Car Dealers Are Coming to a Big Realization After Having EVs on the Lot
Car dealers and manufacturers are desperately trying a number of tactics to get customers to buy a new electric vehicle instead of a gas-powered car, but flagging sales show that buyers are not taking the bait.
The biggest problem that car dealers have discovered is that the early adopters are pretty much done buying EVs, the Wall Street Journal reported.
Early adopters are people who are excited by a new technology and will jump in, no matter what the cost. These are the same sort of people who paid $20,000 for the early flat screen TVs, or who paid $2,000 for the first VCRs. These people are usually wealthy and love to be “first” in buying something new and improved.
But there is a finite number of early adopters. Manufacturers generally rely on early adopters to pay for research and development and to help them make products cheaper so the general public can join the early adopters by purchasing a product.
Unfortunately, this has not helped the auto industry. Instead, car dealers are trying all sorts of tactics to bring prices down to get more people into an EV.
But it isn’t working. EVs are piling up, unsold, on car lots all across the country. And while it is clear that the early adopters are satisfied, the general car-buying American just does not seem to want an electric car.
So, deep discounts are sweeping dealerships right now as car sellers try to unload EVs. Some discounts are up to $4,991, the first time EV sales has ever seen such a high discount rate, according to Insider.
But with list prices of $50,0000 and higher, the cost of a new EV is still simply too high of a barrier for most Americans, who are already being buffeted with high interest rates for loans and rampant inflation making their dollars worth less.
EVs are seeing far more discounts, sales and low-priced lease deals than gas cars now, as well.
The Wall Street Journal added that despite the discounts, individual EVs are taking far longer to unload on customers. In September, it took more than two months to sell an EV. That compared to less than a month for a gas car and three weeks for a hybrid.
This is hitting dealers right in their pockets. Many dealers take out millions in loans a year to buy the cars for their lots from manufacturers. And if these cars are going to sit for months unsold, that costs dealers a pretty penny in loan payments.
The situation is not any better for manufacturers, which ramped up construction of auto plants and battery facilities to fulfill what they assumed would be a big demand for electric cars … a demand that never materialized.
Many of these makers, such as Ford, Hyundai, General Motors and more are already pushing plans to build more factories off into the future instead of going all-in now, like they planned.
Even Tesla is feeling the pinch and has slashed prices, cutting costs for new customers by roughly a third. This put pressure on the rest of the industry to lower prices, too. But these pressures are artificial, not real, and cannot be sustained when dealers and manufacturers are actually losing money on every EV sale compared to what it costs to make the cars.
Dealers are also offering lucrative lease deals to get people into an EV.
For one example, Volkswagen is offering a lease deal for its ID.4 EV with no money down. And others are offering similar deals.
In fact, lease deals have grown to become a large percentage of EV sales. The Wall Street Journal noted that EV lease deals now account for a majority of EV sales, compared to only 30 percent of the market of new cars overall. Volkswagen is even reporting that leasing accounts for 80 percent of sales of its ID.4.
Still, EVs are simply not flying out of dealerships, like Joe Biden and his woke car manufacturers assumed.
What is clear is that most Americans want cheaper, more reliable gas-powered cars, not EVs. And trying to force these unwanted cars on us all from the top is not going to make this fact any less true.
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