs, which typically cost $10,000 more than a similarly sized and equipped internal-combustion-engine vehicle.
So why are dealers committed to the move from ICE to EVs? The answer is found in the car-buying public’s demographics.
As we noted in our previous report millennials are the key buyer demographic for dealers now and in years to come. Millennials (ages 27-42) and their Gen Z counterparts (ages 11-26) also are strong believers in EVs and their potential to change the future of the auto industry. Although only 41% of baby boomers (ages 59-77) and 46% of Generation X (ages 43-58) respondents think EVs are the future, 65% of millennials and 64% of Generation Z believe so.
And when many of these shoppers look for answers about EVs, they likely will turn to their local dealerships, the Urban Science survey insights indicate.
Importantly, when it comes to issues surrounding BEVs, auto buyers across all age groups have an increasingly positive view of automobile dealers. This year, 50% of respondents believed dealers are keeping up with understanding and advising the marketplace on EVs, compared with 41% in 2022.
The numbers for millennials, in particular, rose markedly, from 31% in 2022 to 40% this year. Fifty percent of Generation X respondents gave a positive score to dealerships in 2023 compared with just 38% in the prior year. Even boomers’ faith in dealerships grew, from 52% in 2022 to 57% in this year’s survey.
Those responses also represent a more positive view of retailers’ ability to support EV sales than dealers have of themselves, with only 32% saying they believe dealers overall “are keeping up on understanding and advising the marketplace on EVs.”'
The favorable outlook from millennials and Gen Xers represents a much-needed positive for retailers, which have flat scores in Urban Science’s Dealer Transformation Index (DTI), a composite rating based on auto buyer attitudes about automobile dealers reflected in the survey.
Does this mean that auto buyers will be ready to consider only EVs by 2030? Dealers are working hard to make that happen, and 36% of dealer respondents believe they will hit that goal. Half of retailers surveyed say their current staff is “excited about EVs.” And manufacturers and dealers who zone in on the concerns of auto shoppers, especially millennials, may have an opportunity to increase the current 17% of the buying public that says they will be EV-only ready by that target date.
But whether dealers are on target or overestimating the potential to convert consumers into EV buyers may hinge on three key factors: the price of the vehicles, their range limitations and the lack of charging infrastructure.
Both dealers and auto buyers surveyed agree lack of range is the greatest barrier to purchasing an EV, with cost a close second. The good news is both of those limitations appear to be lessening. Prices are expected to ease as battery costs come down, manufacturing efficiencies improve, EV volumes begin to reach scale and competition increases – and there are government incentives that can help bring down purchase prices in the meantime.
Range also is rising, with EVs capable of 300 miles (483 km) or more now reaching the market.
But charging infrastructure may prove to be the toughest barrier to entry for prospective EV buyers, with 64% of auto buyers surveyed saying they don’t believe public-charging infrastructure will be able to meet demand in three years’ time. Only 31% of dealers are skeptical of the charging infrastructure being ready in three years, a gap that suggests retailers may be underestimating the concerns of new-vehicle buyers when it comes to availability of public charging.
Auto buyers do show a willingness to install home chargers, with 57% of those responding to the Urban Science survey noting they would be willing to spend up $1,100 to fund a home installation, a sign that some buyers’ charging worries may not be insurmountable.
To persuade auto buyers to move toward EV adoption, dealers must:
- Expand their knowledge about all forms of electric vehicles. Auto buyers need expertise, and many are confident the dealership is the best source for such information. It’s critical that sales and service staff are fully informed, but everyone in the dealership should have or know where to find answers.
- Consider pricing. Even when dealerships can’t offer incentives to auto buyers, they can explain the nuances of local, state and federal incentives. That’s not an easy task because it can differ depending on a host of subjective factors on different trim levels of one model. The payoff is trust by the consumer and additional sales for the dealership.
- Educate buyers on how far some of today’s EVs can travel between charges to calm their notions of lack of range.
- Offer or help facilitate installation services for home charging equipment. Provide information on local public charging options for apartment dwellers and others incapable of standard “at-home” charging.
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