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More Thoughts on Electric Vehicles

It’s surprisngly tough to buy an electric car (other than a Tesla — and that’s tough too but for a different reason. They’re expensive!) There’s a long piece in the NYTimes that goes over all the many reasons and describes the frustrations of buyers who go into Nissan, BMW and other dealers who offer fully electric vehicles (EVs). They find salespersons who know little to nothing about the cars or who, if they do, tried to slide them over to the traditional ICE (internal combustion engine) models.

Why, you might wonder, don’t they want to make a sale? Yes but they’re under pressure from management to downplay the EVs and promote the ICE cars. The reason? “Dealers make three times as much profit from service as they do from new-car sales.”

We discovered this a long time ago. I had become friends with the sales manager of our local Infiniti dealer (we were both horse players and bonded over this fascinating game). When we bought our first Infiniti he sat down with us and pulled up the software that structured their sales. We saw what each car cost him and what he made from a sale. We hit on what seemed reasonable, a $300 profit on a $30k car.

“How,” I asked, “can you possibly keep a dealership like this afloat if you’re only making $300 a pop? That’s only 1%.”

“Well,” he said, “we typically make a bit more on each sale but the truth is, it’s the service center that makes it all happen. Our profit is in maintenance and repairs, not sales.”

Dealers don’t like selling EVs because they don’t need service. There’s nothing to service. No engine, no spark plugs, no oil changes, no belts to fray, no radiator fluid, no transmission, no muffler, no exhaust system (there’s no exhaust!), no gas tank, no filters of any kind. EVs go in once a year for a quick check and tire rotation. Heck, even the brake pads last for damn near ever because the regenerative breaking system means you don’t use them till you’re going 5 mph.

Tesla, the most successful EV car company, understood this economic dynamic from the outset. They do not use dealerships. They sell directly to the customer. Most major cities do have Tesla showrooms where consultants will take you out for a test drive, answer questions and provide advice but they don’t actually sell you a car. You do that yourself, online. A Tesla rep will walk you through the process if you like but it’s just part of the company’s way of doing things.

You can buy a Tesla anytime you want. Just go online, Google “Tesla” and follow the links that pop up. There is, no course, no bargaining. You can’t do what we did with our Infiniti — and what every savvy car buyer has always done, haggle. The price is the price.

I am a huge fan of EV’s. If your daily commute is less than 90 miles or so take a look at the BMW, Nissan, VW, Mercedes, Ford or Honda models. If you routinely take longer trips Tesla, with its 275 mile range, is the obvious choice (though it is a lot more expensive). That NYTimes article says that recharging spots are not all that common. This is not quite true and, anyway, is changing rapidly. Tesla is installing “SuperChargers” around the country and local businesses are quickly discovering that a good way to bring in customers is to have a charger on site

There are several apps (PlugShare, Green Charge and Open Charge) that list all chargers. They are dotted along most of the major highways and soon will be everywhere. We’re at the beginning of  revolution here. When motor cars first appeared you really had to worry whether you had enough gas in the tank to get to the next station. Now they’re on every other corner. Soon we’ll see this same distribution for chargers but with a huge difference: virtually all are free! Yes, it takes longer to charge an EV than to fill up an ICE. Life’s filled with tradeoffs. This is just one more.

As noted in an earlier post our 750 mile, five-day winery trip didn’t cost us a penny in fuel.

How will the old-school auto dealers handle this? I honestly do not know but life moves on, innovation cannot be stopped. Back in the ’90s the ICE-embracing gang managed to derail the first wave of EV’s. But that was then and this is now. The future will arrive whether you’re ready for it or not.

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