Nov 28, 2023 - Business

Car dealers tell Biden: Customers aren't ready for electric cars

Illustration of a traffic light with a yellow lightning bolt icon lit in the middle light

Illustration: Natalie Peeples/Axios

Nearly 4,000 U.S. car dealers are asking President Biden to tap the brakes on proposed emissions regulations designed to ensure that two-thirds of new passenger cars are all-electric by 2032.

  • Consumers just aren't interested, they say, and electric vehicles (EVs) are stacking up on their lots.

Why it matters: Neighborhood car dealers claim to be the best barometer of consumer sentiment — and a group calling themselves "EV Voice of the Consumer" is sounding the alarm about a widening mismatch between EV supply and customer demand.

Driving the news: A total of 3,882 franchised car dealers from 50 states sent a letter to Biden Tuesday urging the administration to slow down its EV mandates.

  • "Last year, there was a lot of hope and hype about EVs," they wrote, describing demand from early adopters.
  • "But that enthusiasm has stalled. Today, the supply of unsold BEVs (battery electric vehicles) is surging, as they are not selling nearly as fast as they are arriving at our dealerships — even with deep price cuts, manufacturer incentives, and generous government incentives."
  • "With each passing day, it becomes more apparent that this attempted electric vehicle mandate is unrealistic based on current and forecasted customer demand. Already, electric vehicles are stacking up on our lots which is our best indicator of customer demand in the marketplace."

Zoom in: Ford's once-hot F-150 Lightning electric pickup is one example.

  • Mickey Anderson, whose Baxter Auto Group has 20 dealerships in Nebraska, Missouri and Colorado, said when the Lightning was first announced, he had nearly 200 refundable orders from early "hand raisers."
  • The list dwindled over time, resulting in 25 Lightning sales — out of a total of 1,000 F-series trucks he sold last year.
  • He's currently got 12 Lightnings in stock — about a six-months' supply — and he's trying to unload them with up to $14,000 in Ford incentives and dealer discounts, in addition to a $7,500 federal tax credit.
  • "While the technology is absolutely brilliant, and I would argue world class, it doesn't change the daily challenges that the American consumer has with an all-EV product today," said Anderson, who tells Axios he is a big believer in EVs.

What they're saying: Customers cite a variety of reasons for avoiding EVs, Anderson and other dealers told Axios.

  • They're too expensive, buyers have no place to charge at home, and public charging is too time-consuming, for example.
  • Dealers say some customers have even traded in their EVs, complaining their driving range was affected by towing a trailer or extreme temperatures. Tires on an EV wear out much faster, too, customers complain.

"It's a hard sell on an EV right now in our market," said Mary Rice, who owns a Toyota dealership in Greensboro, North Carolina.

  • In Toyota's Southeast region, newly redesigned Prius hybrids are flying out of the door, while fully electric BZ4X SUVs are gathering dust, she said.
  • "If people were dying to have EVs, it'd be great because I could sell them," she said. "Instead, I'm going be at the end of the year with this car no one wants. There's no amount of money that makes sense for an EV here."

Between the lines: Car dealers have enjoyed extraordinarily strong profits since the COVID-19 pandemic, when supply chain disruptions led to vehicle shortages and higher-than-normal prices.

  • Now, with a wider variety of electric cars arriving and demand stalling, a price war has broken out — which has many automakers reassessing their EV investments.
  • Dealers stand to get pinched, too. Some Ford dealers, for instance, have objected to the company's demands that they invest in costly EV charging and training to prepare for the transition.
  • Ford told Automotive News last week that it is easing some of its dealer requirements "as we continue to adapt our overall EV strategy to the market and listen to dealer feedback."
  • Another potential threat to dealers might be less service revenue if EVs, which have fewer moving parts, need less repair work.

Catch up quick: The government is spending billions of dollars to speed up the nation's transition to electric vehicles.

  • That includes consumer tax credits, manufacturing incentives and $7.5 billion for new fast chargers.
  • Plus, the Biden administration is now proposing much tougher new-vehicle emissions targets that would likely mean more EVs.
  • The Environmental Protection Agency can't mandate that carmakers sell a certain percentage of electric vehicles — but the agency's proposed limits on tailpipe emissions for 2027 to 2032 are so strict that the only way carmakers can comply is to replace their fleets with mostly EVs.

The other side: "More Americans are buying EVs every day—with EV sales rising faster than traditional gas-powered cars—as the president's Inflation Reduction Act makes EVs more affordable and helps Americans save money when driving," a White House spokesperson told Axios.

Where it stands: EVs currently make up about 7.5% of new cars sold in the U.S., according to Cox Automotive (California accounts for the largest slice of the market).

  • Yes, but: EVs still represent barely 1% of all vehicles in operation in the U.S., according to S&P Global Mobility. Even in California, only 3.5% of the cars on the road are electric.

Reality check: Even with lower prices and government incentives, EVs remain prohibitively expensive for many.

The bottom line: Well-intentioned government policies shouldn't leave ordinary Americans behind, says Anderson.

  • "We've been far too focused on the Tesla buyer, the well-heeled one-to-two percenters," he said.
  • "We're forgetting about the people where a car is not a luxury — it's a necessity."

Note: Cox Automotive's parent company, Cox Enterprises, also owns Axios.

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