NADA Reflections: EV Not Ready for Prime Time
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CEO of Bel Air Partners
Dealership advisory firm
Despite the preoccupation with electric vehicles at the NADA Show, I've lost faith in them, for now. They are just not ready for prime time. I'm not even talking about the burning EVs on the ill-fated cargo ship taking my Lambo down with it. Any fan of "BattleBots" knows batteries are prone to catch fire.
Despite the hand wringing about the inevitable demise of car dealerships, I've gained a new appreciation for the role of independent dealers. True, new challenges are on the horizon, but independent dealerships will continue to be valuable intermediaries benefiting manufacturers and consumers alike.
Road trip
After my fill of the convention, my bride and I rented a car, prepaid for fuel, and went on a bit of a road trip. We wound up at Bryce Canyon National Park in Utah, first passing through Zion National Park.
After three glorious days it was time to drive the 400 miles back to catch our return flight to Newark. It was here that reality intruded in my already not entire embrace of "clean sustainable energy," or in this case the adoption of EVs.
You see I wanted to use every ounce of my remaining gasoline hoping to arrive virtually empty when I returned the rental. It's not that I'm penurious, it's just a matter of principle.
With 100 miles to go, the car reported 160 miles of range left. That posed a dilemma. Even though we were headed back to Vegas, I'm not a gambler.
Imagining traffic jams and construction holdups ahead, I decided to let the rental car company win and get more fuel. Within a few miles we pulled off the road to a big rest stop. Although 15 or so fellow travelers were refueling, I had no trouble finding an empty pump. Five minutes later we were back on the road. As it turned out, we needed the additional fuel and made our flight with time to spare.
Had I been driving an EV, we would be facing a predicament, balancing the stress of locating the nearest charging station against the time pressure of making our flight. Hopefully we'd find one nearby but there were none at the gas station. Besides potentially long charging times or waiting for already occupied stations might have increased my level of panic. Worst of all, if I had decided to skip the charge and ran out of juice, well, who you gonna call? To my knowledge, AAA doesn't currently supply roadside battery charging.
I might have been out West but I ain't no pioneer. Maybe in five or six years, our EVs will meet the dreams of governments and manufactures. Until then, our infrastructure and battery range of EVs do not provide the safety and convenience of ICE cars. At this point I'll just let braver souls than me take the plunge.
Dealers aren't obsolete
That then brings me to another area that generated buzz at the convention: the potential disintermediation of the traditional distribution model. Upstart EV ventures have eschewed traditional car dealers and are selling directly to the consumer.
Let's be clear. Despite the prevailing opinion in some circles, independent dealers are critical to avoid a future mobility fiasco. Independent car dealers are indispensable partners with manufacturers. Even more so for embryonic EV manufacturers.
General Motors has recalled a few of their new Hummers for a minor taillight bug. Note, nothing to do with the batteries. Legacy manufacturers have spent decades to perfect the design and assembly of today's cars but inevitably hiccups still happen.
Its an open secret that our neophyte EV manufactures are experiencing all kinds of design and assembly problems. They like to call themselves technology or mobility companies to please Wall Street, but they are experiencing a multitude of teething problems. Manufacturing vehicles provide a multitude of opportunities for mistakes. If an experienced manufacturer such as GM occasionally misfires, what would you expect from a novice car company?
Imagine if the Hummer recall had been for thousands of units? Fortunately, hundreds of local GMC dealers provide customers a convenient solution to any recall. As the new EV companies achieve scale and manufacture millions of vehicles, they will need the support of local independently owned dealerships.
Without a substantial and experienced dealer body imagine the mayhem customers would experience in the event of a major recall. It may be mundane but local dealers are there fixing minor problems like leaky sunroofs every day. A rule of the business is that customer loyalty is gained in the service lane.
Service is only one reason among many why independent auto dealerships are indispensable. Undoubtedly, dealership consolidation will continue unabated. However, independent car dealerships are here to stay. They bridge the needs of manufacturers and consumers alike.
