Electric vehicle dealer: Why the EV mandate should end now!

Welcome to another episode of the Car Dealership Guy Podcast.

On today’s episode, I speak with Alex Lawrence, CEO of EVAuto about his unique approach to selling EVs, what it takes to be one of America’s top 10 used EV dealerships, why EV mandates should end, and decoding Elon to beat the market.

You can stream the full episode now on YouTube, Spotify, or Apple.

1. From entrepreneurial academic to car dealer.

Alex’s path to running a dealership didn’t follow the traditional formula. While he has been an entrepreneur for the entirety of his career, he joined academia by starting an entrepreneurship program at Weber State and obtaining his PhD in Business at Oklahoma State. However, he explains that he has always emphasized entrepreneurship over his academic background, and it was this that led him to eventually join the car business.

2. Early business model.

His entry into the world of auto sales came from a conversation he had with a close friend who noticed that it was difficult to buy a preowned Tesla, due to the fragmented market. The two decided to build a digital platform designed to exclusively sell used EVs, paying $20,000 for their first website domain. Alex notes that his friend had an old dealer's license, which they decided to use to sign up for dealership tools and participate in auto auctions. 

3. Why a dealership?

When he first began considering opening a physical storefront, Alex remembers being told to find a place that was safe and easy to find, but that he didn’t need to worry about visibility. The reasoning was that modern consumers do most of their research online and won’t care about the quality of in-person shopping. However, from his own experience, Alex knew that most EV shoppers were entirely new to the market and had many questions they wanted to ask before deciding on a model. With that in mind, he went after locations that were highly visible and highly desirable.

4. Staying ahead of the curve.

After selling several million dollars worth of Teslas, Alex realized how profitable a used EV business could be. He rented out a small location which he stocked with supply from Manheim. While the electric car market is extremely volatile, Alex was able to navigate the challenges of the market by following trends as closely as possible and reacting earlier than his competitors. He notes that he was able to avoid losing any money when Elon Musk began discounting Tesla models, as he predicted lower values were on the horizon and adjusted his own prices in time. 

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5. Why do people buy EVs?

Alex notes that around 95% of his customers are first-time EV buyers. He says that many are motivated by recommendations from friends and family members, adding that owners are major advocates for electric cars. “They’re unpaid advertisers. They love them, and they’re not shy about telling people about them,” he explains. Shoppers are also motivated by cost savings. “The majority of my customers right now are comparing [EVs] against gas alternatives, and recognizing that dollar-for-dollar, there’s no better car.”

6. The EV shopping experience.

Another driver behind Alex’s success is his focus on catering specifically to an EV shopping experience rather than a general car buying experience. He explains that many dealers and salespersons either don’t want to sell electric cars or lack the knowledge to answer consumers' questions about the technology. Gathering EV-related expertise under one roof and cultivating enthusiasm for gas alternatives allows Alex and his team to provide a high-quality experience that consumers will struggle to find at any but the most EV-friendly dealers.

7. The problem with modern car sales.

Alex believes that the negative stereotype of car salespeople and dealers is well-deserved. “I’m tired of hearing there’s a few bad apples. No, I think there’s a lot of bad apples,” he explains. Rather than pressuring consumers right out of the gate, Alex ensures that his team is very laid back, treating shoppers with respect and allowing them to walk around the showroom at their own pace. Even when talking with customers for multiple hours, he notes that his team never puts pressure on anyone to purchase a vehicle. From his perspective, one of the core issues with the modern car buying experience is that dealers don’t understand what it’s like to shop at a dealership. “A lot of car dealers, they haven’t bought a car in a very long time,” he notes.

8. Managing a used EV business.

Alex estimates that his gross profit per unit is around $4,600, of which roughly $3,600 is from the front end and $1,000 from the back end. He notes that the back-end continues to grow as he adjusts the process to include financing. Alex leverages every avenue to purchase inventory, including trade-ins and wholesale, noting that he is also starting to ramp up private acquisitions. However, he avoids purchasing vehicles that need extensive reconditioning, opting to save on costs by focusing only on options that have, at worst, a few dents and scratches. “We’re very, very particular about what we buy,” he comments. While Alex employs technicians at his dealership, he adds that EVs typically don’t need much maintenance.

9. Advertising and marketing.

Alex’s advertising budget is minimal, a fact that he admits to being proud of at one point although now he is unsure if he waited too long to invest in traditional marketing. He challenges the idea that used EV dealers should use listing platforms like CarGurus, which he argues compete with his own marketplace. However, even though his business sold 93 cars in July (since his lot can only carry 40 units, this translates to a turnover of more than two full lots), he confesses that the market is so volatile that he refuses to let himself feel overly confident. In a similar vein, Alex primarily sells Tesla models, noting that demand fluctuates too often for vehicles from other brands. However, he adds that the second most popular EV model is likely Rivian. Later in the interview, Alex clarifies that he does invest heavily in non-traditional marketing tactics, such as using car wraps to advertise his business locally.

10. Will EVs really catch on?

“EVs are not for everyone,” Alex comments, admitting that this may be surprising to hear from him. He has gone so far as to advise customers who shop at his dealership to consider sticking with gas-powered vehicles after learning more about their lifestyle. However, while electric cars aren’t an appropriate option for every consumer today, he firmly believes this won’t always be the case. “I think EVs will be, eventually, for almost everyone,” once charging availability expands and charging costs come down he remarks. “As prices go down, as choice goes up, and as charging becomes more available, more and more people are going to want them and get them.”

11. 3 tips to sell more EVs.

1. Be all in or all out. Dealers need to convince their customers that they are the best resource for answering their questions, which can only happen if they learn everything about their products.

2. Abandon traditional sales tactics. Dealers should rely on the expertise of sales professionals who already use an EV in their day-to-day and know what consumers like them want from the car buying experience.

3. Understand charging. This doesn’t just mean that dealers should understand how charging works. Instead, sellers should know what the charging environment in their local market is like, in addition to the charging needs of each buyer. This will allow them to recommend the best model and make personalized recommendations for each client that can help them navigate limited ranges. Alex notes that it is also important to offer in-house charger installation services.

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