As electric vehicle demand rises, more states are adopting regulations created by the California Air Resources Board (CARB). These policies push automakers to gradually lower their carbon footprints by requiring increasingly higher sales of all-electric, hybrid or alternative fuel models on an annual basis. On this episode of Inside Automotive, hosts Jim Fitzpatrick and Shyann Malone are joined by Jason Wilson, the president of the Kentucky Automobile Dealers Association (KADA), to discuss why some states are against these regulations and provide his insights on EV demand.
The adoption of CARB policies will likely differ based on local electric vehicle demand. This can vary heavily between states, notes Wilson. For instance, in rural regions such as Kentucky, range anxiety is a major concern for buyers, who tend to live further apart and have less access to reliable charging than residents in more densely populated areas. On the other hand, car dealers, who are nevertheless supportive of electrification, are worried about how their businesses will fare in an EV-only market if their respective consumer bases remain hesitant. OEMs often require that their retailers spend millions on charging stations, training and other preparations, investments which could take years to pay off should electric vehicle demand remain stifled. Simply put, for buyers and dealers in many states, a disconnect exists between the ambitiousness of the industry’s transition plans and the practicality of abandoning gas-powered cars. “This is truly a government-driven initiative,” remarks Wilson. “Whereas in the past, as we evolved through the car industry…all those changes came based on the demands of the consumer.”
Affordability is another concern for car buyers. At present, an EV typically costs $10,000 more than its petrol-based counterparts. Add in rising interest rates and untamed inflation, and it begins to make sense why electric vehicle demand could be limited in some locations. Wilson also notes that consumers are holding onto their cars for longer, with most driving 200,000 miles before considering a replacement. The combined cost of battery-powered vehicles and the longevity of ICE models have made it difficult for dealers to convince buyers to make the switch, a challenge evidenced by the pile-up of EV inventory seen in multiple states.
Wilson believes Kentucky will wait a considerable amount of time to adopt CARB regulations if, in fact, it ever does. Electric vehicle demand is simply too dependent on the local consumer base for regulators to expect uniform success. EVs are certainly in high demand among young buyers or drivers in urban environments, but that support dwindles in rural states or regions with older populations. Addressing demographic differences will be key to ensuring a smooth transition away from gas-powered cars. Unfortunately, since they must remain compliant with both local and federal regulations, OEMs are unlikely to distinguish between states with different markets. As a result, retailers bear the majority of the risk when it comes to the EV transition. “When dealers are told they have a choice to either opt-in or not on the EV program when the manufacturer is saying ‘we’re going all EVs’…what does that look like for you as a new car dealer for that manufacturer?” asks Wilson.
Associations like the KADA play a crucial role in keeping the business lucrative and successful, even in the face of challenges such as inconsistent electric vehicle demand. Wilson states that he and his colleagues will continue to examine the issues affecting franchised dealers as they represent the retail automotive sector before corporations and regulators.