Pub. 19 2020-2021 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S I S S U E 3 | 2 0 2 0 12 new jersey auto retailer Dealerships Must Prepare To Lead The Upcoming Electric Vehicle Revolution The NJ CAR PlugStar Certification Program Helps Dealerships Sell More EVs BY TOM MOLOUGHNEY Automotive retailers have a long history of adapting to the industry’s changes and challenges and re-energizing their operations. The COVID-19 shut down early this year and how it has continued to impact day-to-day business are prime exam- ples of how New Jersey dealers can survive even the toughest business environments. Another challenge has been ramping up over the past few years and provides dealers with an incredible opportunity if they pre- pare themselves. I’m talking about the growing number of plug- in electric vehicles that manufacturers are planning to release, as well as the aggressive Cal-LEV mandates facing New Jersey over the next five years. Over the past decade, manufacturers have invested billions of dollars in developing and producing electric vehicles. Some of the early options weren’t very competitive with comparable gasoline or diesel cars. They were much more expensive, could only drive 70-100 miles on a charge and needed to be plugged in 5-10 hours per day. Plus, they weren’t available in the variety of options that modern-day consumers demand. Additionally, dealerships received very few of these vehicles in inventory from the manufacturer, so there was little incentive to spend much time and effort learning about the differences, training staff, and investing in an ecosystem to encourage the sale of the plug-in offerings. That is changing, perhaps quicker than many people realize. First, manufacturers are faced with regulations requiring an increasing percentage of their overall fleet to be zero-emission vehicles. In New Jersey, a Cal-LEV state, 9% of all vehicles sold are mandated to be electric. That mandate increases by 2.5% per year until it hits 22% in 2025. New Jersey EV sales in 2019 ac- counted for 2-3% of all vehicles sold and are expected to remain relatively flat in 2020. While EVs in all shapes and sizes and price ranges are avail- able (with dozens more scheduled to be introduced over the next four years) , there is still work that needs to be done to address the two biggest obstacles to EV adoption — price and underdeveloped charging infrastructure. Let’s take a closer look at how these barriers are being removed. Electric Vehicle Cost The main driver in the high cost of EVs is the battery pack, which is measured by how many kilowatt-hours (kWh) of elec- tricity they can hold. The larger the battery pack, the further the vehicle can go on a single charge. Therefore, the bigger, the better. However, the batteries’ high cost has stopped manufac- turers from using very large packs because they wouldn’t be economically feasible. That’s why EVs don’t go 400 to 500 miles per charge as a gas or diesel car can. It’s that simple. Fortunately, EV battery prices have been dropping faster than analysts predicted, and an EV battery pack in 2020 now costs nearly 10 times less than it did in 2010. Most experts believe that by 2023, EV battery prices will reach the point that will finally allow manufacturers to achieve cost parity with internal combustion vehicles. Even today, when you factor in the federal tax credit, the New Jersey EV rebate and the New Jersey Sales Tax exemption, an electric vehicle can be just as affordable or even cost less than a comparable conventionally-fueled vehicle.