Dealers Remain Obstacle to Growth in Electric Vehicle Market

By · December 05, 2015

Shopping for an electric car

It's been five years since mainstream electric cars like the Nissan LEAF and Chevy Volt went on sale. In that time, plug-in car buyers have repeatedly complained about poor consumer experiences at car dealerships. Most of their stories fall into two categories:

  • Undertrained sales people who don’t know very much about the cars and the underlying technology
  • Dealers pushing shoppers to consider conventional gas vehicles instead of the plug-in they came in to buy

Online forums provide numerous anecdotes about this apparent dealership bias against electric vehicles. And in the last year, the evidence has become far less anecdotal.

The New York Times recently investigated the phenomena and its causes. The newspaper cited a speech by a former chairman of the National Automobile Dealers Association. The industry group head compared electric vehicles to broccoli and gas-powered vehicles to “low-calorie doughnuts.”

Last year, Consumer Reports published the results of a secret shopper study of 85 dealerships in four states, finding that at 35 of those dealerships sales staff attempted to steer buyers toward internal combustion vehicles instead of a plug-in they had expressed interest in. Thirteen of those dealers tried to entirely discourage shoppers from buying an EV.

Why would a salesperson discourage the sale of a (typically) more expensive plug-in in favor of cheaper gas model?

“What a Hassle”

These issues are not new and the causes are fairly well understood. In fact, the University of California Davis completed a study of customer satisfaction surveys and dealer interviews conducted by JD Power in 2013. Its findings suggest that many dealers view electric vehicles as a “hassle,” requiring a bigger investment of time and money to move. Dealers cited longer perceived transaction and delivery times that would limit staff’s ability to help other customers. However, data from the study seemed to contradict that perception, showing that plug-in transactions actually took less time to complete.

Dealers also claimed to make less of a profit from plug-in sales than from conventional gas-powered cars. Again, the UC David study indicated the reverse to be true—with the average plug-in sale resulting in a $1,050 markup compared to $650 for a gas car.

The reluctance of dealers to push EVs might lie in legacy profits extending years after the initial sale—particularly maintenance visits, which are less frequent for plug-ins. According to NADA, dealerships make as much as three times as much from after-sale services as they do from the sale itself. Without the need for services like oil changes and belt repairs, a dealer is far less likely to see regular return business from a plug-in owner. The UC David study confirmed this, finding that plug-in buyers were 11 percent less likely to say they planned on returning to the dealership for further services after the sale.

The Short-Term Solution

The UC study recommended a number of policy refinements that could increase dealership interest in plug-ins in California, mostly relating to state incentive programs.

If the lack of recurring post-sale revenue is actually a driving factor dealers’ decisions to ignore plug-ins, it will likely require more than streamlining a tax rebate. The issue will likely continue to be present until plug-in demand significantly grows. Yet, it will take at least a few years before the market becomes strong enough to force the hands of car dealers.

In the meantime, plug-in consumers can take matters into their own hands—first, by calling local dealers in advance and asking to speak to an EV specialist. If a dealer doesn’t have one, move on to competitors in your area until you find one that has a passionate and informed EV specialist. Then, ask the specialist the questions you may have about the car over the phone in advance, mostly to gauge the dealership’s interest in plug-ins. And when you find a dealership that cares about selling an EV (and all the benefits that a zero-emissions car provides), give them your business and spread the word about your positive experience.

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.