There was a tiny nugget buried in the Ontario climate plan released earlier this month, and while few noticed, it could significantly boost electric vehicle awareness and sales in Canada's largest automotive market.
According to the climate plan, “Ontario will work with Plug’n Drive, a non-profit electric vehicle advocacy organization, to establish and operate a facility to showcase electric vehicles and related technology to Ontarians across the province.”
Details still have to be worked out, but Cara Clairman, president and chief executive of Plug’n Drive, told TVO.org that the idea is to create a large physical space that lets consumers see all the electric vehicle models available for sale in Ontario. Visitors will be able to take cars for a test drive and learn all about electric vehicles and charging technology, their climate and economic benefits, and the incentives available to consumers. Potentially, facility staff will refer interested buyers to local dealerships that have vehicles in stock.
The one-stop public showroom would be the first of its kind in Canada, and a model for other jurisdictions to follow. “Without a solid education effort we will not get people to buy these cars,” says Clairman, adding that she’s “thrilled” the government backs the concept and hopes to see the facility open in 2017. “That’s been the key missing piece in Ontario.”
It’s a piece that vehicle dealerships in the province were expected to supply, but research from Plug’n Drive suggests many dealerships have been a bottleneck — if not a barrier — to electric vehicle sales. In February 2014, the non-profit hired a firm that sent 20 mystery shoppers into 24 EV-certified dealerships across Ontario. A total of 95 shopping experiences were recorded and analyzed.
Of dealerships visited, 46 per cent didn’t have an electric vehicle floor model for customers to see, let alone test drive. In more than half of the shopping experiences there were no EV-related brochures or pamphlets available. If shoppers wanted to order a car, they had to wait three to four months.
“Misinformation was an issue throughout the shopping experiences,” according to Plug’n Drive’s report. “Incorrect information was given regarding the availability of electric vehicles in Canada, their costs and benefits, details regarding the subsidies for electric vehicles, and a range of other topics.”
In 22 per cent of interactions mystery shoppers noted a lack of enthusiasm about electric vehicles. In eight encounters, shoppers said they were discouraged from considering them “even after they prompted the salesperson for information and demonstrated a definite interest in the EV.”
While many dealerships were enthusiastic and knowledgeable, the report showed that others were not — and this was a survey specifically of EV-certified locations, the ones most eager to sell electric cars in Ontario.
Breaking the Dealership Bottleneck
As of March 31, a total of about 6,500 plug-in vehicles were registered in Ontario. The province’s new climate action plan aims to boost annual sales to 14,000 by 2020, up from about 2,000 sold in 2015 — in other words, to increase sales sevenfold within the next four years.
To spur sales, the province plans to extend its program of offering electric vehicle purchase rebates (in amounts up to $14,000) to 2020. In 2017 it will begin offering households free overnight charging for four years, and it hopes to eliminate the HST charged on new purchases by 2018.
Within a of couple years, new homes and commercial buildings will be required to be EV-ready (by accommodating charging stations) and a new program will be launched to help low- and moderate-income households trade in their gas-fuelled clunkers for a plug-in vehicle. All of this will be tied together by massive investment in public EV-charging infrastructure.
But Clairman believes eliminating barriers at the dealership level is crucial for the government to achieve its targets.
The problem is that dealerships won’t invest in electric vehicle training and inventory if they don’t believe people will buy the cars, and people won’t buy the cars if dealerships don’t have the inventory or training. “It’s a bit of a chicken-and-egg problem,” she says. “If dealerships know they’ll sell them they’ll carry them, but they don’t believe that at the moment. We have to fill that gap and by doing so, my hope is it will inspire more dealerships to carry and promote EVs.”
If Plug’n Drive’s one-stop showroom works, it will eventually generate enough demand to render itself redundant. “My view is this will have a five-year window. After that, the dealerships will be promoting EVs because they want to,” she said.
So what do electric vehicle makers think? Industry response has ranged from reserved to dismissive.
“We have not been approached about a new centralized EV showroom model at this time, therefore cannot comment further,” says LouAnn Gosselin, spokesperson for FCA Canada, maker of the new Windsor-built 2017 Chrysler Pacific Hybrid, a plug-in minivan. “At this point, our dealers are excited to be offering consumers the world’s first hybrid minivan in their showrooms.”
Mitsubishi Motors wants to learn more about Plug’n Drive’s plan, but spokesman John Arnone says the company’s electric vehicle strategy will continue to “put our qualified dealerships at the centre of the sales and delivery process.”
Clairman is clear, however, that nobody intends for the universal showroom to replace dealerships. “We are not going to be selling cars. We're going to work with dealers,” she said. “Some dealers will love it, because they know they'll benefit from it. Some won't love it.”
Thinking it through
Francois Lefevre, chief marketing manager for the pure-electric LEAF at Nissan Motor, says dealership support for the Plug’n Drive facility will depend on how it’s structured and how staff are trained. If interested electric vehicle buyers are directed to specific dealerships, how would staff choose where to send them? “It may prove a little bit delicate.”
Lefevre said EV-certified Nissan dealerships are required to have at least one LEAF in stock at all times, and follow a strict set of rules regarding sales processes, service equipment and tools. Even so, he acknowledged that the dealership experience could be better and more consistent.
High employee turnover means there are times throughout the year when some sales staff aren’t properly trained to sell EVs. And while Nissan dealerships must have at least one LEAF in stock, there is currently no requirement for independent franchisees to have showroom models on display. “But that’s something we’re pushing,” Lefevre says.
The ideal scenario is for electric vehicle dealerships to have one vehicle in stock, one available for test drives, one on the showroom floor and one as a loaner to customers who have already purchased a plug-in and are getting it serviced. “It’s car sales 101,” Lefevre explains. “If you don’t have it in inventory or have a demo model, you’re not going to sell it. It’s basic, and it’s 10 times more important for an electric vehicle because it’s so different.”
But is Plug’n Drive’s planned facility the only solution to the problem?
Some are floating another option: carving out a small piece of the purchase incentives offered by the province and giving the money to EV-friendly dealerships. For example, if a consumer purchases an electric vehicle that would qualify for a $10,000 government rebate, why not give $1,000 or $2,000 of that rebate to the dealership that sold it?
“This is smart. I think it would be the best thing to do and would more than quadruple our sales,” Lefevre says, pointing out that margins at dealerships are thin and electric vehicles are more expensive to sell than conventional vehicles, as they require extra staff training, facility retooling and more time on consumer education.
“The government doesn’t understand the extra expense of selling electric cars, and they’ve made all these changes [with the climate plan] without consulting the manufacturers. But with a small $1,000 incentive for dealerships it would be a win-win — money well spent.”
It isn't something the Ontario government is actively pursuing, however; so at the moment it’s the universal showroom proposal that is gaining momentum.
Clairman says Plug’n Drive is meeting with the government over the coming weeks to hammer out the plan's details and come to mutual agreement on what’s needed to push it ahead. As for location, the goal is to have it easily accessible by both transit and highway, and avoid hiding it in a non-descript industrial plaza.
“Of course, we're looking for industry to help support it,” she says. “We want industry to be at least a 50 per cent partner in this. And I think lots of folks will be interested. I'm confident of that.”
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