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EV Service is Off to a Good Start

by David ThomasJanuary 15, 2024
Electric vehicles are a game changer in many respects. But how will they affect the way service is traditionally delivered at dealerships?
David Thomas, CDK Global.
David Thomas, Director of Content Marketing at CDK Global.

The common belief that the simpler design of EVs and fewer mechanical parts would prove a detriment to car service providers is slowly changing course. There may not be an oil change but software- and hardware-related issues, along with an array of recalls, have shown EVs will be making repeated stops in the service department.

That’s why CDK Global reached out to dealership and service department leaders across the country and brands that sell EVs to find out where they stand today and what they think of the future. If nothing else, the EV Service: Today and Tomorrow study suggests that the current service model is unlikely to radically change for years to come.

When you look at EV sales and service, there are a lot of conflicting numbers out there. There are two important facts, though, that overshadow the entire conversation that need to be addressed head-on and then simply put aside. Essentially, half of all EVs sold today are Teslas. And half of all EVs, Tesla or not, are sold in California.

These giant figures are why you hear such different attitudes about EVs from traditional automakers and, of course, their franchised dealer networks. Overall, EV sales may be up by 50 percent in 2023 but to a dealer in the Midwest or Southeast, they may be staring at slow-moving inventory and sales in the single digits.

Just 2.5 percent of new car sales at franchise dealers nationwide are EVs. Not surprisingly, 2.4 percent of all repair orders at dealership service departments are for EVs. These numbers may rise as 2023 comes to a close, but it’ll still be far lower than any national number that’s being reported, which includes Tesla sales and, of course, California.

Yet, every respondent in CDK’s survey said they’ve already begun servicing EVs or will within the next two years, and 99 percent said they have at least a portion of their staff trained on EVs. Nearly nine out of 10 (88 percent) has charging stations on site and 64 percent of those respondents have more than one charging station in the service department. The next time you see a story that claims dealers aren’t prepared for EVs, please keep this in mind.

Perceptions vs. Profit

The single finding that I come back to in our study is that dealers are somewhat pessimistic about EVs in the service lane but not about how much money they’ll make. Only 42 percent of service leaders feel positive about the future of EVs. There’s no sugar coating that.

But when you ask this same group where they see revenue going in the next two years, four out of five see both total revenue (79 percent) and EV revenue (78 percent) increasing.

Much of this is likely due to warranty work, which has always been profitable for dealers, but the latest wave of EVs have proven to require a bit more than most anticipated. Indeed, 89 percent of the service leaders CDK surveyed expect EV warranty volume to increase in the next two years.

EV service at dealership.

EV Service Not Much Different

Two of the primary reasons people choose a dealer over an independent mechanic or chain for service is for the factory-trained technicians and OEM-supplied parts.

When you look at the EVs from traditional OEMs today, and in the next few years, there are few, if any, options for service outside of a dealership.

Service retention falls quickly when a new car ages out of its warranty, but for EVs that may not be the case. And in many areas across the country, there simply won’t be another option for many years. That could be why 77 percent of service leaders said they expect retention to remain the same or increase for EVs.

Now, will independent shops eventually be able to invest in the advanced equipment, additional lifts, safety gear, and training that dealers already have to fix EVs? Yes. But this is one area where traditional dealers have a leg up on the competition, and they need to ensure they prove their value during this transitional moment.

Service departments will focus more on tire maintenance with the demise of oil changes to keep customers coming in and many respondents agreed on their importance. And while there are fewer moving parts in an EV, there’s more technology that’ll require skilled labor to address. Not everything will be solved by an over-the-air update.

EVs will need service and maintenance, and the infrastructure for it is already in place at the dealership.

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.