By now everybody’s seen the news where the state of California is looking to ban sales of gas-powered cars – basically, everything has to be an electric vehicle. There’s more to it than just California because you might think, California is only one state and I don’t live in California so it’s not going to affect me. Well, let’s take a look.
Even though California is technically one out of 50 states, it represents about 15-18% of the automobile market. So when manufacturers build vehicles they have to make sure they keep California in mind because it’s a larger than average share of the national vehicle sales market. In addition, there are other states that are doing this. The state of Washington has already announced that they’re doing this as well. So now you add those two together, there are also four or five other states that have either announced they’re going to phase out gas-powered cars within the next few years or they’re expected to do so very shortly. If you add up all of the states that have already either announced or certainly will, you have about one-third of the population of this country living in a state where gasoline vehicles will no longer be eligible to be purchased. In fact, some states will not even allow you to register them. In the state of Washington, the law says not only can you not buy them but you can’t even register them. If you already own one, when this law passes, your registration will be rejected when you try to renew it. It seems that California will let you keep the gasoline car you already have. It’s unclear whether you’d be allowed to buy one in another state and bring it into California.
The writing is on the wall right, electric vehicles are being shepherded in as a requirement where gasoline vehicles won’t be. Look at this point if the states pass these laws, even if the manufacturers or you as a consumer want a gasoline car, it might even be impossible because manufacturers aren’t going to build cars that are essentially illegal in large part of the country. And in addition, they’re not going to build parts for cars that are being phased out. So if you have a 10-year-old car or a 5-year-old car that needs parts, 10 years from now you might not be able to get parts. Many people think, well I’ll just keep my gas car forever and keep driving it, good luck with that. You might not be able to continue to maintain that car in operating condition if parts aren’t available. Even things like computer chips, electronic parts, or collision parts. What if the car gets crashed and you need a fender and there are no fenders? What if the brakes go out and you can’t buy brakes? So you might think, well maybe I’ll just bite the bullet and buy an electric vehicle, well not so fast. At the same time, this is happening, EV prices are going up. According to this article from The Verge, electric vehicle prices are going up. In fact, Ford announced recently for a lot of vehicles, they’re increasing the prices between $6,000 and $8,000 for electric vehicles due to what they call “production cost increases”.
So what does this mean? What does it mean for you as a consumer? For the market and for the industry? Let’s first start with what are your comments. If you are a consumer, what are your thoughts on the fact that electric vehicles may not be a choice anymore and may be a requirement? If you don’t live in California, what if your state decided to do the same thing? What if the market realities made it so that you couldn’t find a gasoline vehicle? What if the manufacturers are not making gasoline vehicles, are you prepared to live a life with an electric-only vehicle? Do you have the capability to charge it? Does match your transportation usage? Are you in the automotive industry? Are you a repair shop? Are you prepared for the transition to electric vehicles? Does your shop have the right technology to repair and fix these vehicles? In fact, are these third-party repair shops even going to be a thing with electric vehicles? It might be dealer-only repairs.
Think about this – if you have a cell phone or a computer, most of those things are under warranty, or the repairs are done through a download or only at the authorized retailer or it may be that third-party repair shop with aftermarket parts. Local garages are not really even needed anymore because everything’s electronic, there are no mechanical parts. Is that industry going to fade away? What about collision repairs? Well, the collision repair of an EV is more than just sheet metal. In most cases, if the floor pan of a car gets damaged, and almost every collision even light impact damaged the floor pan, that’s where the battery is. If the battery is damaged, that’s more than just sheet metal repair, that’s a mechanical item that may have to go back to the dealer.
What about dealers themselves? What is this going to do for the future of automotive retailing? Is it going to change how you run your dealership? What about used car lots? Will it be practical to buy and sell used electric vehicles? A five-year-old electric vehicle might have more than a hundred thousand miles and now your battery is out of warranty. Most manufacturers warranty the battery for eight years or a hundred thousand miles. Well, some people hit a hundred thousand in five years. That’s only 20,000 miles a year. Many people drive more than 20,000 miles a year. So in five years if that battery is out of warranty, does that make the car worth anything? Is it worth even buying or selling these cars? Because if the battery costs $15,000 $18,000, is a five-year-old car even worth that to replace a battery? So tell us what your thoughts are. This is all brand new, this is a new world a new era, all new information. We’d like to hear your feedback on what you think about the transition to electric vehicles. What do these new laws changing mean for you? And what opinions do you have about this?