Dealers Warn of Impending EV Mandates: Challenges and Opportunities Ahead

A group of over 5,000 car dealers have voiced their concerns about the lack of consumer demand for electric vehicles (EVs). Earlier this year, they lobbied the White House to ease impending federal fuel efficiency regulations that would require automakers to sell significantly more EVs. Now, they are sounding the alarm over upcoming EV mandates, particularly in the so-called Zero Emissions Vehicle (ZEV) states.

Navigating the Shifting Automotive Landscape: Dealers Grapple with EV Adoption

The ZEV Mandate: A Looming Challenge for Dealers

The ZEV states, which include California, Connecticut, Colorado, Delaware, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Oregon, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia, all follow the emissions standards set by the California Air Resources Board. These standards require that by 2035, 100% of all new cars and light trucks sold in these states be zero-emissions vehicles, which includes both plug-in hybrid EVs and battery EVs.This mandate is set to take effect starting with the 2026 model year, which means that by midway through next calendar year, a third of all new vehicles sold in these states must be battery EVs. However, the car dealers argue that there is not enough customer demand for electrified vehicles to support this requirement, and it would ultimately lead to higher prices for gasoline-powered cars.

Addressing the Demand-Supply Disconnect

The car dealers' primary concern is that the ZEV mandate will create a mismatch between supply and demand for EVs. They claim that dealerships will be allocated fewer internal combustion engine and hybrid vehicles, while the lack of BEV sales will result in excessive demand, driving up prices for customers.This disconnect between the regulatory push for EVs and the current consumer appetite presents a significant challenge for dealers. They argue that the mandate will force them to sell more EVs than their customers are willing to buy, potentially leading to unsold inventory and financial strain.

Bridging the Knowledge Gap: Educating Customers on EV Adoption

One of the key issues highlighted by the dealers is the lack of knowledge among their customers about EVs. The open letter from the dealer group complains that customers are often uninformed about crucial aspects of EV ownership, such as charging infrastructure, battery life, and range limitations, especially in colder weather.This knowledge gap poses a significant barrier to EV adoption, as customers may be hesitant to make the switch without a clear understanding of the technology and its practical implications. Dealers argue that they are in a prime position to educate and inform customers, but the current mandate may limit their ability to do so effectively.

Navigating the Transition: Opportunities for Dealers in the EV Era

While the dealers' concerns about the ZEV mandate are valid, the shift towards electrification also presents significant opportunities for forward-thinking dealerships. By embracing the transition and proactively addressing customer needs, dealers can position themselves as trusted partners in the EV revolution.Investing in employee training, developing comprehensive EV sales and service capabilities, and leveraging digital tools to enhance the customer experience can help dealers capitalize on the growing demand for EVs. Additionally, dealers can explore innovative financing options, such as leasing and subscription models, to make EV ownership more accessible to a wider range of consumers.Furthermore, dealers can play a crucial role in shaping the future of mobility by providing valuable feedback to automakers and policymakers. By engaging in constructive dialogue and collaborating on solutions, dealers can help ensure that the transition to EVs is smooth and beneficial for both the industry and consumers.