Car dealership are absolutely pumped about the return of President Donald Trump. Sixty-four percent of surveyed dealerships told Automotive News that they expect the new administration to have a positive effect on their business. They’re most excited about the rollback of federal emissions standards, because they really, really seem to hate selling EVs.
That’s for good and bad reasons. Part of it is understandable. Car dealerships have often been given undesirable EVs to sell, and have lost plenty of money over these cars sitting on their lots. I mean, if your paycheck was tied to how many Subaru Solterras you could offload onto Johnny Public, you’d probably be pissed too. It’s not their fault that so many EVs are half-baked, mis-priced or both. But it is their business that suffers when those cars don’t sell.
According to the Automotive News survey, 65% of dealers say that customers are not interested in the EVs on their lots. A group of 4,700 dealers argued in a public letter to President Joe Biden last year that meeting aggressive EV goals would be impossible and ill advised.
“It is uncontestable that the combination of fewer tax incentives, a woefully inadequate charging infrastructure, and insufficient consumer demand makes the proposed electric vehicle mandate completely unrealistic,” the letter said. Dealers noted that EVs sit on lots longer and that consumer demand had not kept up with the rising flood of new models and inventory.
But they may also be thumbing the scale themselves, as dealers often nudge consumers away from EVs. They have another major reason for being anti-EV. Putting aside that many dealer owners and managers are ideologically opposed to EVs and the politicians that push them—they’re wealthy car guys who own business—there’s a clear incentive mismatch. Car dealers make roughly half of their profit from servicing vehicles. Most of that profit comes from customer-paid work, as manufacturer warranty work is far less profitable, if it’s profitable at all.
That pits them against EVs for a few reasons. First, EVs have fewer expensive failure points than internal combustion cars. You’re not going to need a new transmission or turbocharger ever. Then there’s maintenance: You don’t need regular oil changes, other fluids are rarely swapped and brakes last longer. Not only does this cut into their margins, but it also gives them fewer opportunities to interact with the customer and, ideally, sell them something else. Then there’s the battery and powertrain warranties, which are super long on EVs. If your battery fails at 90,000 miles (which is extraordinarily unlikely), that may be the only expensive part the customer ever needs to replace. Since it’ll be a warranty claim, though, the dealer won’t make much.
Yet smaller problems are actually more common with EVs. Electronic gremlins, fit issues and software problems have plagued many of these first-generation volume EVs. These usually surface quickly, and require fixes under warranty. My Blazer EV, for instance, needed a new headliner and a fault code checked out. These issues take up a lot of dealer technician hours for little payoff.
Photo by: Mack Hogan/InsideEVs
My dealership took an absolute bath on selling me this Blazer EV, then had to deal with two warranty visits. Another is likely coming soon.
Put together, these issues mean EV customers are not really the customers dealerships want to sell to. They’re unlikely to make any money on the sale, likely to come back with warranty issues in the short term and likely to sell the car before experiencing the sort of significant out-of-warranty issue that earns a dealership some real profit.
It’s no wonder these companies are excited to see standards rolled back. If automakers don’t need to hit strict emissions targets, they won’t have to keep aggressively ramping up their EV rollouts. Dealerships will have more time to squeeze profits out of their internal combustion business, while waiting for manufacturers to launch the sort of profitable, desirable products that are easy to sell. If they can find a model to make money on the service, all the better. Because it’s going to be really hard to electrify the fleet if the people selling cars are this opposed to EVs.
They’re less excited about Trump’s proposed tariffs, however. Most dealers are selling something either imported from Mexico or Canada or using parts from those countries, so they’re exposed. Automotive News reports that analysts expect the average vehicle price to rise by around $3,000 if the tariffs go into force. As a result, 68% of dealers expect tariffs to impact their business “negatively” or “extremely negatively” if imposed. That doesn’t seem to temper their overall excitement for this administration, though.
They still support it. From where I’m sitting, they’ll support any politician so long as they can keep selling the big, thirsty, profitable vehicle they’ve sold for decades.
That is, to my eye, what they want. The same thing the slowest-moving automakers want: To continue making absurd amounts of money without having to grow, learn or adapt. And, hooray, hooray, they’re getting exactly that.
Contact the author: Mack.hogan@insideevs.com.
