Where traditional dealerships are missing the boat on EVs

How do you sell a product that your customers don’t yet know they’ll love? Why even try?

These are the sorts of unanswered questions that lurk just beneath the consciousness of car dealers. In other words, the questions are just beneath the surface, waiting to bubble up, but just haven’t been asked yet. Why are they still in the subconscious? There’s several reasons:

• Experience: If you look at what the managers and owners of car dealerships drive, as their demos, most of them are large trucks, SUVs and (especially in the case of foreign manufacturers) luxury sedans. In other words, even the dealers do not know if they’ll like driving a plug-in vehicle, because they haven’t tried it themselves.
• Effort: The salespeople at dealerships are like everyone else (including you and me, if we’re being honest here). They want to get the job done with the least amount of effort. The job is moving metal, selling vehicles, at a profit. Selling a plug-in vehicle is thought to be a difficult task and, in some ways, it is. The salesperson has to learn about the vehicle and so does the potential buyer. If a salesperson is lucky, there are many more buyers than salespeople. That’s a good thing, but think of it this way: If every one of those buyers has a different question, the learning required to avoid embarrassment can seem staggering!
• Time: Salespeople are (typically) commission-based, rewarding those who can turn deals quickly and move on to the next potential buyer. Educating buyers is counter to this way of doing business. Managers are (usually) given bonuses when their teams reach a certain goal in units sold. That’s why it seems like deals are better at the end of the month. As payday and bonus award day approach, both managers and salespeople that may have lagged in their goal attainment and income start to freak out. Sometimes, their job is on the line. They become willing to sell for less, instead of haggling for more, because they’ve got to get the deal done and get another one started right now. EV sales slow the process down and are therefore, avoided.
• Unknown product: This problem is the OEMs either have dropped the ball or have intentionally fumbled it. Bloomberg pointed this out in a study, where it was shown that manufacturers that produce both electric vehicles (EVs) and internal combustion engines (ICE) are dragging their feet, when it comes to plug-in vehicle adoption. They are doing a balancing act, trying to eke out every last dollar of profit, from their traditional vehicles, while keeping their toe in the water of electrics. This can be seen in the lack of television advertising, except on the right and left coasts, where the manufacturers perceive the people most interested in EVs are located. I’ll just bet, if you heard Sam Elliott’s drawl and deep voice, you’d expect to hear about a certain brand of pickup. If you heard Bob Seger singing, “Like a Rock,” you’d think of another pickup. In my own experience, to this very day, people walk onto the Chevrolet dealership where I work and are shocked (pun intended) to hear that Chevy makes plug-in vehicles!

Do most of the manufacturers believe that electric vehicles will be the future of their corporations? They certainly say so. But isn’t it interesting that they are all coming out with many new electrically powered vehicles in about 4 to 5 years? It’s like the sign in a diner that says, “Free lunch tomorrow.” We patiently wait, but today is never tomorrow (or 4 to 5 years from now, for that matter). This behavior does not come without a risk. Some of the major manufacturers, whose existence we take for granted, may not survive.

When Steve Jobs showed the first iPhone to the world, the mobile phone market had been stagnant. Incumbent sales leaders were happy to produce phones with very few changes in functionality. Only the form factor would change. They were bricks. Then they would fold in half. Then they would have hidden keyboards that would slide out. Then they got very thin. Then they had color screens. Then QUERTY keyboards and style. What a time to be alive!

Then everything changed.

Every mobile phone manufacturer seemed to change their product line overnight, although it wasn’t quite that fast. Some failed to make the move, like Blackberry (once the most desired phone of Wall Street), Nokia and Motorola. I myself owned two of those phone brands, but knew, as Steve Jobs left the stage, that I wanted an iPhone so bad I could taste it. Remember how people camped out every time Apple launched a new iPhone. Was there resistance by the other manufacturers? You bet! The CEO of Microsoft, at the time, Steve Ballmer scoffed at the idea of anyone spending $595 for a cell phone! Just three years later, Microsoft held a funeral for the iPhone.

But three years is a long time, when consumer tastes change. When’s the last time you had a mobile phone from Microsoft? Nokia? Motorola?

Even the way mobile phones are sold has changed. It used to be you went to the phone store of your network provider and selected a phone they supported. Certainly this hasn’t ended completely, but ask yourself, how many times have you gone to the phone manufacturer’s store instead of the network provider’s store? I’ll bet if you live in a decent-sized city, you usually buy at the manufacturer’s store.

Here’s the risk for vehicle dealers: If they don’t find a way to successfully market plug-in vehicles, someone already has. There’s a new Steve Jobs in town and his name is Elon Musk!Those of us in the EV industry owe a debt of gratitude to Mr. Musk, whether we sell Teslas or one of their competitors’ EVs. He made EVs sexy, a thing to be desired, lusted over and one day…acquired. He made us want.

We’ve seen an amazing thing, over the last 25 months. The Tesla Model 3 has, just last month, surpassed the combined lifetime sales of the Chevy Volt and Bolt EV, in the U.S. The Bolt EV has been on the market for only three months longer than the Model 3, so that may not seem like such a big deal. However, the Chevy Volt has been on the market for 6 years and 8 months longer than the Model 3! In fact, the Volt’s sales are higher than any other plug-in hybrid, in the U.S., EVER! The Model 3, in just 25 months, outsold them both, by 15,433 units, which is over ten months’ worth of the Volt’s average monthly sales.

That’s a sea change happening before our eyes.

Are potential Tesla owners more informed about electric vehicles? In my opinion, no. I’ve had new Tesla owners visit my dealership to recharge their vehicle on our public, level 2 charger, not realizing their plugs wouldn’t work, because they have a different plug configuration. In one case, I told a Tesla owner that her Model 3 probably had an adapter that would let her plug in and charge. A quick look at the owner’s manual and we found the adapter.

This taught me that success isn’t just educating the customer and that’s what most of the other manufacturers just don’t get. It’s about desire. They need their clients to covet their EVs like Tesla fans covet the Model 3.

As Hannibal Lecter said:

“And how do we begin to covet, Clarice? Do we seek out things to covet? No. We begin by coveting what we see every day.”

Tesla has been lucky, in this respect. Without having to spend a fortune on advertising, the story of Tesla has been on every screen before our collective eyes. Elon’s sometimes outrageous behavior, his hipness, his ability to promote an idea like Steve Jobs used to do, has kept him (and his products) in the public eye.

Other EV manufacturers will have to try harder, or come up with a “face of EVs” for their own brand. One hint: As much as I love these guys, Sam Elliott or Bob Seger is not that person. If manufacturers do not find a way to promote EVs in an entertaining, informative and engaging way, they won’t succeed in selling them, and if they don’t succeed in EVs, they’ll go the way of Studebaker, Tucker, et al.

In my opinion, dealers have an easier road, as far as promotion goes, but may be doomed by the very nature of the way they do business. If you’ve been reading My Electric Vehicle Journey for a while, you probably know I’m a car salesperson at a Chevy dealership… in Texas. I specialize in plug-in vehicles, but sell everything Chevy makes, in order to make a living. However, those that know me, know my heart is dedicated to electrics. I don’t have access to the sales numbers of salespeople at other Chevy dealerships, but I probably have sold more Volts and Bolt EVs than any single salesperson in Texas, Oklahoma, Arkansas, Louisiana, New Mexico, Colorado, Kansas…well, you get the idea. I’m sure there are salespeople in California and New York that are way ahead of me, in plug-in Chevy sales, but they’re not in oil rich Texas.

How do I do it? Actually, there are two secret ingredients: I absolutely love electric vehicles and I have the support of the dealership’s owner and management team. Both of these are critical to the EV salesperson’s success. You cannot fake enthusiasm. I’ve been told by my coworkers that they can tell, just by the way I walk, when I am working on a Volt or Bolt EV sale. I truly get excited about the prospect of sharing my adventure with a newbie. However, without the support of management, I would probably have been cast aside years ago. I do not produce the highest profit margins of the members of the sales staff. We dominate EV sales in the DFW area, so that’s success enough…for now. The owner of the dealership is forward thinking and sees where the world is going. To put it bluntly, he placed a bet on me and I believe it has paid off for him.

New car dealerships, in general, work a certain way. When times are tough, they advertise low, low prices, but consequently offer lower prices on the vehicles traded in. When things are booming, or there’s a new vehicle in very high demand, (say, the 2020 mid-engine Corvette Stingray) prices are firm and trade-ins do better. Negotiating is a big part of the game and many people, including me, avoid getting a new vehicle, until they cannot wait any longer. We just hate haggling over price and have the fear that a colleague at work, friend or family member, will buy the exact same car for a much lower price. This is such a common feeling, among buyers, that I’m sure you’ve seen commercials for dealerships that offer “no haggle buying.” Tesla has a simpler approach.

• You configure your vehicle.
• You’re given the same price as anyone else.
• You buy.

Many, many people want this. However, I’ve definitely found that some people really want to haggle. I’ve even asked, ahead of negotiations, “Do you want my best price or do you like to haggle.” Almost always, they want my best price, up front. Then, some want to haggle, from there. There was a legendary salesperson who once told me he ended a negotiating session, after he had reached his best price, by saying, “So, what you’re saying is you’re looking for a good buy, right?” When his client answered in the positive, he held out his hand and said, “Well, goodbye!”

I’ll never have the guts to try that…but I’ve come close.

The EV buyer is more networked than other buyers. They’ve had to be, because most salespeople they’ve encountered can’t answer their questions. This networking includes sharing the price paid by others, incentives available from OEMs, where to get the best after-sale service, etc. Due to this, the dealership (and salespeople) have to decide to either a) become the discount dealer and live on thin profit margins or b) become a useful resource for their EV clients and earn their profit margin. The latter is the road I took. I have had clients tell me unbelievable offers they’d received and I asked them, incredulously, “Then why are you here??? That’s the deal of a lifetime!”

Then again, I’ve spent hours, calling every client that bought a plug-in vehicle from me in the last nine months, because there was a new, retroactive state rebate that became available, from which they could benefit financially.

So how can dealerships get turned in the right direction?

• First, the basics:
  • Keep your plug-in vehicles charged. (Duh) In a hybrid, failing to do so robs the potential buyer of the experience of driving electric. In a fully electric vehicle, it prevents the test drive and therefore, the sale.
  • Keep your plug-ins grouped together, in a prominent place. They may not be your best-selling vehicle today, but they will be and establishing your dealership as a leader will reap benefits.
  • Put one on the showroom floor and rig a charger on a stand, next to the car. Even though it’s just a display, go ahead and plug the vehicle into the display charger. When I’ve done this, many more people stopped and started asking questions about out EV & PHEV offerings.
• Select a salesperson, perhaps one curious about EVs, and give them a demo EV to drive for three months. Allow them to charge at work. Let them live the EV lifestyle and watch their enthusiasm grow exponentially. Do the same with a manager. An added benefit is that some of these salespeople will buy an EV, when they get their next car!
• Use long-range EVs in your Service Department’s loaner fleet. Most loaners are out for three days or less. Make sure the customer is shown how the EV works and are comfortable, in case they have to charge. Most won’t need to charge. They’ll return the EV with their eyes opened to the possibilities. (We call this, “butts in seats.”)
• Have “ride and drive” events, where the EV curious can come in, without any sales pressure, just to take a test drive. Have a knowledgeable, EV-experienced person ride along, to answer any questions that come up. Make sure the guests get to experience EV acceleration as well as energy regeneration.
• An alternative to the “ride and drive” event, is a “challenge event.” Many people are so satisfied and smug with their ten year old hybrid, thinking they have an efficient vehicle, so they don’t need to consider an EV. Have one person drive their existing vehicle and the other drive the EV…simultaneously, on the same test drive route. Pair their cell phones to both vehicles, so they can talk to each other, while driving. Again, make sure they get to experience EV acceleration.
• Host EV learning sessions, off the sales floor, so a group of EV curious people can come in, at a set time, to ask questions and get answers.
• Participate in EV gatherings, like Earth Day celebrations, National Drive Electric Week, etc.
• Set up kiosks where clients can watch short videos that explain the fun of EV life as well as its benefits to the planet and their wallets.
• Decide to make a reasonable profit on sales, rather than taking a loss on inventory that cannot be moved. Let the uninformed dealers, that do not understand EVs, sell their inventory out, below their cost. They won’t reorder after that and you’ll be the one people flock to, because your sales staff will become more interested in EV sales and therefore, more knowledgeable and the haggling will come to an end.
• Get your Preowned Department involved in EVs! A considerable number of EV buyers today cannot afford a new EV, or cannot qualify for the Federal Income Tax Credit for plug-in vehicles. Don’t let these customers leave to buy elsewhere! Make sure your preowned staff has a member fluent in EV, that the lot has at least one lever 2 charger and keep your inventory charged! Nothing is more disappointing, to a potential buyer, than finding the vehicle they want to test drive is stranded (EV) or only able to test drive on gasoline (plug-in hybrid).
• Speaking of departments, let’s talk about the Service Department for a moment. This is where dealerships have a chance to prevent the end of the dealership model. By dealership, I mean a franchised business, selling and servicing vehicles, rather than an arm of a manufacturer. In my opinion, one weakness of the Tesla direct sales model is the expense of having service facilities in small towns. Yes, EVs have much lower service requirements, but when I want my Volt serviced, I don’t want to wait weeks to get in, due to there being a small number of service locations, handling a large number of customers. This will be much worse for those in rural areas. The dealership model has successfully provided service, even in very small towns and provided employment opportunities there. For a single entity, this would be extremely difficult to implement.
• One other department to address is Marketing. Larger dealerships send out mailers, in order to remain in the forefront of their customers’ minds, when it comes to their future needs. However, many continue to shoot themselves in the foot by sending out mailers/email ads that tout new models in which most EV purchasers have no interest, like large trucks and SUVs. Even worse, sending out a coupon for a free oil change, when the only vehicle purchased by the client is an EV, reflects poorly on the dealer and undermines any image of expertise they’ve tried to establish. EV owners are quick to post images of these coupons in Facebook groups, as humor. Please, stop doing this!
• In short, build a community for EV owners and the EV curious!