Where Do Auto Dealers Fit Into The Clean Transportation Revolution?

The transportation sector is the top greenhouse gas emitter in the United States. With climate change mitigation on the line, it is crucial that we transform the way we travel–and one such solution is transition to electric vehicles (EVs). Lately, it seems that everyone is talking about the EV policy world: it is currently exploding with plans and incentives to get EVs on the road and charging infrastructure in the ground. Less talked about, however, is the role that auto dealers will play in this revolution. Dealerships are on the front lines of getting vehicles into the hands of the people who want them and are excited to facilitate the transition. But challenges still stand in their way. Let’s take a look.

The EV Policy Landscape

At a national level, the Biden Administration has set a goal to build out a national network of 500,000 EV chargers and facilitated new standards and increased investments in EVs and new infrastructure. The Bipartisan Infrastructure Law, for example, has allocated $7 billion for the EV battery supply chain and $7.5 billion for charging buildout. This $7.5 billion includes $2 billion in EV infrastructure funding for underserved communities, as well as $5 billion for the National EV Infrastructure Formula Program (NEVI). All 50 U.S. states, as well as Washington, D.C., and Puerto Rico, have now submitted EV infrastructure deployment plans and will have access to NEVI funding over the next five years. These funds and proposals, as well as countless other state- and local-level EV goals, planning, tax credits (i.e. from the new Inflation Reduction Act), and incentives, will help us achieve a clean transportation future.

Part of the Biden Administration’s agenda includes a target that half of new vehicles sold in 2030 will be zero-emissions vehicles (ZEVs). Auto manufacturers are rapidly developing exciting new innovations to answer the call, and dealers stand ready to drive this transition forward. The National Automobile Dealers Association (NADA) announced this past year that dealers are “all-in” on selling and servicing EVs. In both rural and urban areas alike, dealers across the country are investing billions to train their staff, electrify their facility, improve the EV purchasing experience, and overall reduce barriers to EV ownership.

Dealers Driving Transformation

For generations, dealers have been the heart and soul of the car-buying experience. People enjoy going to one of a network of dealerships, test-driving vehicles, and chatting with a trained expert about which car is right for them. It only makes sense that this would carry forward into the world of EVs, strengthening access and excitement through community connections. NADA is working to ensure that dealers are well-equipped to best serve those with EV interest. Earlier this year, the annual NADA show spot lit electrification, organizing panels with EV experts and progressive dealers, hosting workshops on participating and competing in the EV market, demonstrating the past, present, and future of EVs, and offering a number of other solutions to embrace the EV transition. NADA is also partnering with the Center for Sustainable Energy and Plug In America to host an education platform where dealers become certified in EV proficiency and join Plug In America’s PlugStar Dealer Referral Network.

There is strong dealer buy-in for EVs. There is a wealth of training opportunities and no shortage of resources to help dealers electrify their facility. Federal funds are on the way to help speed infrastructure development. So we should begin to see EVs everywhere, right?

Challenges for Dealers

Well…not quite yet. There are still key issues to be faced. The first problem is that there is a microchip shortage for electric vehicles. Given the pandemic, supply chain issues, and a limited number of chip manufacturers, original equipment manufacturers (OEMs) have been struggling with production volume. Demand for EVs is ramping up across the country, and there are not enough vehicles for the consumers who want them.

Without that supply, what is going to happen when a person heads to the dealership and needs to purchase a vehicle right then and there? Say they have totaled their car and are interested in going electric…but when they get to the dealership, they are told they are on a waiting list of 8,000 people, just at that single point of sale. Even in states where demand is very low, folks are stuck in long queues for EV access. Not everyone can wait around for their lot to be drawn, and they may have to purchase an internal combustion engine vehicle instead.

There is also disparity in where the EVs that are available can deploy. Currently, 12 states are considered “ZEV states”--California, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont. These states have signed a memorandum of understanding (MOU) to support deploying at least 3.3 million ZEVs and adequate fueling infrastructure by 2025.

Those participating in the ZEV program have requirements which mandate automakers to send a certain number of vehicles to their state. OEMs are also simply incentivized to direct more inventory to ZEV states based on heightened interest and mechanisms that provide financial flexibility. So in times of limited EV supply–as we are experiencing currently–non-ZEV states are particularly caught in a lurch. Dealers simply cannot get enough vehicles on the lot.

Hope for the Future

The good news is that the chip shortage will not last forever–it will likely clear up within the next 12 to 18 months. Though ZEV states will still receive more supply, other states can still implement EV-ready measures or even consider signing on to the ZEV program. In the meantime, it is important to continue to get retailers and consumers alike informed and excited about EV options. Dealers should continue to train their employees, taking advantage of funded opportunities such as those offered through Plug In America. They can get ahead of the curve and install the charging infrastructure that will soon be a prerequisite to service their inventory and customers’ vehicles.

If they cannot yet access EVs on the lot, consumers can take advantage of consumer facing events, such as those during the upcoming National Drive Electric Week (September 23rd to October 2nd). This nationwide celebration seeks to raise EV awareness by offering EV test-drives and resources around charging, range, fleet deployment, and more.

Though there are still some roadblocks, the EV revolution is underway, and the good news is that the auto dealers are all in on EVs. Making the switch is to the benefit of everyone across the globe.