Mark Barrott is a principal automotive analyst at Plante Moran, a Southfield, MI-based consultancy whose longtime clients include the car industry.
In a conversation with Wards, Barrott, a 30-year veteran of automotive strategic experience, discusses how dealers and consumers may or may not adapt to the impending electric-vehicle era. Here is an edited version of the interview.
Wards: How will dealers adjust their business models for EVs? That sounds tough.
Barrott: It is tough. There is a range of ways they are doing it. There’s the collaborative way. We’re seeing very much of that with Stellantis attempting to figure out implications, opportunities and costs for specific dealerships. They’ll send a team to a dealership and say, "This is how you adapt."
Cadillac and Chevrolet are being somewhat collaborative as well. General Motors is picking its spots carefully, focusing on the first wave in California.
Ford is strikingly the outlier in this. They are saying, "Here’s the deal." That’s causing sort of a backlash among some dealers.
I hate to use the term ‘heavy-fisted.’ But it is that in Ford’s case. There are lawsuits filed by dealers in at least three states. Ford’s position is that it is laying out the standards necessary to be a leading EV provider. There are valid arguments on both sides. We haven’t seen the full resolution yet.
Wards: Which way is better?
Barrott: There are different ways to get to the goal. Being more strategic about where (geographically) you select to concentrate on EV sales and which dealers you bring into the EV fold seem like a more successful long-term view of the network.
Wards: There was a recent story that some Buick dealers are cashing out rather than meet GM’s EV requirements. Is that to be expected, or does it merely indicate dealers are different?
Barrott: Right. Some dealers are skeptical about EV success, just like some members of the public are. As a dealer, you will have your view as to whether the EV investment is worth it or not.
Is the juice worth the squeeze in a particular territory? Buick dealers may look at buyers average age and ask: ‘Is that age group particularly interested in owning an EV?’ If that isn’t the case, maybe the best decision is to cash out.
Wards: Mercedes-Benz (has) opened its first dealership (in Yokohama, Japan) selling only EVs. How wise is that? Isn’t that restricting yourself to a small part of the market at this point?
Barrott: Tesla is the OEM with a target on its back right now.
GM has announced it wants to overtake Tesla EV sales by 2025. Mercedes and its parent company Daimler haven’t come out and said anything like that, but secretly I think that is where they want to go.
They feel they have to provide a unique experience to EV buyers. A lot of OEMs feel that way.
In some ways, it makes sense if you put the dealership in the right location and train and educate the dealership staff to a high degree. You pull in, as you say, a somewhat limited market, but you are pulling that market into a dealership that really knows how to sell that vehicle. That has some appeal, provided it is in the right place. There is some merit to what Mercedes is doing.
Wards: A while back, the rap was that customers would go into a dealership asking questions about EVs, and the salespersons not only didn’t adequately answer the questions, they tried to talk the customer out of buying an EV.
Barrott: That’s going to be extremely frowned upon moving forward.
Wards: How difficult will it be to get to the EV promised land? Will there be ups and downs or a smooth ride up?
Barrott: Last year, EVs accounted for 2.5% of North American production. This year, the forecast is north of 5%. That’s significant growth.
OEMs project EV production volumes of 40% by 2030. But Tom Lake of Honda said at a conference, "If consumers don’t want to buy EVs, we don’t reach our target.”
Wards: It’s as simple as that.
Barrott: It’s as simple as that. But we are getting to price parity and maybe even eventual price advantage with government incentives to EV buyers.
There are headwinds, but a lot of core barriers to EV adoption are being knocked down. Those include price, charging infrastructure and range.
Wards: Of the dealers pushing back, are they short-sighted old fogies or are they cautious about where they want to spend their money?
Barrott: That’s a great question. But the dealer group is relatively conservative. They are protective of their space, territory and revenue streams.
A good, skeptical portion of the dealer community is yet to be convinced that EVs are the future. They ask the same questions as others do: ”How much raw material is available to make these batteries? How much power is available to generate them? How much EV demand is in my particular market?” It’s almost blue state, red state.
Wards: What kind of car do you drive?
Barrott: Oh gosh. A GMC Sierra Denali 6.2L V-8 pickup truck. I do have a Mini as well.
Wards: Just to balance it out, right? Do you ever see yourself owning an EV?
Barrott: Absolutely. I’ve driven various EVs. Some are better than others. The best EV driving experience I had was in a Ford F-150 Lightning. Since I drive a truck, I was interested in how it performed. It blew away some other EVs I’ve driven.