Publication1 2021 Issue 1

25 KENTUCKY AUTO DEALER worth of charge can disappear pretty quickly, especially if you have heat and want a radio. My brother rented a Tesla Model S in Denver for us to drive to Aspen. Interstate 70 was closed. I thought for sure we would run out of charge, and I had no idea what to do. It worked out, but I was worried about it.” He sees plug-in hybrids as the more reasonable choice at this point. “I drive a RAV4 Prime. The pure electric part of a plug-in hybrid works for short commutes, and if you get out on the open road, you have internal combustion, so you have no range anxiety. And cars with internal combustion engines are very efficient now. They are not big polluters; everything gets pretty good gas mileage these days.” Another new choice, Ford F-150 hybrid trucks, are a further indication of the changes to come. Ultimately, Steve says, “manufacturers will build and sell what people want, whether it is EV or hydrogen or anything else.” The current market share is only 2%. Some of that has to do with availability, and the other part has to do with cost. “EV and hybrid technology are just more expensive,” he said. “The difference in powertrain between a gas engine and a hybrid may only be $800-$1,000. A rough estimate for a plug-in hybrid adds another $4,000 on top of that $800-$1000. Full electric could add another $3,000-4000 on top of $4,800-$5,000, which means the price might total as much as $9,000 more than for a similarly equipped internal combustion vehicle. Even if all the extra cost only makes a $20 difference in the monthly loan, $20 matters. The supply has to be affordable.” Since the government will always be involved in the auto retail industry, Steve thinks dealers need to work with them toward standardizing manufacturer regulations. “It does not work to have one set of regulations for California and another for Kentucky. Manufacturers can’t survive if they can’t sell in California, and having multiple standards is unreasonable. Even if California standards are adopted, which may be, we should all have to live by the same rules,” he said. One way electric cars will affect dealerships is to make service departments less profitable, and Steve has the same healthy concerns about that as other dealers. He pointed out that service departments are filled beyond capacity right now, and many need more space. “I don’t know if it makes sense to build or add on,” he said. “If the EV business is 10%-15% by 2030, then it would be a mistake not to add on. If it is 50%, then it would be a mistake. But nobody knows. News media and the government are overstating how many EVs will be on the road by 2030; EVs have a long way to go. Europe will get there first. In Europe, and perhaps in China, the law seems pretty clear that manufacturers won’t build combustion engines after 2035, so dealers in Europe have a better understanding of their future.” Despite the uncertainty, Steve is confident that dealerships will adapt. “This is another lesson from the pandemic. We can meet the challenges because we’ve already learned how to pivot,” he said. CONTINUED ON PAGE 26