All signs point towards electric vehicles (EVs) continuing to grow in popularity. Worldwide sales hit 6.6 million in 2021, almost doubling from the previous year. Factors like climate change and commitments to reach net-zero emissions are helping drive the global shift to gasoline-free driving. With this trend in mind, is your dealership considering servicing EVs?
It’s not a question to be taken lightly. Investments in employee training, charging stations, and service equipment are substantial. For example, last year GM asked that it’s Cadillac dealerships invest about $200,000 on upgrades per facility on charging stations, training, and EV-related equipment. Dealers who balked were offered up to $500,000 to drop their franchises altogether. An eye-raising 1 in 6 opted to cash out and close rather than charging forward with EVs.
Every dealership is different with its own unique business model and goals, so the decision to service EVs really has to be made on a case by case basis. Consider the pros and cons of making the leap now or taking a “wait and see” approach to decide which is best for you.
• Lower Equipment Costs. Dealers who get on board now can often save on equipment because demand is relatively low. As EV sales grow, demand for equipment will lead to price increases. If you’re on the fence about EVs and believe you will eventually make the jump, the time to act is now.
• Affordable Technician Training. OEMs require technicians to be EV-certified and have contracted with third-parties to provide training. These third-parties currently can keep up with demand, but that’s changing quickly. As demand increases, expect longer wait times for training and increased costs due to vendors having to staff-up and invest in more training facilities. OEMs will most likely pass these additional costs on to dealers.
• OEM Support. Some OEMs offer co-ops to cover half or a percentage of equipment and training costs. Research what your OEM offers when considering servicing EVs.
• Tax Breaks. Legislation such as the Clean Energy for America Act proposes tax incentives for investments in clean transportation. While bills are still under discussion and up for a vote, the climate in the country points toward adoption at some point which could result in a nice tax break for dealers who invest.
• New Revenue Stream. Conventional, newer model year fossil-fueled vehicles already require less maintenance then vehicles manufactured 5 to 7 years ago, which eats into service profits. EV service represents a new profit stream for forward-thinking dealers.
• More Collision Business. If you have a collision center, it’s a smart move to invest in EVs now. There is complexity and danger involved in servicing EVs. As insurance companies recognize these factors they will seek out EV-certified centers to send EVs that have been involved in collisions and require repairs.
• Technology. Advances in service center technology mean you can work more efficiently with fewer staff and shift resources toward EV costs. The two-legged expense is the biggest expense. Leaning on mobile applications to allow techs to do more in less time or a Digital Voice Assistant to answer inbound phone calls frees up capital for EV equipment and training costs.
• Cost. The cost of installing high voltage lines, updating electrical panels, buying equipment and hiring/training technicians can be cost-prohibitive. There will also be an increase in energy costs to charge and maintain EVs in inventory, and you have to account for the drivers who swing-by for a free charge because your dealership’s EV charging station is listed on the charging network.
• Training. Training technicians is not cheap and there will be lost production at your dealership while a tech pursues certification. Especially now when techs are difficult to recruit, this is a tough decision for dealers who are already low on techs and have work booked out for weeks. Tech turnover is also notoriously high. Investing in training only to see a tech walk out the door months or a year later is a serious complication.
• Delayed ROI. Studies show that both OEMs and dealers will see a significant decrease in service and parts profits as EVs naturally require fewer maintenance visits than fossil-fueled vehicles. A dealership that spends $100,000 to $200,000 on equipment and training to support EV service may not break-even or see a ROI for years.
• Small Market. Data can be attained to show the number of EVs registered in your primary market and it is strongly encouraged to carefully review these numbers before investing. The EV market in your area may be too small currently to warrant the cost. In all likelihood your market will grow, but it may be best to take a “wait and see” approach. This is especially true for small shops, those in rural areas, and/or those who are struggling to meet current service demands.
Every dealership is different so assess your own business model and goals before deciding to charge into the EV service market. No one knows for sure where the EV market is going, but it is certainly growing. Careful consideration of your shop’s role in this new market should be a part of your long-term business planning.
This article was originally featured in Fixed Op Magazine
To hear more about this topic check out our episode of PDS On The Rocks: Pros & Cons of Servicing Electronic Vehicles in Your Service Drive