Like you, we were shocked last month when the Sierra Club’s 2023 Rev Up electric car report revealed that “Some car dealerships refuse or are still not ready to sell EVs to consumers. Of the 66% of car dealerships that did not have an EV for sale, 45% of those dealers reported they would not offer an electric car for sale regardless of automaker allocations and supply chain constraints.”
According to Slate, car dealers are among the wealthiest Americans. Some of the top dealership groups do more than $100 billion in business every year — in some cases, that’s more than the companies that manufacture the cars earn. The magazine sent one of its own — Alexander Sammon — to this year’s National Automobile Dealers convention in Dallas to see what the mood is among dealers about the electric car revolution.
Sammon’s report made the NADA convention sound like a fraternity toga party. It featuring a lot of drunken white men staggering from one event to the next, all of which had an open bar or two nearby. The theme of the convention this year was “NADA is all in on EVs.” [They said the same thing in 2021.] And yet, when Sammon attended a session where dealers could learn how to properly fill out the paperwork so customers could qualify for federal EV tax credits, he found just six people in a room with seats for 120.
An Electric Car Workshop
The session focused on such catchy topics as how to fill out forms for the Section 30D Clean Vehicle Credit and what to know about eligibility requirements for the Section 45W Qualified Commercial Clean Vehicle Credit. Three of the people in attendance were event staff. One person was wearing noise cancelling headphones.
Andrew Koblenz, executive vice president of legal and regulatory affairs for NADA, asked the one man in the room who was taking notes if he had any questions. He did not. The rest of the hundreds of people at the convention were eagerly grabbing cold beers from two coolers strapped to the side of a mule.
Sammon got a chance to speak to Buzz Smith, a former car salesman turned blogger who bills himself as The EV-angelist. Smith was giving a presentation entitled “Selling EVs Is Easy, Even in Texas!” Take the time to learn how an electric car actually works, he counseled those in attendance. Get the buyers out for a test drive. “The big message, though, is do not mention the environment. Do NOT mention climate change,” he warned. People in the audience made a note of that.
Later, Sammon got to speak with The EV-angelist himself, who told him, “There’s a lot of resistance because of the compensation plan. We’re asking them to make about a quarter of the income they used to make. So there’s lots of pushback, especially if they’re staunch conservatives.”
The car business has been very good to car dealers lately. After Covid, people are just happy to find a car that is available for purchase. Dealer profits are up 180% since 2019. Based on data from the U.S. Census Bureau, data scientist and author Seth Stephens-Davidowitz found more than 20% of car dealerships in the U.S. have an owner who is putting more than $1.5 million a year in the bank. Sammon ran into an inebriated conventioneer who told him, “The last two years, cars have basically sold themselves.” Then he paused and said with a sigh, “There’s a fucking reckoning coming.”
The Power Of Car Dealers
Sammon offers his readers a primer on how car dealers came to acquire their power. When the first car dealership opened in Detroit in 1898, it was seen as a convenience for cash-strapped manufacturers, which were overwhelmed just by producing the cars. They needed a means to reach customers without having to build their own sales networks. A class of middlemen sprang up. Car dealers quickly became pioneers of influence, concocting new and astonishing breakthroughs in the very American alchemy of converting riches to political sway.
As the automobile industry flourished, so did the dealership mode. But when America entered World War I, a group of 30 Chicago dealers went before Congress to argue that cars shouldn’t be classified as luxuries by the tax code. The luxury distinction would have allowed car manufacturing facilities to be converted to wartime production.
That would have been fine for manufacturers which could continue making money by building vehicles for the war effort, but it would be disastrous for car dealers. The dealers won the argument and left Washington with a 40% cut in the luxury tax on cars. And with that, the National Automobile Dealers Association was born.
In the 1930s when another war threatened their businesses, dealers went state by state. “At that time, there was lots of attention being paid to small business as having inherent virtue and the need to protect mom and pop shops,” Daniel Crane, a professor at the University of Michigan Law School, told Sammon. “They embraced that story and were extremely successful at getting legislatures in all 50 states to strictly regulate how cars were sold.” In 17 states, it is outright illegal for automakers to sell cars at all.
Since then, the NADA has become one of the most influential lobbying entities in Washington. In 2022, it spent a record $7 million on federal lobbying — far more than the National Rifle Association. In 2020, it spent $25 million on federal elections, with 5 out of every 6 dollars going to Republican candidates.
Car dealers donate heavily to state and local Republican campaigns as well. They often play an outsized role in communities, buying up local ad space, sponsoring local sports teams, and strengthening a social network that can be very useful to political campaigns. “There’s a dealer in every district, which is why their power is so diffuse. They’re not concentrated in any one place; they’re spread out everywhere, all over the country,” Crane said.
A survey done in 2016 by one of their own trade publications found that 87% of Americans dislike the experience of buying a car at a dealership. “So what?” Sammon asks. “You don’t have to be well liked if you’re powerful.”
The headline speaker at the NADA convention was Nikki Haley, now a candidate for president. To riotous applause, she told the packed house, “I didn’t allow unions in our state. I was a union buster, and that’s something I was very adamant about.”
Perhaps it is little wonder that Elon Musk, who hates unions with a passion, has decided these are his kind of people, even though his putative adoptive state of Texas refuses to allow Tesla to sell its cars in the Lone Star state, thanks to unrelenting pressure from Texas car dealers.
This Will Not Stand!
During the convention, those who were not too besotted to see heard a lame comedy routine by Fox News stalwart Greg Gutfeld, who got tremendous applause with this quip: “Nobody is going to be able to confiscate your gas-powered car, because what’s gonna tow it? I have not seen an e–tow truck to save my life!” That’s some funny stuff, Greg!
Afterward, a man sidled up to Sammon and said, “This stuff is crazy, what they’re saying. It’s crazy. Claiming 10% of the fleet will be electric by 2030? Never gonna happen. Do you sell EVs? They’re toys, They’re not cars. And there’s nothing clean about clean energy — we know that,” he said.
“Ask any Tesla owner if they have a second car, and if it’s a Tesla. Ask what they take on road trips.” He told Sammon grim tales of Ford dealers who, rather than meet the company’s requirements for selling electric cars, have decided to give up selling Fords completely. “I can get you in touch with plenty of dealers who feel that way,” he said.
Sammon’s conclusion should be of concern to anyone who wants to see the electric car revolution succeed and as soon as possible. He writes, “Dealers stand between many electric cars and most American car buyers, but they aren’t just going to lay down and let some zero emissions playthings roll them over. Some, I heard over and over, would rather not deal than deal with someone else’s dictates.”
It makes no difference to them that the Environmental Protection Agency is preparing regulation to support a goal of two-thirds of all new cars sold by 2032 to be battery-electric cars. Never mind that the Federal Trade Commission had singled out the industry for a crackdown. Dealers have stared down the government before and are making more money than ever. They take hostages, they did not become them, Sammon says.
They will self-sabotage if they have to. In line with that Sierra Club survey, almost half of dealers said say they will refuse to offer electric cars to their customers. “They have had 100 years of practice and accumulated power, all leading to this moment. Dealers have the best federal advocacy in the country — and plenty of Republican foot soldiers hard at work to ensure that the future will not come.”
Greed will be the death of us all — literally.
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