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- Dealers learned a lot of lessons on EVs this year.
- EVs started piling up on dealer lots for the first time.
- A new crop of customers changed dealers' approach to EVs.
Car dealers had a big year with electric vehicles, as more battery-powered options landed on their lots.
The year started with healthy demand for electric cars, with most dealers delivering factory orders rather than holding these cars on their lots. But by the summer, dealers were raising concerns about long-term demand trends.
In the second half of the year, electric cars started piling up, according to one measure of inventory levels, and some dealers even started turning away EV allocations.
Most dealers are still committed to electric vehicle sales, but warn that the current price point for these cars is out of alignment with how customers are shopping right now as rising interest rates and overall inflation cause consumers to pinch their pennies.
"I don't think the manufacturers have yet come to grips with what the right price point needs to be – but it's probably about five grand below where it is today," Vince Sheehy, a dealer in the Washington, DC area, told Business Insider this fall.
Dealers told Business Insider this week that they're heading into 2023 with a much different perspective on electric vehicles than when they entered the year. Most are still enthusiastic about selling these battery-powered cars, but hope that their manufacturers are paying attention to the changes they have seen on their lots.
EV oversupply
At the end of July, there were nearly double the amount of EVs on dealer lots compared to gas-powered cars. That was good news for shoppers looking for a deal on an EV, but for dealers it was the first sign that EV production was outpacing demand.
This was an about-face from the problems EVs have faced for the last several years. While most manufacturers still weren't producing EVs at scale yet, supply of these cars has been extremely limited and most buyers waited in long reservation lines for their cars.
The longer those waits got, the more often EV shoppers started looking for other options, sometimes placing multiple orders just to see which car came in first.
More on EV oversupply on dealer lots:
There's an oversupply of EVs versus gas cars at dealerships
EVs are running out of customers — and some dealers don't want them anymore
These dealers love their EVs. They just don't know how to convince shoppers.
A new set of customers
After years of wealthy early adopters who required little to no hand-holding in the EV shopping process, dealers started encountering a new set of electric car shoppers in 2023.
As the pool of wealthy buyers dried up and a wave of macroeconomic changes affected buyers' habits, the profile of the average EV shopper shifted dramatically.
"People are no longer evaluating EVs as 'I'm gonna buy an EV, but which one?' It's, 'I'll buy an EV depending on the value proposition relative to a plug-in hybrid, a hybrid, or a traditional ICE vehicle," Sheehy said.
More on new EV customers:
The EV plateau is coming. It's bad news for companies like Ford and Tesla.
The auto industry overestimated EV demand this year. Now companies are scrambling.
It's getting harder for dealers to sell EVs. That's a bad sign for the industry.
50 new EVs are hitting the US soon. It's not clear if there are buyers for them.
Do you work for a car dealership? Have you had an interesting experience at one recently? Get in touch at transportation@businessinsider.com.