There’s a continued disconnect between what the broader automotive industry sees from growing, albeit slowly, EV sales and how U.S. dealers view this class of vehicles. At CDK, we wanted to uncover if anecdotes about a lack of enthusiasm on the retail level were real and to test our own hypothesis that it could be largely driven by where the dealers were located.
Why is geography so important? One word, or place: California.
More EVs are sold in California than anywhere else in the country. Nearly one-third of all battery electric vehicles (BEVS) in the first half of 2024 were sold in the Golden State. And the state of Washington is a major player too. That means dealers in those states likely view the technology much differently than clearly those in more rural areas but also populous areas in states from Michigan and Ohio to Tennessee and South Carolina.
In CDK’s Dealers Face the EV Transition white paper, the map is broken down not just regionally but at a subregional level. That allowed us to look at what’s happening on the ground for dealers, their sales teams, and what store leadership sees as the impact on their bottom line.
It was plain to see that Pacific shoppers were the most interested in EVs at 55 percent while the mid-Atlantic states of Pennsylvania, New York, and New Jersey saw far, far less interest at just 10 percent. That might seem counter to popular thinking, but dealers sell cars in every town, and from the suburbs on out, cars are a way of life that’s hard to change. The least interest came from West South Central – Arkansas, Oklahoma, Louisiana, and Texas at 3 percent. Yes, even though a lot of EV sales happen in Texas, dealers across the state and surrounding states aren’t feeling electric love from customers.
These results came before recent retreats from automakers on their EV plans. Dealer networks are the frontlines when it comes to sales and service, and leadership wasn’t rosy on how EVs would impact their bottom line.
Negative Impact on the Bottom Line?
Nearly three-quarters (73 percent) of dealers think EVs will have some negative impact on their bottom line with 53 percent saying they’ll have a negative impact on both their front and back end gross. Only 7 percent see EVs as having a positive financial impact.
Despite this pessimism, nearly three out of five dealers (59 percent) have already started transitioning their stores to sell and service EVs. Only 11 percent remain steadfast against EVs in the near future, saying they don’t plan any changes to adjust for selling and servicing EVs. But as we noted in our white paper: “Most of these EV-resistant dealers are generally smaller operators, with 75 percent saying they own one to two rooftops, and 89 percent are located in rural areas.”
EVs are in a Transition Period
With all these fluctuating conditions, the key stat of the white paper may actually not be as negative as it seems at first glance. When asked if they were optimistic or pessimistic about the EV transition, most (65 percent) fell into the pessimism camp with 19 percent being optimistic and the rest (16 percent) being neutral. The fact that the pessimism number comes below the number of dealers forecasting lower profits is a tiny sliver of a silver lining.
The thing to remember is that we’re indeed in a transitional period, shifting an entire national fleet of cars from something familiar (and often nostalgic) to an electric future that hasn’t made its case in every corner of the country. The nation’s car dealers are pragmatists and offer an unvarnished view of what they see in showrooms every day.
David Thomas is Director of Content Marketing at CDK Global, a leading provider of cloud-based software to dealerships and original equipment manufacturers across automotive and related industries.