Dive Brief:
- A coalition of more than 3,800 car dealerships sent a letter to President Joe Biden urging him to put the brakes on an Environmental Protection Agency proposed rule that would incentivize EV production.
- The dealership coalition wrote that EVs are simply not selling fast enough and that “electric vehicle demand today is not keeping up with the large influx of [battery electric vehicles] arriving at our dealerships. BEVs are stacking up on our lots.”
- The proposed EPA rule would require automakers to ensure their new product lines meet more stringent emissions standards beginning in 2027. To meet these requirements, automakers would likely expand EV production.
Dive Insight:
Following the early years of the pandemic, car dealerships experienced record profits as supply chain shortages and pent-up demand allowed them to sell cars at higher prices.
Even though new vehicle sales were the lowest they had been in a decade in 2022, dealer profits were triple what they were before the economic and health crisis. However, dealer profits have fallen from last year largely due to inflation. With higher interest rates, consumers must borrow more to purchase a vehicle, including EVs, which are now building up on dealership lots.
Commenting on falling dealer confidence in EV sales, Cox Automotive Chief Economist Jonathan Smoke said that “the pressure dealers feel is from over-supply rather than a lack of demand.”
Cox's "Dealer Sentiment Index" reported that dealers had declining expectations for future EV sales. However, Smoke said that dealers were experiencing what was “an expected part of growth.” Because the biggest issue for consumers is the price of EVs, Smoke said that he could “pretty confidently predict that surplus inventory and increased competition will eventually drive down prices, which will help with EV consideration and adoption.”
In addition to the coalition of dealers, the National Automobile Dealers Association has also come out against the EPA’s proposed rule. NADA said it has submitted public comment opposing the rule and also wrote a letter in support of a House appropriations bill that included language to prevent the EPA from implementing it. The bill passed the House in early November and is awaiting consideration in the Senate.
