Skepticism meets Biden EV push

WASHINGTON — A large majority of dealers surveyed by Automotive News said they are taking steps to sell electric vehicles, but they have mixed opinions on the federal government’s role in supporting the transition and accelerating consumer adoption.

Roughly 82 percent of the dealers are selling or preparing to sell EVs at their stores, according to responses in the 2023 Dealer Outlook Survey of 264 dealers and dealership managers. That’s slightly higher than last year’s results of about 80 percent in a survey of 196.

To get ready, most respondents surveyed in January said they have installed charging infrastructure, followed by purchasing and installing service department equipment and training or hiring technicians specifically for EV maintenance and repair.

While dealers said they’re feeling pressure from automakers to invest in EVs and the necessary infrastructure and store upgrades to sell and service them, they also cited the Biden administration as a driving force behind the EV push — with some supporting federal policy decisions and others deeply skeptical of the government’s strategy and influence.

“There will be different solutions for different people. For the government to choose their preferred solution, then try to bend the market to their decision will be very expensive and just won’t be successful in the long run,” one respondent wrote.

“Any forced or incentive-based EV business will be hard to sustain,” another said.

Lorenzo Serrano, a former general manager of a Subaru store in California who is now the general manager of Zimmer Chrysler-Dodge-Jeep-Ram in Florence, Ky., said both stores are having to make investments that are “too big” for the slow ramp-up of electrified models.

He said the Subaru store poured $150,000 into EV chargers and other related infrastructure investments despite the Japanese automaker having just one all-electric model in its lineup.

“The investments that we’re forced to [make] by the manufacturers are not consistent with a good business plan,” Serrano told Automotive News, noting the Kentucky store also is adding electrical system infrastructure to support a required number of EV chargers.

“Quite honestly, I would say I blame the Biden administration,” he added. “I think the push comes from Biden to manufacturers, and they have to react to it.”

Lincoln dealer Dick Fitzpatrick said he’s generally in favor of the Biden administration’s direction on EVs.

“I think it’s the right thing to do,” he said. “We’ve got to clean up our environment and our air for the next generation.”

Fitzpatrick, who is dealer principal at Crest Lincoln of Woodbridge in Connecticut, said his store has been following the EV guidelines set by the Ford luxury brand. That includes contacting companies recommended by the automaker to assess the dealership property and to determine whether there is enough power for the required number of EV chargers.

For Lincoln dealerships such as Fitzpatrick’s that are in the brand’s top 130 market, the plans are “more aggressive and more expensive,” he said.

Still, most survey respondents said the Biden administration negatively affected their businesses last year, citing high energy costs and inflation as well as rising interest rates.

Dealership executives also were skeptical of Biden’s target for half of all new vehicles sold in the U.S. to be zero emission — battery-electric, plug-in hybrid and fuel cell — in 2030, with nearly 70 percent saying they don’t support the president’s goal.

That includes Rob Gonzalez, dealer principal at Rush Chevrolet, who called the ambitious objective a “pipe dream.”

Unlike some Chevy dealers, Gonzalez said he’s not preparing to sell EVs at his store in Elgin, Texas, about 25 miles east of Austin.

“I’m not anxious to pursue it at this point, but I’m receiving an extreme amount of pressure from the Chevrolet division of General Motors,” he said. “They’re putting a lot of pressure on dealers who are not signed up for EVs to sign up.”

Gonzalez said his hesitance is mainly driven by two reasons.

“I don’t believe that this is a viable, long-term solution,” he explained. “One, the vehicles are extremely expensive. No. 2, the infrastructure to support an EV program does not exist in our country.”

To be sure, the $1 trillion bipartisan infrastructure package signed into law in 2021 included $7.5 billion to help build a national network of EV charging stations, though it will take time for state infrastructure plans to be completed.

The more recent Inflation Reduction Act signed by the president in August includes provisions aimed at boosting U.S. manufacturing of EVs and batteries. The law also revised rules on a $7,500 tax credit for consumers buying new EVs to include more complicated eligibility restrictions designed to incentivize domestic production, reduce reliance on foreign supply chains and prevent wealthy buyers from getting a discount.

While some dealers remain hopeful that the incentives — including a new tax credit for used EVs and a commercial credit that could spur competitive leasing programs — will help EV sales over time, others are discouraged by the changes.

“One move created confusion with brands that manufacture EVs in the U.S. and abroad,” one respondent said. “A consumer visits and notes we have two VW ID4s in stock. One qualifies for a large tax credit, while the identical [unit] parked next to it does not because it was made in Germany. The administration needs to figure out what’s more important: an EV sale or a vehicle made in the U.S.”

Kjell Bergh, CEO of Borton Volvo Cars in Golden Valley, Minn., and a retailer for EV-only brand Polestar, supports Biden’s 2030 ZEV goal but said the restructured tax credit for new EVs will negatively affect his business.

“It was extremely harmful to the administration’s stated objective of converting to clean energy, as far as transportation is concerned, as quickly as possible, and it was extremely harmful to us in that we had large amounts of cancellations and an abrupt drop-off in new business for the all-electric vehicles,” he said.

Chevrolet dealer Tom Castriota said his dealership in Hudson, Fla., sold three Bolt EVs within a two-day span at the start of January because customers wanted to wait until 2023 when certain GM vehicles became eligible again for the credit.

“We’re at an advantage with GM,” he said, citing the automaker’s planned EV lineup and ability to meet the credit’s North American assembly requirements.

Despite new eligibility challenges, most respondents said the Inflation Reduction Act’s EV tax credits will either have a positive effect on their business and ability to sell EVs or no effect.

“As dealers, we can dance. We move as the environment requires,” said Crest Lincoln’s Fitzpatrick. “As we move forward and the administration continues on this pathway, we’re going to be OK. We’ll have to adjust, certainly. We’ll have to modify some of the things we do, but I think we’ll be all right.”