EVs…There Is A Lot To Talk About

February 25 2021
CBB

By: CBB Analyst Team

EVs seem to occupy the lion’s share of media exposure and general automotive conversations these days. The electric vehicle market has come a long way since the early days of the first generation Nissan LEAF, Smart fortwo, and Mitsubishi i-MiEV that were all compact and had limited range. That is auto industry history. Gone are the days of a range under 160 kilometers with little cargo space.

Enter Tesla and its first Model S shipments in 2012, and a shift began in consumer expectations and acceptance, with their daring designs, longer range, and performance modes. Today, most OEMs are looking at an electrified future. Some OEMs boast multiple EV options across various segments and some major brands have announced plans for full electrification within a decade or so.

This will mean noticeable changes for new dealers, as well as for used dealers, as the volume of used EVs will increase significantly. This will be particularly important for dealers in regions that are pushing for widespread EV adoption sooner rather than later. For example in Quebec, the Premier announced late in 2020 that the Province would ban the sale of combustion engine vehicles by 2035, and BC has committed to do the same by 2040.

Future EV Growth

Currently there are nineteen all-electric (BEV) and thirty-four Plug-in Hybrid Electric (PHEV) models in production for the North American market. OEMs across the industry have plans for or announced a slew of new EV models to look forward to. Recent announcements range from performance-oriented vehicles, to crossovers, to full-size trucks, to heavy-duty trucks and delivery vans. There will be options for mainstream, luxury, and fleet/commercial buyers.

Much of the growth is in the consumer retail space, which is what most of us are more aware of, due to awareness campaigns and social media. However, the commercial sector is also actively expanding in the form of EV delivery vans and medium/heavy duty trucks.

It is interesting to see and follow the development of some newer names in the EV market, such as Canoo, Rivian, Bollinger and Nikola Motors. But the established players, such as BMW, Ford, GM, Volvo and more, are making aggressive investments in EV with substantial new product announcements and launches for 2021 and beyond.

Below is just a sampling of what is currently in the market and what is coming soon.

How Should Dealers (new and used) Be Getting Prepared?

For new vehicle dealers, if you aren’t already carrying at least one electrified model, then you likely will be soon. As mentioned most OEMs have plans for electrified or alternative fuel models currently in the pipeline. It is important to get your service, parts, and sales staff trained and get your facilities prepared to accommodate this change in inventory type. Canadian Black Book continues to work with OEM’s and other industry stakeholders on customized studies to inform the transition to EV.

Used dealers, with this push toward electrification from OEMs and governments, in order to stay competitive, you will need to get ready for the used EV inventory that will be showing up in the market in the near future. We all know that if you are not ready to accept change or something new, it is certain that your competitors will.

This means learning how to equip your dealership with the necessary charging equipment, training staff, having educational materials for customers, and learning about upcoming models that will soon become used inventory. It will be key to be able to educate consumers about the positives of EVs, such as low maintenance costs, battery warranties, and improved ranges compared to early generation models.

What matters to a consumer when purchasing a new or used EV?

So, what are consumers really looking for or actually worried about when they are considering the purchase of a new or used electric vehicle? ‘Range anxiety’, a widely discussed area of contention between EVs and consumers, is certainly one of the biggest factors. Reservations about range are being eased today, by longer range models that are not just Teslas. It is now the norm for EVs to have a range exceeding 320 kilometers, with many exceeding 400. Currently, sixteen of the nineteen BEV models already on the market are available with more than a 320-kilometre range. To put this into perspective, one decade ago the Nissan LEAF was introduced as the first modern BEV, with a 120-kilometre range.

Obviously, cost is another important factor which can inhibit the widespread adoption of EVs. Organic demand may be relatively saturated; however, governments’ mandates are directing OEMs to build EVs, while monetary/tax incentives entice consumers to buy. In an EV, it is the battery cost that typically accounts for the high sticker value. However, over the past decade the cost of lithium-ion batteries has dropped significantly. Unfortunately, data suggests that the reduced battery costs are not fully passed on to consumers. To encourage widespread adoption of EVs, the total cost of ownership disparity between an EV and a traditional ICE vehicle needs to be minimized through lower MSRPs, consumer finance incentives, and higher fuel prices.

So What?

Well, in short…EVs are coming! OEMs are learning from their vast ICE vehicle experience and beginning to put more focus on SUV and light truck options. After all, we know that in Canada, these models are where the majority of demand lies. So time will tell. When these SUV/Truck units become more readily available, will they offer consumers the options, style, size and range that Canadians want? It is our expectation that the answer will be ‘yes’, but we certainly don’t expect that to be an instant shift. But, as we said, EVs are coming and it is not a matter of ‘if’, rather a matter of ‘when’.