Governor Andy Beshear discusses progress in electric vehicle production in Kentucky
With $11.6 billion in investments since 2020, Kentucky is becoming the center of electric vehicle production, according to Governor Andy Beshear.
Car dealerships act as ambassadors for customers looking to purchase a new car. Their job is to understand and promote new trends and technologies in the industry.
And there’s no bigger trend in today’s auto industry than electric vehicles. However, dealers may be prevented from selling these vehicles because of their business model, say electric vehicle advocates.
The service and parts department is typically the department where dealers make the most profit. According to the National Automobile Dealers Association, dealers nationwide placed 264 million repair orders last year and generated more than $142 billion in service revenue.
Electric vehicles consist of fewer parts and require less maintenance because there is no combustion engine, transmission, or other important internal parts that require regular maintenance or repair.
“It’s not profitable to sell electric vehicles,” says Ellen Wade, an electric vehicle owner and advocate, “because they’ll never see us again.”
Despite massive investments in electric vehicle manufacturing in Kentucky, totaling $11.7 billion over the past four years, the state lags behind other states in ownership rates.
Consumers are hesitant to purchase an electric vehicle due to high costs, fear of range and the lack of charging infrastructure.
Still, dealers will play a central role in Kentucky’s transition to electric vehicles. And some say selling electric vehicles has been a challenge so far.
“We’re not ready yet,” says Daniel Mekuria, general manager of James Collins Ford in downtown Louisville, of consumers. “Maybe in the next five years.”
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Service is important for car dealerships, but electric vehicles could change that
So far, there aren’t enough electric vehicles on Kentucky’s roads to cause a noticeable drop in service profits for dealers, but EV advocates worry that could lead to lost sales over time.
“The dealers are dragging their feet a little because they make money on service,” says Fred Rockhold, an electric car owner and activist with Evolve KY. “They make a lot more money on service and maintenance than they do on selling the vehicle, and they don’t train their salespeople to sell the electric car.”
According to the Department of Energy, electric vehicles still require maintenance, but less than gasoline-powered vehicles.
Virginia Payne, manager of stationary operations at James Collins Ford, said the services her team has provided on electric vehicles have mainly consisted of tire changes and programming bulletins.
Stefano Boccuzzi, a service advisor at Mercedes Benz in Louisville, said the shift to electric vehicles has him worried about his job security. He pointed out that 90 percent of the electric vehicle work his team handles consists of software updates and requires less hands-on tinkering with the car and more computer skills.
“They worry about whether the computer is going to do most of the work. And we don’t want to sit around and just click ‘OK’ to update everything,” Boccuzzi said. “But right now the infrastructure isn’t there yet, so we’re probably still going to be 90% motorized and 10% electric.”
Premium prices can lead to a decline in sales for some retailers
Ford, which has a strong presence in Kentucky, sees electric vehicles as the future of the auto industry. In a July earnings call, Ford CEO Jim Farley said customer data showed that “about 50% of car buyers would be better served with an electric vehicle.”
“We’ve been very clear on electrification about why electric vehicles are so important and a good choice for customers and businesses,” Farley said. “There are a lot of misconceptions around electric vehicles … and (automakers) like Ford need to do a much better job of educating their customers about the benefits that electric vehicles offer in terms of operating costs.”
Ford has had greater success with its electric vehicle lineup this year. In the second quarter of 2024, Ford’s electric vehicle sales increased 72% year-over-year.
Still, Mekuria said his dealership struggled to sell electric vehicles after Ford “inundated” the dealership with the product a few years ago.
According to Mekuria, about 20% of consumers looking for a new vehicle are interested in electric vehicles.
But at Mercedes on the other side of town, the electric vehicles are “selling like hot cakes,” says Cullen Dunn, sales and leasing consultant at Mercedes.
While the price of electric vehicles has dropped in recent years due to advances in battery technology, many electric vehicles still come with a high price tag, and for dealers like Ford, selling a high-priced vehicle can be challenging compared to a luxury car dealership like Mercedes.
According to Kelley Blue Book, the average price of an electric vehicle in June was over $56,000, while the average price of a gas car was about $49,000. Federal tax credits are designed to close that price gap, offering up to $7,500 toward the purchase of a new electric vehicle.
“That’s ultimately going to be the future; it just hasn’t happened as quickly as manufacturers wanted,” Payne said. “Consumers just haven’t been on board, but I think that’s going to be the future.”
Dealers often lack information about electric vehicles
Many dealers also lack education about the product, electric vehicle owners and advocates told the Courier Journal.
Rockhold of Evolve KY said that in his experience, salespeople at car dealerships “don’t really know how to talk about electric vehicles.”
Stuart Ungar, executive director of the Louisville Sustainability Council, said he occasionally went to car dealerships with customers looking for electric vehicles to help them through the buying process.
Some car dealerships are open to the change, while others “don’t embrace it,” he said.
“I go to the car dealer and support him because for the vast majority of dealers, even the really good ones, it is much easier to sell customers a petrol or diesel vehicle because that is the vast majority of vehicles,” says Ungar.
Dealers also have some leverage through a Kentucky state law that prevents automakers like Tesla and Rivian from selling vehicles directly to consumers. Despite this, Tesla has found a caveat to the state law and has been on the Kentucky Motor Vehicle Commission’s dealer list since August 9. The company also has a branch in Louisville that is looking for sales and service employees.
Despite consumer and dealer reluctance, the state has cemented its leadership in next-generation vehicle production with facilities in at least 13 counties.
As the state works to expand charging infrastructure and focuses on the jobs and economic development that electric vehicles bring, auto dealers are looking for their place in the evolving industry.
“People who don’t embrace it are in danger of having their Kodak or Polaroid moment,” Ungar said.
Contact reporter Olivia Evans at [email protected] or on X, formerly known as Twitter at @oliviamevans_. Connor Giffin is an environmental reporter for the Courier Journal. You can reach him directly at [email protected] or on X @byconnorgiffin.
