An increasing number of electric vehicle (EV) tax incentives and government standards are pushing both consumers and auto dealers to look at electric vehicles more closely now than ever before.
According to Bloomberg, the U.S. crossed the electric vehicle “tipping point” for mass adoption with 5% of new vehicle sales being EVs in the first half of 2022. Looking ahead, OEM and consumer adoption of EVs is only expected to accelerate, requiring dealers to shift gears and re-evaluate their sales strategy to stay ahead of both buyers and competitors.
While dealer adoption will vary from brand to brand, proactive auto dealers can stay ahead of industry trends and take advantage of future sales opportunities by establishing credibility with their current customer portfolio surrounding electric vehicle sales.
In this blog post, we’ll explore the reasons why dealers need to plan ahead to understand the factors driving EV purchases to identify and nurture future buyers including:
· The state of current and future EV growth
· Opportunities for auto dealers who embrace EVs
Electric Vehicles Market Experiences Major Growth
As previously mentioned, in 2022 the U.S. joined Europe and China(the world’s two largest car markets) in crossing the EV tipping point.
Who Is Calling the Shots: Dealers or Customers?
In the past, consumer adoption of EVs has been historically slow; although it took awhile to reach this critical point, consumers are increasingly interested in electric, exploring options and challenging dealers who aren’t prepared to transition with their market. According to a 2022 Recurrent industry study, 80% of buyers would consider purchasing an electric vehicle; this was an increase from just 50% of buyers from the previous year
By 2030, the number of available EV models in the US is expected to increase 10 times over, from 26 in 2021 to 276, according to S&P Global Mobility. While today EV sales are heavily concentrated in select U.S. markets, future consumer adoption is expected to be much more widespread. According to S&P Global Mobility, California’s share of EV sales is projected to decline from 35% to only 12% by 2030.
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Embracing Electrification A Customer-First Approach
Opportunities for Dealers who Proactively Embrace EV Sales
Even with this projected growth, by 2030 the average dealer is projected by S&P to have a new vehicle sales mix of 70% internal combustion engines (ICE) and 30% EVs. However, this shift will have a marked impact on the auto finance industry as S&P Global Mobility finds the average credit scores for EV buyers, both mainstream and luxury, are greater than all ICE buyers.
How Can Dealers Ensure Future Success?
While the projected pace of EV growth will vary based on factors including brand and market, the challenges and opportunities presented to dealers will be the same. Dealers who are proactive in establishing a customer-centric approach will be in the best position to serve this growing segment.
This statement is emphasized by current research showing today’s EV-only brands are lagging behind when it comes to customer experience. In a recent industry survey conducted by Auto News, the 4 electric-only brands, including Tesla, Lucid, Polestar and Rivian, were ranked in the bottom quarter of PSI rankings. According to S&P, Tesla’s share of EV sales is projected to decline from a mammoth 71% in 2021 to only 10% in 2030.
The challenges experienced by EV-only brands, such as responsiveness and poor customer service, present an even greater opportunity to dealers if they embrace EV sales now to proactively build credibility with customers today.
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4 Ways for Dealers to Embrace an Electric Future
Why Proactivity Is Key to Accelerating Dealership ROI
Ultimately, staying ahead of customer demands is key for a dealer’s transition to EV sales. The complexities of maintaining both ICE and EV service and sales operations will be especially challenging and costly for dealerships with disjointed operations. However, dealers who take a targeted approach that incorporates every department have the opportunity to build EV credibility with their customers to accelerate their ROI.
How Can Dealers Maintain Customer Trust?
Before a customer transitions to an EV, they will likely have questions. By ensuring their staff is well-equipped to answer EV-related questions and understanding the factors driving EV demands, dealers will be well equipped to capture EV growth in their market.
Some dealers are scaling their approach by appointing a designated “EV Expert” on their teams. This person’s role is to answer questions and connect customers to valuable resources such as helping buyers navigate and take advantage of all the federal, state, local and utility EV incentives available.
However, it’s important every member of your team can confidently speak to EVs to personalize their approach and build trust with EV buyers. Sincereasoning for adoption varyies from person-to-person, it’s important for dealers to take a data-driven approach to identifying and engaging potential and future EV customers.
For example, using dealership marketing technology like Mastermind, dealers can assess the factors motivating a buyer’s decisions to tailor sales team messaging. If a customer is a homeowner, a salesperson may need to mention in-home charging stations. If a buyer expresses frustration over frequent service visits, it may be worth mentioning EVs offer increased reliability over the ICE counterparts.
Interested in learning how Mastermind can help your dealership embrace future EV sales opportunities? Contact us for a free demo.