Automobile dealerships serve as ambassadors to customers looking to buy a new car. They're tasked with understanding and promoting new trends and technologies in the industry.
And no trend in today’s auto industry is bigger than electric vehicles — but dealers may be disincentivized to sell them because of their business model, EV advocates say.
The service and parts department is typically where dealerships make the most profit. Dealers nationwide wrote 264 million repair orders and brought in more than $142 billion in sales from service last year, according to the National Automobile Dealers Association .
Electric vehicles have fewer parts and need less service, with no internal combustion engine, transmission, or other major internal parts needing regular maintenance or repair.
"It's not profitable to sell electric vehicles,” said Ellen Wade, an EV owner and advocate, “because they're not going to see us again."
Despite massive investment in EV manufacturing in Kentucky, totaling $11.7 billion in the last four years, the state is lagging in rate of ownership compared to other states.
Consumers are hesitating to buy EVs because of price, range anxiety and access to charging infrastructure.
Still, dealerships will play a central role in the pace of Kentucky’s electric vehicle transition. And some say selling EVs has been a challenge, so far.
"We’re not ready yet," Daniel Mekuria, the general manager of James Collins Ford in downtown Louisville, said of consumers. "Maybe in the next five years."
Service is big for dealerships, but EVs may change that
So far, there aren't enough electric vehicles on Kentucky roads for dealerships to see a tangible dent in service profits, but EV advocates worry it could hold back sales over time.
"The dealerships are dragging their feet a little bit because they make money on service," said Fred Rockhold, an EV owner and advocate with Evolve KY . "They make much more money on service and maintenance than they do on the sale of the vehicle, and they're not training their salespeople to push the EV."
Electric vehicles still need some service, albeit less than gas-powered vehicles, according to the Department of Energy .
Virginia Payne, the director of fixed operations at James Collins Ford, said the types of service her team has encountered for EVs are mainly tire rotations and programming bulletins.
At Mercedes Benz of Louisville, Service Advisor Stefano Boccuzzi said the EV transition gives him concern for job security, noting that 90% of the EV work his team handles is software updates and requires less hands-on tinkering with a car than it does computer operating skills.
“What they're worried about is, is the computer going to do most of the job? And we don't want to be sitting around just clicking ‘OK’ to update everything,” Boccuzzi said. “But right now, the infrastructure is not close, so we're still chugging along probably 90% motor vehicles, 10% electric vehicles.”
Premium prices can stall some dealership sales
Ford, with its strong Kentucky presence, see EVs as the future of the auto industry. In a July earnings call, Ford CEO Jim Farley said customer data shows "about 50% of customers who buy automobiles would be better served" buying an EV.
"On electrification, we've been very vocal about why electric vehicles are so important and a great choice for customers and businesses," Farley said. "Now there's a lot of misconceptions around EVs ... and (automakers) like Ford must do a much better job in educating our customers about the advantages that EVs offer in terms of cost of ownership."
Ford has seen increased success this year with its EV lineup. As of the second quarter of 2024, Ford's EV sales were up 72% for the year.
Still, Mekuria said his dealership struggles to sell EVs after Ford “flooded” the dealer with the product a few years ago.
Mekuria said roughly 20% of consumers looking for a new vehicle are interested in EVs.
But across town at Mercedes , EVs “sell out like hotcakes,” said Mercedes Sales and Leasing Consultant Cullen Dunn.
While the price for EVs has decreased over the last few years as battery technology has advanced, many EVs still come at a premium price, and for dealers like Ford, compared to a luxury dealership like Mercedes, the sale of a premium-priced vehicle can be challenging.
According to Kelley Blue Book , the average price for an EV in June was more than $56,000, whereas the average price for a gas car was about $49,000. Federal tax credits have sought to bridge that price gap, offering up to $7,500 for new EV purchases.
“It will be the way of the future eventually; it just didn't happen as quickly as the manufacturers wanted it to,” Payne said. “The consumers just were not on board, but I do believe it will be the future.”
Dealerships often lack EV education
Many dealers also lack education on the product, EV owners and advocates told The Courier Journal.
Rockhold, with Evolve KY, said it's been his experience that salespeople at dealerships "don't really know how to talk about electric vehicles."
Stuart Ungar, the executive director of the Louisville Sustainability Council , said on occasion, he has gone to dealerships with customers looking for EVs to aid in the shopping process.
Some dealerships, he said, appear open to the change, but others "aren't embracing it."
"I will go and kind of hold their hand at the car dealership because the vast majority of dealerships, even the really good ones ... it's much easier for them to steer somebody to a gas or diesel vehicle because that's the vast majority of what's out there," Ungar said.
Dealers are also given some leverage by a Kentucky state law that has prevented automobile manufacturers, like Tesla and Rivian, from directly selling vehicles to consumers. Despite this, Tesla has found a caveat to the state law and as of Aug. 9, the EV company appeared in the Kentucky Motor Vehicle Commission’s list of dealers and has a Louisville property that is hiring for sales and service workers .
Regardless of the hesitancy among consumers and dealers, the state has solidified its place as a leader in this next-generation vehicle production with facilities in at least 13 counties.
As the state works on rolling out its charging infrastructure and focusing on the jobs and economic development EVs bring, dealerships are searching for their place in the evolving industry.
"The folks that aren't embracing it, run the risk of having their Kodak or Polaroid moment," Ungar said.
Contact reporter Olivia Evans at oevans@courier-journal.com or on X, formerly known as Twitter at @oliviamevans_ . Connor Giffin is an environmental reporter for The Courier Journal. Reach him directly at cgiffin@gannett.com or on X @byconnorgiffin .
This article originally appeared on Louisville Courier Journal: 'We're not ready yet': Why some Kentucky auto dealers are struggling with EV sales
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