The EV Transition: Dealerships on the frontline.

By Dr Imogen Garcia Reid

THE transition to increased Electric Vehicle (EV) uptake represents the greatest change to the automotive industry in over one hundred years. For over a century the automotive industry has been successfully adapting to change associated with technological advancements across all sectors. The Australian Government's ambitious goal to reduce Co2 emissions via the New Vehicle Efficiency Standard (NVES) presents several challenges for the automotive retail industry and none more so than for our new car dealerships who are at the very frontline of the EV transition journey.

What many may not realise is that new car dealers are required to heavily invest in additional capital expenditure projects: floor plan finance arrangements, service bays, charging infrastructure and upskilling of staff to set up the EV infrastructure required. These investments run into the millions of dollars and have been necessary to meet government-led mandates (i.e. NVES) and the Original Equipment Manufacturer's (OEM) demands in the transition to an EV marketplace. OEMs often direct dealers to build facilities in a certain style with strict control over who does the work. VACC's research shows over 63 per cent of dealers have been forced to use building firms and EV charging installations endorsed by the franchisor. There is often no room to move, irrespective of the cost.

VACC research also shows that 81 per cent of dealers have not received any financial assistance from their OEM, despite having a direct edict to build new showrooms and service bays, install EV infrastructure, and train technicians. This is all an immediate cost to the dealership, with no guarantee of a return on investment.

Stock remains a pain point, noting OEMs are delivering high volumes of EVs coupled with an emerging trend showing an oversupply of Internal Combustion Engine powered vehicles to dealerships. This is despite low demand and a shrinking sales pipeline – a situation that is amplified in regional Victoria. Six per cent of Victorian dealers advise that ZLEV sales currently account for 10 per cent or more of their sales.

I make the point that new car dealerships are caught in the crossfire of the implementation of the NVES, which will impose a significant disruption to the market. Time will tell if consumers respond to the change in product offerings mandated by the Federal Government and whether stock will move.

There is much talk about transition: infrastructure, energy generation, safety risks, and skills – but dealerships are often overlooked as a critical player to the success in increased uptake. They are at the frontline of transition and responsible for the majority of sales and servicing of EVs. They must be amongst the first points of reference when government EV related policy settings are being discussed.

Consideration should also be given to the existing automotive retail industry. This includes not only new car dealerships but automotive repairers, towing operators, service stations and the like. VACC made this point at recent Hearings conducted as part of the House of Representatives Standing Committee on Climate Change, Energy, Environment and Water inquiry on the transition to electric vehicles (EVs).

The Federal Government's Dealership and Repair Initiative for Vehicle Electrification Nationally (DRIVEN) program is a welcome acknowledgement of support for car dealerships and automotive repairers. What remains important is that the funding applications associated with the DRIVEN program recognise the early adopters within the dealership network, who have been ahead of the curve and invested heavily in EV infrastructure early.

Members are invited to read VACC's full submission available on the VACC website.

?? Read more about how the EV transition is reshaping the automotive industry. Don't miss our in-depth coverage in the October edition of Australasian Automotive.

Read the digital edition here: https://australasian.automotive.vacc.com.au/digital-edition/