Electric Vehicles Need Dedicated Sales Organizations

JAN 20 2019 BY DAVID ROPER 36

Should legacy automakers develop an independent brand for EVs and approach sales from a different perspective?

It is well known that Tesla sells its electric cars with a combination of online and Tesla-store ordering. Delivery of a Tesla vehicle can take place at a Tesla store or service center, or possibly at the buyer’s home or business. Eight U.S. states do not allow Tesla to sell its cars in those states because they are not sold at a legacy car dealer.

Also, it is well known that legacy car dealers are not good places to sell electric cars for several reasons:

  • Electric cars (EVs) are very different that internal-combustion-engine (ICE) cars. Sales persons have to spend much time learning about the electric cars that they can sell. There are two kinds of electric cars: Plug-in hybrid cars (PHEVs, such as the Prius Prime) and battery-electric cars (BEVs, such as the Tesla Model 3).
  • Some customers who are seeking to buy an electric car often know more about the EVs they seek than a sales person knows. Other customers need much time with a sales person to learn about electric cars.
  • A large fraction of the profit of legacy car dealers comes from maintenance after sales. Since EVs, especially BEVs, require much less maintenance than do ICE cars, legacy car dealers obviously are not as interested in selling EVs as they are in selling ICEs.

So, it is obvious why Tesla does not want to sell its BEVs through legacy dealers. In fact, it is obvious that legacy car manufacturers need to set up dedicated EV dealerships to sell their EVs.

Volvo has figured out a way to do that by establishing a new car brand only for EVs, the Polestar. A Polestar can be ordered online similar to the situation for Tesla cars. According to Motor1:

That means customers can research, configure, and order cars online. If customers want to see a car before ordering, they can do so in a franchised Polestar Space. Here, customers will interact with non-commissioned product experts (not sales personnel) who will provide any information they need. These “spaces” will also offer pick-up and delivery servicing so customers won’t have to wait at a dealerships service center while their vehicle is being serviced.

Polestar is also offering a subscription service for customers, much like Care by Volvo. Here, customers can cover nearly all the associated costs of ownership through the service, including insurance, maintenance, repairs, and car payments. All customers have to pay for is gas.

The main difference between how Tesla sells EVs and how Polestar does is that the sales locations for Polestar are owned by franchised businesses instead of by Polestar.

Plugstar.com is a good place for EV customers to view details about available EVs before approaching a legacy dealer about buying or leasing an EV.

All EV manufacturers need to either sell their EVs as Tesla does or as Polestar does. The Smart Columbus Experience Center in Columbus Ohio where EVs from several legacy car dealers are on display and are available for test drives is a baby step toward separating EVs from ICEs for sale.

L. David Roper, roperld@vt.edu, http://www.roperld.com/personal/roperldavid.htm

*Above web address is not secure.

If you’re interested in searching for a new or used EV, check out our sister site, MYEV.com.

Categories: EV Education, General, Tesla

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36 Comments on "Electric Vehicles Need Dedicated Sales Organizations"

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The points in this article are very strong. Especially the back end maintenance profits that ICE vehicles yield over EV’s. Selling both side-by-side is nearly impossible for legacy manufacturers, due to the fact that most compelling features of EV’s directly point out the flaws of ICE. It’s like selling CRT televisions right next to flat panels. It doesn’t work.

“Like selling CRT televisions right next to flat panels” – was it a sarcastic comment? I don’t remember any issues. Flat panels won because they were clearly superior to CRTs in areas matters for the most of the customers.
I cannot say that EVs are always superior then ICEs.

You’re correct, Cfttester. Sadly, legacy manufacturers are in a difficult position. If they truly built EVs with passion, they couldn’t fail to be superior to their ICE counterparts. Having them together in the same showrooms would kill their ICE sales. Hence, EVs are not always superior to ICEs.

Tesla avoid both issues. They don’t have to cripple the potential of their EVs because they don’t produce inferior products in competition with themselves.

ICE cars have nothing on EVs other than the energy density of the fuel they use.

At this moment EVs are solving problem majority don’t care about. Record breaking 0 to 60 time, bit less noise, who cares? What are the most popular form factors in US?Where is EV equivalent of RAV4 or Odyssey? Where is EV competitor of Ford 150? I don’t see them hence adoption goes really slow and dealerships are a bit of scapegoats.
Maybe Tesla should hire a couple of guys for their marketing department instead of making whatever vehicle Elon needs in his current phase of life. 🙂

How about the OEM making all the dealers put their salesforce through EV training and driving courses?
Then there is not excuse for not understanding EV’s and that they are the way of the future.
I’ve seen the three sides of the argument. Tesla (positive), Jaguar(positive) and Renault(couldn’t care less).

Legacy doesn’t work. You can tell from “lifetime oil change” offer with EV. There has to be clean break from ICE.

Car dealers can’t even keep their sales teams up to date on training on their ICE cars.

Sales staff turnover rate at dealerships has been around 70% in recent years. Chances are the salesperson showing you a Volt or a Leaf was selling Toyota’s a few months ago, and Kia’s before that.

https://jalopnik.com/why-is-turnover-so-high-in-car-sales-1818590738

It’s because they don’t want to sell EV’s. It’s pretty obvious that legacy manufacturers don’t have any interest in selling EV’s, why would they invest any time/money in something their heart isn’t in?

Yea, Chevy couldn’t care less either. See my post.

I do think that automakers do need a different brand for their EVs ONCE THEY ARE TRULY INTERESTED IN SELLING EVs.

I think the reason that their current sales force is so ignorant about the EVs or the PHEVs that they sell is that the profit margin is much higher for their ICE vehicles, so the ICE vehicles is what they want to sell. There is no great demand for any EV other than TESLAs right now, because the EV vehichles being offerered are boring and uninspiring. Teslas are cool and interesting, and something people aspire to own because of that.

“profit margin is much higher for their ICE vehicles, so the ICE vehicles is what they want to sell”

It is not that the profit margin is higher on sales, it is that EV require lower maintenance (and likely lower repairs).

But what do you say to the fact that dealerships of one brand sell USED vehicles of a different brand (e.g. a Chevy dealer selling a used Ford) with half the profit margin of a new car and with no expectation of service income from the car?

I agree the profit margin must be really high on some ICE. There’s an ad on TV for a new 2018 pickup that there cutting the price by $15,000. It didn’t say the list price but if you paid list price for one a few months ago, you have to feel like an idiot now.

Another Euro point of view

“Electric cars (EVs) are very different that internal-combustion-engine (ICE) cars. Sales persons have to spend much time learning about the electric cars that they can sell”

OK but information is available on the net, whatever a bit complex & expensive that I buy I look at offers & prices, have a look on the net, compare, go back, for a car: ask a test drive, then possibly order. Relying on salesmen is often a good way to listen to loads of BS so best is to do your own research.

Another Euro point of view

I agree that selling ICE along with BEVs might not be ideal but by any means the Tesla model should be taken with a grain of salt, here, an excerpt of a comment left today 20/1 on Tesla Motors Club forum:

“I love this post but hate the facts. When I switched from my beloved P85D I was dismayed by the shoddy delivery mess. The car itself was amazing, although the badging has not yet appeared. Sadly, my car was damaged in an accident caused by an inept driver. I was a passenger seeing it in slow motion but helpless. That was on Sept 14 last year. The car has been in a body shop ever since, with multiple parts requiring multiple replacements because of Tesla errors and delays”

And he concludes his comment by “Right now I am a very worried bull”.

Nice work taking a broad view of EV’s being sold alongside ICE and making it about Tesla’s failings. Funny how your other comment here speaks about doing your own independent research, yet you talk about Tesla without having done any research, save for only searching (and passing along) negative narratives of the company.

Another Euro point of view

“Nice work taking a broad view of EV’s being sold alongside ICE and making it about Tesla’s failings”

Well illustration of this article is a Tesla Model 3 so in all fairness it did not start well with “broad view of EV’s sold”.

Astute insight, you identified a photo of a Tesla vehicle in an article speaking about electric vehicles. The conspiracy link is quite obvious after all.

@Another Euro:

You have literally nothing to say other than stilted, biased, cherry-picked comments bashing Tesla.

No reasonable person would pay any attention to what you say.

Another Euro point of view

I just plus voted you PuPu. Reason for that ? When you do not call commenters haters fudsters etc. I agree to most of what you write so that merits plus votes, even when you call me Tesla basher.

Oh, how noble of you, Mr Troll! You are an inspiration to…yourself alone.

The problem is the Manufacturers, their Dealerships and the Salespeople.. The dealerships at least in the case of the Chevy Bolts and Volts would rather sell Silverados and their SUV’s because of the high profit margins and future service visits. As for product knowledge it’s the level of education and mentality of the sales people. You can learn almost everything you need to know about these cares on the internet by watching a few good YouTube Videos and reading the quick start manuals in the new cars glove compartment. The Dealerships salespeople have a lot of downtime drinking coffee, shooting the shit and looking out the window rather than reading and watching videos on their products. I know because I did that prior to visiting three different Chevy Dealerships before I bought a Bolt and Volt. I knew so much more than the salespeople before I bought them. Their mentality was that you try the screen or knobs to see what they do like it was an ICE vehicle every time I asked a question. They only knew about selling a subscription to GM’s Onstar and Sirius Radio. Now GM wants to sell luxury EV’s through their Cadillac Division! I… Read more »

Unless Cadillac becomes GM’s “Polestar” division. Everything ICE Cadillac currently sells would do as well if it were sold through Buick. Let Cadillac become the EV “Design Studio” of GM. Fewer locations, a more web based buying process. Let the Chevy/Buick divisions and dealers chase the ICE market. Exactly the focus you and the article advocate.

One thing to keep in mind is that car dealerships sell used cars from different manufacturers (vehicles that were traded in), and a used car sale gives the dealer about half the gross profit margin of a new car. And they do this knowing that they won’t get any service income from that used car (different manufacturer).

Another thing to keep in mind is that car salesmen don’t care about service income, and as long as there is not a lower commission schedule for EVs, salesmen shouldn’t care whether they are selling an EV or not.

Obviously, dealers can reduce their service staff eventually as the percentage of EVs grows much higher. But there is something else they can do. Since parts/service prices are not flexible, but new car prices are, they can stop negotiating the price of a vehicle (sell at MSRP) after EVs become a high percentage of new sales. Or decrease the discount under MSRP over time, and eventually only sell at fixed prices.

I have been suggesting that Legacy Manufacturers create stand alone EV Brands for quite a while. Franchise Dealers notoriously show no interest in selling EVs for all of the reasons already mentioned. They are intentionally uninformed and leave their EV’s with barely charged batteries to discourage test drives and to create concerns in the customer’s mind. Surely the Legacy Manufacturers are aware of this. Their failure to correct this situation is just another example of how unmotivated they are to sell EVs.

It’s obvious to me that the solution would be to grow separate EV Brands while watching the ICE Brands wither away. If I can figure this out (and I’m not that smart), why can’t the Geniuses at Ford and GM,..? In fairness, GM says they will be repositioning Cadillac, we’ll see. The answer of course is that they do know this, but choose to stay the course.

Car salesmen are ignorant about the cars they sell in general. Last time I bought an ICE, I knew more about the car than the sales guy did.

Have you ever being in a dealership that sells cars in the same price range as Teslas?

Yes. Their turnover rate in the US is only marginally less than more mainstream car makers, with their turnover rate at around 50% compared to the industry average of 70%.

You have a 50-50 chance of getting someone who was selling something like Kia’s or Honda’s a few months before you walked in the door.

Nissan managed to sell through their dealerships enough EV to be number 1 until very recently. I’ve bought i3 at BMW dealership with 0 issues. So, what are the evidence that dealerships don’t want to sell cars? (Let’s say EVs in this case)

What CARB state are you located in?

In the state that has fairly packed roads, so commuters line access is a thing and fairly high gas prices. I.e. the state in which EVs economically makes sense.
I doubt that “mighty” Tesla Sales org will be able to sell a Model X to a guy who need a pickup track.

Nissan seems to be the exception. I wish I knew what the “secret formula” was there, that causes Nissan dealerships not to fall into the trap of seeing plug-in EVs as unwanted stepchildren who threaten their sales of gasmobiles.

Please don’t forget there are also EV Centers in Toronto, Canada (Electric Vehicle Discovery Centre) and in the U.K. in Milton Keyes (EV Experience Centre). Both of these are staffed with knowledgable EV people who can offer information on various models of EVs offered in those areas, kinds of chargers available and test drives of many EVs. All in a sales-free environment. They are there to educate and inform.

Car dealerships and sales people are in the business of making money. Give the dealership and salesperson a good way to make money from selling an EV similar to an ICE, and they’ll sell the EV. Simple as that.

L David Roper is likely correct in his assertion that EVs need a dedicated sales force, or at least a minimum number of EV specialized/trained salespeople. My limited experience surveying EV dealerships in 2016 yielded a disappointing picture of dealerships’ EV ignoring/ignorance, even though they may have improved some since then. It is not clear how dealerships can transition from here to there… Assuming you are in a state that gets ample supply of EVs [most are not], the OEMs have very little selection of models to sell, and at 2-5% of the market, EV-only sales cant keep a salesperson sufficiently compensated..
Tough for a dealer to adapt. Thoughts?

I agree that there will be a transition phase, but, I don’t agree that EV and ICE cannot be sold side-by-side. Used car specialists do it. In a few years, ICE will be rare.

ICE maintenance might be a little more, but, the electronics are similar. My ELR had the shifter, radio head, infotainment screen, window trim and tires replaced. Nothing an ICE has uniquely.

The problem is training. My sales guy for the CT6 PHEV sold Chryslers three weeks earlier. He didn’t know how the 360 camera recording worked or what the shifter “M” position did. (Regen not manual shifting). Watching an Alex-on-Autos video before demo would have helped.