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The Future is Electric

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Given a choice between cash and closing your doors or changing how you do business to adapt to a changing industry, which would you choose? It looks like Cadillac dealers are facing this question as GM wants to shift to an all-electric lineup by the end of the decade. One in five Cadillac dealers will be giving up their franchise, by the end of next year, of course, with a hefty payout from GM. General Motors is moving into the electric vehicle market at full speed, and they are giving their franchise owners an option to follow them in this venture or walk away with cash in hand.

"For any brand, the closure of about 150 dealers would be significant. However, given the size of the buyouts — generally $300,000 to $500,000, but in some cases much more — and the six-figure investments Cadillac requires for dealers to become EV-ready, it might seem surprising more aren't walking away."

However, we are in the business of selling cars, aren't we? Does it matter if it is electric or gas? If the future is electric, then why walk away? Dealers cater to their market and have to adapt to changes every day. If a customer walks in and wants a lime green car with hot pink polka dots and is willing to pay for that, that dealer will find a way to make it happen – I've seen it before.

Although some EVs are currently on the market, I wouldn't say it is the hottest item that dealers are now selling, unless you are Tesla. It is more popular in certain areas of the country than others, for sure. However, manufacturers are shifting their business models and adding more electric vehicles to the market in the not-so-distant future. Some have come up with different ways to prepare for that. For example, starting next year, Ford, GM, Tesla, and Toyota are all launching various online training and certification courses explicitly geared for electric vehicles and their components. 

Even the Japanese are starting to see a shift. Not to say that they are late to the game or anything – after all, Toyota first brought us the Prius, a hybrid vehicle back in 1997, Honda with the Insight, and of course, Nissan and Mitsubishi with fully electric cars later on. The Japanese brought this market into fruition many, many years ago. We see now the change to having more EVs on the road like us, and many other countries will soon see. Japan's Ministry of Economy, Trade, and Industry are "…proposing phasing out sales of new gasoline-powered vehicles by the mid-2030s." which in turn leads to their ultimate goal – being a net-zero emitter of greenhouse gases by the year 2050. 

This will not be an easy or a quick task as I'm sure you can imagine. Automakers do have a long road ahead of them to reach this goal. Some will have an easier time, as they already have put their foot into the EV market, while others will have a more challenging time competing in this market. Manufacturers will also have to consider the herculean task for states and governments to install charging stations and outlets across the United States, and possibly, in conjunction, homes being outfitted correctly for charging outlets. The future is changing, and we must be ready to change along with it.     

Helpful Links:

Cadillac Gets A Little Bit Smaller

Preparing for the EV Switch

Japan's EV Bid

 



Author: Christine P.
Date: Dec 16, 2020