Car Dealers Reject EVs As Production Outpaces Demand

The Biden administration continues to push eco-friendly initiatives, forcing manufacturers in certain industries to pump out products that use “green” technologies.

Yet, in one of those industries at least, the consumer demand for those eco-friendly products just isn’t there.

According to a new report from Insider, car dealerships around the country are telling their auto manufacturers that they don’t want any more electric vehicles sent to them because they already have plenty on their lots. Because consumers aren’t purchasing these EVs fast enough, the dealers simply don’t want to be sent more of them until they can clear their lot of the electric vehicles they already have.

Despite this fact, auto manufacturers continue to crank out more EVs than they ever have in the past.

Insider spoke to the COO of Kunes Auto and RV Group, Scott Kunes, who said that:

“[Manufacturers are] asking us to make a large investment, and we’re just wanting to see some return on that investment.”
The company that Kunes founded launched in 1996, selling domestic and foreign cars as well as RVs to customers in Wisconsin, Minnesota, Iowa and Illinois, at more than 40 locations. As such, he has a pretty good handle on the state of the market and the demand for EV inventory.

He explained to Insider:
“We have turned away EV inventory. We need to ensure that we have a good turn on it.”

Inventory “turn,” Insider explained, measures the pace at which car dealerships are able to sell a vehicle equal in value to everything that it has in stock. Typically speaking, auto retailers want to turn their inventory over 12 times per year.
According to the Insider report, dealerships had 54 days’ worth of inventory on their lots just a few months ago. EV inventory, though, was almost double that amount, causing a major problem for auto dealerships.

Manufacturing companies ramped up their production of EVs not long ago. While it was once difficult for interested customers to test drive an EV, let alone purchase one, that simply isn’t the case today.

Many auto retailers that Insider spoke to said they are turning away additional EV inventory until they’re able to sell what they already have on their lots.

According to Insider, the lack of demand comes from the fact that there isn’t a large enough pool of people who have enough money to afford to purchase an EV in the first place. And even among those who do have the money, many people don’t want to be the first to purchase EVs, in case the technology hasn’t been refined enough yet.

As AutoForecast Solutions’ vice president of global vehicle forecasting, Sam Fiorani, explained to Insider:

“It’s not just that these vehicles are expensive, which they are. We’re talking about a much more nuanced lifestyle change.”

There’s a much different “ownership experience” that comes with EVs, he said, due to the lower range that the vehicle can get from one charge, and the fact that there aren’t enough charging stations yet, at least relative to the number of gas stations on the road.

That, Fiorani explains, means “it’s hard for the average customer to make that leap while spending an extra $10,000.”