Tesla, EVs, and the auto industry's response

[Electroman]

I took the average price of these cars from what I could gather online to get revenue. Then Tesla comes out as the clear leader:

View attachment 276846

This is why just having raw counts of cars sold and having Tesla in that mix is meaningless.

 

[renim]

Revenue /= Profits /= oil displacement

BYD has previously stated that 60% of profits came from plugin sales, that then collapsed by about 25% with the terrible 1/2 half 2017 results (due to government bureaucracy), obviously that is far far greater than revenue from plugin sales.
I presume the same effects is for other private Chinese automakers.

even lil Mitsubishi demonstrates the same behavior,

I would say that the PHEV is the most expensive Mitsubishi in that range, and at 10% of EU sales, is easily the most profit making in their range.
Mitsubishi Outlander PHEV clears 100,000 sales milestone in Europe - Automotive World

it goes to the ridiculous level with BYD
top spec BYD Tang is about $100k, mass market spec ICE equivalent is from $15-$20k
(obviously they are not the same fitout or drivetrain, but its comparable to a VW Tiguan to Porsche Macan )

 

[Phillip L]

This might be a silly question but if someone wanted to push ev sales from the major automobile manufacturers and get around the dealership rules in the USA could someone form a dealership with several of the manufacturers that only sold ev’s? I am a Canadian but on my drives through Maine, before the Supercharger build out in that state, the nice people at Darlings Nissan in Bangor would let us Tesla owners use their Chademo charger. I could not help notice that there were Darling Motors dealerships in Bangor for several ice brands.

So would it be possible for someone to set up a dealership that would be branded as “<city’s name>‘s Electric Vehicle Dealer “ and be an official, let’s say, outlet for ev’s from BMW, Nissan, etc etc. The local ice dealerships would not be offered ev’s they don’t want to sell anyway, the branding would still go to the manufacturers, there would be a significant boost in knowledge, expertise and marketing of the products. What do you think? Be as critical as you want, I am just throwing it out there.

 

[RobStark]

This might be a silly question but if someone wanted to push ev sales from the major automobile manufacturers and get around the dealership rules in the USA could someone form a dealership with several of the manufacturers that only sold ev’s?

I guess you could do this until an EV was a hot seller that an ICE dealer wanted. Most States have laws saying OEMs can't favor one dealer over another of the same brand.You can't give one dealer the hot sellers and another dealer of the same brand a few miles away only the slow sellers. OEMs used to be very abusive and vindictive.

The way to get around this is to create a new EV brand. Then they could pick exclusive EV dealers. It is the OEMs(not franchise laws) that generally don't like several competing brands from different manufactures under one roof. They tolerate this in rural areas but general don't in densely populated areas.

 

[Phillip L]

I guess you could do this until an EV was a hot seller that an ICE dealer wanted. Most States have laws saying OEMs can't favor one dealer over another of the same brand.You can't give one dealer the hot sellers and another dealer of the same brand a few miles away only the slow sellers. OEMs used to be very abusive and vindictive.

The way to get around this is to create a new EV brand. Then they could pick exclusive EV dealers. It is the OEMs(not franchise laws) that generally don't like several competing brands from different manufactures under one roof. They tolerate this in rural areas but general don't in densely populated areas.

But if you were only selling the non-hot ev’s, by the time they became hot you would be established as THE ev seller in the city, with the history and reputation and expertise. So even if the ice dealer wanted in on it, they would be at a disadvantage.
I suspect that most OEM’s would not want a new brand, unless it were closely associated with the main brand, because they would want the “green” branding associated with it. But there are precedents, e.g. Infiniti being a brand of Nissan. But such separate branding would be easy, e.g. call the new BMW brand, iBMW for example, or eMercedes, etc. That way you get the green cred for the mother company and separate branding for dealerships. And there would be nothing to stop a BMW dealer being a BMW and iBMW dealer.
I just figured that a pure ev dealership would need several brands for a while to be able to make it as a viable business. What would be in it for the OEMs? Branding and selling more cars. Would not work for OEMs that just have compliance cars, of course.

 

[renim]

Its a continuum, but there are 3 types of OEMs

those that want to use the xEV but to sell their none xEV vehicles (ie Ford wants you to buy their ICE Ford Laser)
those that want to use the xEV as a halo car (ie GM want to sell a Bolt, just like they want to sell a Corvette)
those that want to use the ICE, but to sell their xEV (ie Mitsubishi, BYD would really like you to upgrade to the plug in)

all of these have motivation to have ICE and EV on the same lots, despite having very different intentions for EVs.

there are used car dealers that specialize in 4x4, there will be used car dealer that specialize in EVs.

 

[renim]

Electric vehicle threatens European car industry

 

[gregd]

This might be a silly question but if someone wanted to push ev sales from the major automobile manufacturers and get around the dealership rules in the USA could someone form a dealership with several of the manufacturers that only sold ev’s?

In one of the "History of Tesla" presentations given by Marc Tarpenning, he mentioned that during an early discussion with the investment community they found out that the dealership thing was an either-or situation. If you go through dealers, you cannot sell the cars yourself. He describes it as a formative moment during their early evolution. This may vary from state to state, of course, but basically the direct sales model that they currently have is effectively the only one that they can have. Touching a traditional dealership would poison the whole thing.

 

[bhzmark]

Two good relevant articles


Does Tesla Have A Free Pass?

Tesla 'Will Prevail In All States' Against Dealer Lawsuits: Dealership Commentator

 

[wdolson]

I guess you could do this until an EV was a hot seller that an ICE dealer wanted. Most States have laws saying OEMs can't favor one dealer over another of the same brand.You can't give one dealer the hot sellers and another dealer of the same brand a few miles away only the slow sellers. OEMs used to be very abusive and vindictive.

The way to get around this is to create a new EV brand. Then they could pick exclusive EV dealers. It is the OEMs(not franchise laws) that generally don't like several competing brands from different manufactures under one roof. They tolerate this in rural areas but general don't in densely populated areas.

Someone could reproduce the Saturn model, spin off a new nameplate that was EV only and sell those at exclusive dealerships. Though in smaller towns they probably would still be grouped with some other brands of cars.

 

[Olle]

This might be a silly question but if someone wanted to push ev sales from the major automobile manufacturers and get around the dealership rules in the USA could someone form a dealership with several of the manufacturers that only sold ev’s? I am a Canadian but on my drives through Maine, before the Supercharger build out in that state, the nice people at Darlings Nissan in Bangor would let us Tesla owners use their Chademo charger. I could not help notice that there were Darling Motors dealerships in Bangor for several ice brands.

So would it be possible for someone to set up a dealership that would be branded as “<city’s name>‘s Electric Vehicle Dealer “ and be an official, let’s say, outlet for ev’s from BMW, Nissan, etc etc. The local ice dealerships would not be offered ev’s they don’t want to sell anyway, the branding would still go to the manufacturers, there would be a significant boost in knowledge, expertise and marketing of the products. What do you think? Be as critical as you want, I am just throwing it out there.

I have thought a lot about this exact thing. It would be awesome for right now, but if you are, like me, convinced that EVs will eventually become mainstream, your edge as EV specialist will diminish.

Would be interesting to see a business plan from someone with dealership experience. As a layman I observe a couple of things.
Pros:
If you deal in used EV, you will have the market almost all to yourself since the other dealers are not pursuing it much. Used cars can be profitable.
Cons:
The profit margin in new car sales is low.
Less service revenue. There is some warranty work to go around but at discounted rates dictated by manufacturers.

 

[RobStark]

But such separate branding would be easy, e.g. call the new BMW brand, iBMW for example, or eMercedes, etc. That way you get the green cred for the mother company and separate branding for dealerships. And there would be nothing to stop a BMW dealer being a BMW and iBMW dealer.

If a Chinese BEV startup named its new company iBMW or eMercedez claiming that is an entire new brand BMW/Mercedes would sue and rightly win. If BMW and/or Mercedes opened iBMW or eMercedez near established BMW or Mercedes dealers and refused to allocate them BEVs or PHEVs they wanted the dealer would sue and likely win.

 

[wdolson]

I have thought a lot about this exact thing. It would be awesome for right now, but if you are, like me, convinced that EVs will eventually become mainstream, your edge as EV specialist will diminish.

Would be interesting to see a business plan from someone with dealership experience. As a layman I observe a couple of things.
Pros:
If you deal in used EV, you will have the market almost all to yourself since the other dealers are not pursuing it much. Used cars can be profitable.
Cons:
The profit margin in new car sales is low.
Less service revenue. There is some warranty work to go around but at discounted rates dictated by manufacturers.

Except for Teslas EVs have not held their value very well in the US. That may change, but right now that isn't the case. Though a quick search for used Bolts turned up quite a few around $30-$35K so they are so far holding up better than most EVs.

 

[Phillip L]

If a Chinese BEV startup named its new company iBMW or eMercedez claiming that is an entire new brand BMW/Mercedes would sue and rightly win. If BMW and/or Mercedes opened iBMW or eMercedez near established BMW or Mercedes dealers and refused to allocate them BEVs or PHEVs they wanted the dealer would sue and likely win.

How about <Name> , “Mercedes Quality, All Electric” in large letters underneath?

 

[Olle]

Except for Teslas EVs have not held their value very well in the US. That may change, but right now that isn't the case. Though a quick search for used Bolts turned up quite a few around $30-$35K so they are so far holding up better than most EVs.

True, and for good reason. As an owner of several EVs I am of the humble opinion that all other EVs than Teslas are poorly designed and deserve a low resale value. Take for example all the Leaf batteries that degraded 30-40% from an already diminutive capacity. Who would expect a good resale value after this became common knowledge? They are still useful and have a market among us who know what we are getting into and are willing to take the bad with the good.

Buy them at auction and sell them at your exclusive EV dealership. I spoke to our local ICE dealer and read up on this and got the impression LEAF and FFE go for around $5000 (all years except 2017 and 18) and sell for $9000 at the dealer. Not a bad arbitrage if you can generate some volume too.

 

[Phillip L]

Yes. At a dedicated ev dealership one would be asked all kinds of pertinent questions like daily commute, are other ice cars used for long drives, ability to charge or install chargers, etc. Unlikely to be asked at an ice dealer. Then they could direct you to the suitable cars.

 

[ChadS]

For almost twenty years, it's been understood that getting EVs started at existing dealers is going to be tough. In the US, anyway, dealers barely break even on new cars (they make more money on used cars, and the most money on service), so they are not interested in cars that they assume will be harder to sell, especially if they will cannibalize existing customers. And especially if they have to invest in equipment and training first. It will happen eventually (there ARE some enthusiastic dealers out there that are making great progress) but it will be slow. (This explains BMW's approach: make a sub-brand so dealers can opt in or out; and rather than create a cannibalizing volume car, create a mid-volume car (the i3) that combines compliance and conquest strategies, and a low-volume car (the i8) that follows the halo strategy. These don't cannibalize existing sales, but try to get more people in the showroom and bring in new customers. Meanwhile, make low-cost PHEVs options across the line; they aren't too scary that way).

Of course dealers will oppose any new competition, and automakers oppose any new business model that gives them less control. Automakers have been especially bad about assuming that EVs must be sold like gas cars: if you compare your product to another almost-commodity product, make sure YOU control the messaging, so you can emphasize your few benefits, and hope the customer doesn't notice your deficits. That's how they have done it for decades, and it is hard for them to adopt a new approach. This is largely why automakers resist allowing dealers to sell other types of vehicles (although in more rural areas they have to), and why they generally avoid multi-brand events unless THEY can bring the other brands' cars and be the ones talking about the differences. EVs sell differently; in this stage of a new market (though this will change too), sales of any brand helps all other brands, and there is more differentiation because the market isn't swamped with product yet. And consumers want more information because it is new tech, new user model, and expensive.

So, places that sell all types of EVs (and especially EVs exclusively) will likely do better at EV sales, but they are opposed by existing stakeholders (no surprise, that is true of almost any major industry change). That is not to say that some aren't giving it a shot anyway.

Here is a local used-EV outlet: 8th Street EV Outlet. They are new.

Here is a place in Los Angeles that "sells" new EVs, but it sounds like they really demonstrate them, and work with local dealers to make the sale: Current EV Concierge Service.

Here is a place in Portland that is all about demonstrating EVs to the public, but doesn't do sales: Electric Showcase

 

[RobStark]

How about <Name> , “Mercedes Quality, All Electric” in large letters underneath?

I think the closest you could get away with is eDaimler or Bavarian eMotors or something like that.

If 90% or more people can identify it as a Mercedes or BMW dealership without any advertising or enthusiast knowledge it won't fly.

 

[wdolson]

For almost twenty years, it's been understood that getting EVs started at existing dealers is going to be tough. In the US, anyway, dealers barely break even on new cars (they make more money on used cars, and the most money on service), so they are not interested in cars that they assume will be harder to sell, especially if they will cannibalize existing customers. And especially if they have to invest in equipment and training first. It will happen eventually (there ARE some enthusiastic dealers out there that are making great progress) but it will be slow. (This explains BMW's approach: make a sub-brand so dealers can opt in or out; and rather than create a cannibalizing volume car, create a mid-volume car (the i3) that combines compliance and conquest strategies, and a low-volume car (the i8) that follows the halo strategy. These don't cannibalize existing sales, but try to get more people in the showroom and bring in new customers. Meanwhile, make low-cost PHEVs options across the line; they aren't too scary that way).

Of course dealers will oppose any new competition, and automakers oppose any new business model that gives them less control. Automakers have been especially bad about assuming that EVs must be sold like gas cars: if you compare your product to another almost-commodity product, make sure YOU control the messaging, so you can emphasize your few benefits, and hope the customer doesn't notice your deficits. That's how they have done it for decades, and it is hard for them to adopt a new approach. This is largely why automakers resist allowing dealers to sell other types of vehicles (although in more rural areas they have to), and why they generally avoid multi-brand events unless THEY can bring the other brands' cars and be the ones talking about the differences. EVs sell differently; in this stage of a new market (though this will change too), sales of any brand helps all other brands, and there is more differentiation because the market isn't swamped with product yet. And consumers want more information because it is new tech, new user model, and expensive.

So, places that sell all types of EVs (and especially EVs exclusively) will likely do better at EV sales, but they are opposed by existing stakeholders (no surprise, that is true of almost any major industry change). That is not to say that some aren't giving it a shot anyway.

Here is a local used-EV outlet: 8th Street EV Outlet. They are new.

Here is a place in Los Angeles that "sells" new EVs, but it sounds like they really demonstrate them, and work with local dealers to make the sale: Current EV Concierge Service.

Here is a place in Portland that is all about demonstrating EVs to the public, but doesn't do sales: Electric Showcase

Right now EVs are pretty much a separate market from the rest of the car industry, except Tesla. The people who buy non-Tesla EVs buy for only a couple of reasons: they are ultra-"green" or they are drawn by the incentives, though mostly it's eco buyers. All EVs but Tesla are compromised vehicles that require you give up something for the option of driving an EV. Most are town cars only. Taking a Leaf or i3 on a road trip can be done in certain regions, but it will likely be time consuming and could end up being painful searching for charging.

Some EVs have only been sold regionally intended only as compliance cars in CARB states in the US.

Tesla is the only brand that currently has any significant crosshopping with ICE. Most other EVs are smaller than what most people want too.

To sell EVs to the general public does require education. I'm glad to see some dealerships are cropping up to do that.

The dealership laws being what they are in many US states, unfortunately these EV only dealerships can't really sell new EVs from small start ups, though they would be ideal for them.

 

[RobStark]

The dealership laws being what they are in many US states, unfortunately these EV only dealerships can't really sell new EVs from small start ups, though they would be ideal for them.

I wish celebrities with a net worth over $300M would do exactly that instead of spouting platitudes about climate change on award shows.

How about George Clooney opening up an EV dealership in Lexington Kentucky and a couple times a year showed on the sales floor to actually sell a few cars? VW would only be too happy to award him a VW,Audi, and Porsche franchise where he only bothers to sell BEVs. On top of the new Chinese BEVs coming.