Cox Exec. Calls For Balance to Fed Emissions Rules, Incentives By Jeff Kelley, VADA Communications Arguably the biggest revolution to the automotive industry since mass production, the shift to EVs in the U.S. will be a slow and complicated process, a Cox Automotive executive recently told a group of franchise automotive dealers. It’s a process “with many potholes that we’re all going to need to navigate,” Brian Finkelmeyer, Executive Director of Cox Automotive’s Enterprise Insights and Advisory practice, told a meeting of the Virginia, Kentucky, Maryland and West Virginia auto dealers at their combined associations’ annual convention in White Sulphur Springs, WV. The Biden administration last year announced emissions standards calling for 49 miles per gallon by 2026, a target (known as the Corporate Average Fuel Economy, or CAFE, standards) that Finkelmeyer said is impossible for automakers. “To put that in perspective, that would be like if you all asked me to get up this morning and run a four-minute mile,” he said. “I can assure you, that’s not going to happen.” The result will be financial punishment by the National Highway Traffic Safety Administration (NHTSA) for most domestic OEMs whose vehicles’ MPGs will fall below the target. Automakers are charged $15 for every 0.1 MPG over the limit, multiplied by units sold, which amounts to hundreds of millions in fines. The big winner? Tesla, which derives a significant portion of its profit from selling emissions credits to manufacturers that don’t hit the mandated goals. “Can you imagine if every dealer in this room, for every car you sold, had to send a check for $500 or $1,000 to your crosstown rival so they could build bigger facilities, hire better people, etc.,” he said. “It’s a very difficult situation for the domestic car companies since they are essentially funding Tesla.” At the moment, he said, the economics for EV adoption don’t add up, and he cited four “Potholes” to EV adoption in the U.S. Pothole 1: Consumer Demand Despite OEMs spending millions to promote EVs (with 130 new models coming in the next three years), the Tesla Model Y outsells all others combined. While inventory is often cited as a reason for lack of demand, manufacturers have a significant supply, he noted. In reality, consumers are wary due to high cost and range concerns that create “a stressful [buying] proposition,” he said. EVs remain expensive, with an average MSRP of $61,448 that, after incentives and tax credits, average $8,370 more than an ICE. He said consumer mindsets can only shift if prices come down, charging infrastructure improves and range increases. Pothole 2: Dealer Enthusiasm A Sierra Club study noted 65% of national dealers don’t have EVs on their lot — and nearly half don’t want them. Finkelmeyer said it’s no surprise: Dealer rewards and incentives on invoices are complicated, and investments required are sizable. “I understand the lack of enthusiasm when you’re only maybe selling a couple of these a month, yet you’re outputting big money into building the infrastructure to support it,” he said. Finkelmeyer shared good news: EVs will bring opportunities to fixed operations. Torque-heavy EVs eat tires and require more labor even if there are fewer parts. Cox Automotive calculates the five-year 12 Virginia Auto Dealer
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