- Dealers are losing in the race to get an electric truck in consumers’ driveways.
- Dealers have more to lose than manufacturers, who book revenue when the truck leaves the factory.
- As EV adoption increases, command banks will become less risk-averse.
In an electric truck market where buyers are placing bets on what will arrive first, dealers are likely to be left in the lurch.
Tesla’s Cybertruck is finally leaving the factory, adding another contender in the race to consumer driveways. While startups like Rivian are struggling to fill orders, and legacy companies like Ford and GM have slower production of their electric trucks, Tesla has an opportunity to deliver its trucks more efficiently and lap competitors that beat them to market, some industry experts say.
Regardless of which truck comes first for those who placed multiple orders, the biggest losers are dealers who took customer orders early, said Karl Brauer, automotive analyst for iSeeCars.
If a Lighting or Hummer order comes in and the customer has already taken delivery of a Rivian, for example, that electric truck is now sitting on their lot without a guaranteed buyer at the dealer.
“Consumers are out there and the cars are produced, and the dealer is the bridge between them,” Brauer said. “Dealers are in this very tough spot where they are expected to continue to absorb these vehicles that are being produced by manufacturers.”
The dealers are the canary in the coal mine
Several Ford dealers who spoke to Insider recently said they are already turning over some electric vehicle allocations as demand for the cars picks up. And Ford is not alone. Even Tesla, while rolling out the Cybertruck, struggled with bloated inventory this year.
All of this is a sign of trouble ahead for EV adoption as the market moves past the wave of early adoption, industry analysts and executives said. It will be critical for car companies to listen to dealers about where the demand pendulum is swinging as they roll out more and more electric models in the coming years.
“Dealers know in real time with real time feedback what the market is doing,” Brauer said. “They have always acted as the first warning lights on the dash for the automotive industry.”
Dealers also have more to lose than manufacturers. Car companies that use dealers reserve revenue on a car when it leaves the factory (that’s one of the biggest advantages that legacy car companies have over startups that use a direct-to-consumer model).
It costs dealers money to keep unsold inventory on their lots, and they usually have to take a loss on discounts if a slow seller gets rid of them.
Order Banks will be more risky in the coming years
As EVs make up more of the market—they’re headed toward 10% of the US in the next few years—the types of customers EV sellers will be dealing with will change. That will create more risks, said Jessica Caldwell, an automotive analyst for Edmunds.
The early adopters were buying EVs for more emotional reasons, and were more willing to wait, go through spotty customer service, or deal with a vehicle with more glitches and quirks. The industry has largely burned through those customers now, and the average car buyer will be less forgiving.
In addition, an automotive market that is returning to some sense of normalcy after the pandemic and a global shortage of computer chips has thrown everything off the table for the past three years. And the balancing act of selling EVs to the average customer with long wait times is an even more dangerous endeavor.
“Last year, everything was flying off the shelves and we were all on long waiting lists, whether you were buying an EV or not,” Caldwell said. “As inventory comes back to more normal levels, the average customer will be less patient. And that’s the nature of the game for at least the next five to seven years.”