While other industries suffered significant losses in 2020 because of the economic challenges brought on by the COVID-19 pandemic, the electric vehicle (EV) industry flourished and is now expected to make up 53% of auto sales by 2030.
As interest in EVs continues to grow, dealers need to adjust their sales process to better accommodate the EV buyer persona and prepare for a future EV-dominant market.
Dealerships vs. Direct-to-Consumer
One of the biggest challenges dealerships face in the coming years will be EV availability. Many new EV manufacturers like Rivian and Tesla are opting to forego the dealership model in favor of selling directly to consumers.
Fortunately for dealerships, direct-to-consumer sales are not currently legal in all 50 states, but Tesla and others are lobbying to change that. In 2021 alone, 13 states considered new legislation that would create more opportunities for manufacturers to own and operate their own dealerships in order to sell EVs directly to their customers. If more states start to allow direct-to-consumer sales, dealer profits for new EVs in those states will be significantly reduced.
There is, however, an opportunity for growth and profit within the used EV market. Right now, this particular corner of the automobile market is still in development and inventory is relatively scarce, but within the next few years, current EV owners will start to replace their cars with newer models, creating lots of opportunities that dealerships can take advantage of.
Prioritizing Front-end Training
The EV industry is still in its infancy, but dealerships should take steps now to ensure they’re prepared for an EV-dominant market in the future. Some manufacturers are offering incentives or, in some cases, ultimatums to their dealerships to encourage EV-friendly growth to happen sooner rather than later. Recently, Ford gave all of its dealers the choice to either invest their own money into building infrastructure such as on-site fast chargers or forfeit authorization to sell Ford EVs in the future.
Not all manufacturers are requiring their dealers to make such large personal investments, but it doesn’t hurt to start making some changes now, even if it’s on a much smaller scale. One small, low-cost action that can put you miles ahead of the competition is to include EV material in your front-end sales training.
66% of customers place more value on their experience during the car buying process than the price of the vehicle when deciding to make a purchase. A well-trained sales team who’s prepared to deliver an excellent purchasing experience for EV buyers will have an advantage over competitors whose reps are less knowledgeable about the topic.
Reps should be able to accurately answer questions about how EVs compared to internal combustion engine (ICE) vehicles, the total cost of ownership and maintenance, battery longevity, and charging options. The more in-depth knowledge a dealership can provide on the unique benefits of EVs, the better they will be able to position themselves as leaders in the EV market.
Identifying EV Customers
As you consider making changes to help your dealership adapt to an evolving industry, ask yourself: Does my current target audience fit the EV buyer persona? Knowing how closely your target market currently aligns with the average type of customer purchasing an EV can help you decide what type of changes you should make and when to implement them.
The current average EV customers are middle-aged, caucasian, have a college degree or higher education, and make over $100,000 per year. This buyer persona is fairly restricted due to EV’s high purchase price, which is often one of the biggest barriers to first-time EV buyers. However, EV production processes will become more efficient over the next few years, allowing for the initial purchase price to drop and become more affordable for average consumers. This will allow for the development of a broader, more diverse EV buyer persona.
Thinking Ahead
While there is definitely going to be an increase in EV purchases made by the average customer, dealerships should also be looking to expand into more EV fleet sales and services. Government incentives and company goals of becoming more “green” have resulted in a big push for electric fleet vehicles.
USPS, Amazon, and other local and regional businesses that spend significant time in the field are looking to invest in EVs and build environmentally friendly fleets. Electric vehicle fleets are now predicted to number over 20 million. Service vehicles, delivery vehicles, and ride-sharing workers are all opportunities for sales expansion.
Additionally, the development of auto-pilot and self-driving technologies are something to keep in mind while planning for the future. Dealers can position themselves as the go-to for servicing these types of vehicles. As car-sharing becomes cheaper, more consumers will opt to use a ride-sharing service over owning their own car, especially in dense urban areas. It’s not out of the question to envision a future where consumers subscribe to a ridesharing service like they do a cell phone plan today.
So what’s the key takeaway? Dealerships can no longer get away with simply planning for the immediate future. Only making adjustments for things that will happen within the next two to four years limits the ability to capitalize on a rapidly growing market. To stay ahead of the competition, dealerships need to start strategizing now for a future that’s 10 years away. Take the next few years to futureproof your dealership and surpass your competition permanently.
OfferUp Can Help
With hundreds of thousands of vehicles sold on OfferUp every month, we are here to help you. Many fo our dealer partners have reached out to find out how their dealerships can compete and attract these same buyers in the marketplace. Contact us to talk with one of our automotive experts and we'll help you solidify your digital strategy.