Navigant Research Blog

Selling EVs Becomes a Dealer Incentive

John Gartner — March 5, 2014

In the ongoing debate over what is needed to enable electric vehicles (EVs) to achieve a sizable share of new vehicle sales (i.e., 5% or more) one critical group of participants is often overlooked – car dealers.  Automakers and state governments have focused primarily on developing a winning combination of incentives and regulations to get consumers to buy EVs while neglecting the importance of dealerships.  That may be changing, as the state of Connecticut has created a novel award for dealers who successfully move EVs off the lot.

In February, the state announced that, in partnership with the Connecticut Automotive Retailers Association, it has established the Connecticut Revolutionary Dealer Award.  This award will be given to the dealership that sells the highest percentage of EVs, as well as to the dealer that sells the most EVs in total.

Moment of ZEV

Unless you’re buying from Tesla Motors, dealers are the last mile in an EV purchase transaction.  Their enthusiasm for selling new technology that requires more consumer education and has less likelihood of later service revenue has, not surprisingly, varied greatly.  While in many cases consumers are sold on EVs before ever entering a showroom, the oft-maligned car salesperson can either make buyers excited about the technology features, mobile phone integration, and gas station avoidance or easily push an EV prospect toward a conventional vehicle via FUD tactics.  Automakers have learned from the experience of some less-than-thrilled dealerships to create stronger incentives, and this appears to be the first time that a state agency has incentivized dealers to sell EVs.

While the press release did not specify whether the winners will receive a financial reward, plaque, or merely bragging rights, Connecticut is wise to trumpet dealers’ important role as part of a comprehensive plan to expand EV adoption.  Since it is one of the eight zero emissions vehicle (ZEV) states committed to collectively getting 3.3 million EVs on their roads by 2025, Connecticut faces an uphill battle.  As detailed in Navigant Research’s recent free white paper, Electric Vehicles: 10 Predictions for 2014, it’s a long road from EVs being less than 1% of vehicles sold in 2013 to 10% of those sold in 2022, as required by the ZEV mandate.

For states to meet that goal, they will need multiple incentives and policies to encourage EV purchases.  Connecticut currently offers grants for municipal agencies to purchase EV charging infrastructure, though the state’s public tax credits for EV charging equipment expired in February.  The Nutmeg State would be wise to add a tax credit for buying an EV and offer EVs HOV lane access, which California has proven will get consumers lining up for EVs.  The move to recognize dealers who assist in the process is a helpful step along the way.

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