Some argue that the growth of electric vehicles will be the end of auto dealerships. Car dealers today derive significant revenues by providing parts and service for the internal combustion engine (ICE) vehicles they sell. If EVs, with their far fewer moving parts and far lower maintenance requirements, displace ICE vehicles, the reasoning goes that dealer revenues are doomed to decline.

Of course, this wouldn’t happen overnight. In 2017, U.S. auto dealers sold 17 million cars. Of that total, only 1.2 percent of all sales (199,826) were EVs. That said, EV sales in 2017 increased about 25 percent over 2016. So while EVs still represent a small market segment, it is growing rapidly.

Whatever the rate of EV adoption, dealers do have their work cut out for them. Along with continuing to support ICE vehicle sales and service, dealers will have to emphasize new training and develop new EV-related expertise. Nate Chenenko, a Massachusetts-based transportation consultant, contends that even though EVs will go longer between service appointments than their ICE counterparts, “dealers still can persuade EV owners that the dealership is the best place for service after the factory warranty expires.” After all, this is new technology, and customers will want the support of trusted experts.

Also, let’s not forget the attractiveness of used EVs. Thousands of them are coming off leases, making used models available and affordable. Auto dealers are ideally positioned to be the go-to resource for shoppers interested in a pre-owned EV.

But dealerships could face competition from new ways of selling cars. Tesla, for example, takes a direct sales approach.  Will that catch on as a dominant model? Will auto buyers gravitate toward “Experience Centers” where they can enjoy a low-pressure environment while being educated about choices and even offered test drives? Might customers start buying cars like they buy computers today at the Apple store, or even through “car vending machines” like Carvana? Dealers will have some control over this if they become and remain trusted experts on EV sales. If they drag their feet, another sales model is likely to bypass them.

While this change looks disruptive—and it certainly may be—it brings opportunity as well. Consider one potential EV-related revenue sources that auto dealers could work with.

RAP’s series of blogs on beneficial electrification principles considers how flexible EV charging load, among other electrified end uses, has value to the grid. “We All Wish We Were More Flexible: Electrification Load as a Grid Flexibility Resource” points out how the batteries that power EVs can be charged whenever doing so is most beneficial to the grid. This improves utilization of the electric transmission and distribution systems, shifting loads that would otherwise add to the system peaks that drive grid investment and increase cost. Utilities can also schedule EV load to pair it with inexpensive renewable resources that often run when there is low demand and risk being curtailed.

Furthermore, EV charging flexibility also provides the potential for vehicle-to-grid (V2G) services, or two-way charging, which would allow for EV batteries to serve as storage devices that can discharge power back onto the grid when called upon. This would enable a utility or aggregator to provide “ancillary services” to the grid, including frequency regulation (a transmission-level service) and voltage support (a distribution-level service), to help ensure that the grid operates efficiently and reliably.

In short, EV charging has value to utilities. But they need to unlock this full value, and they might be able to do so effectively by partnering with auto dealers, who can educate and market these benefits to prospective EV owners. After all, dealers are:

• Among those best suited to help get new EV owners into the driver’s seat;
• Well positioned to sell Level 2 EV chargers (which are “smart,” or communications-enabled, and more efficient) rather than the comparatively “dumb” and inefficient Level 1 chargers that come with a new EV as standard equipment;
• Well positioned to develop, market, and aggregate charging packages that provide EV owners with lower-cost, cleaner renewable electricity.

Dealers can do all of these things—and in the process capture for themselves some of the value that EVs can provide to the grid.

“Give Me a Little Piece of the Pie if You Make it a Hit”

Consolidated Edison (Con Ed) offers a program in New York State called SmartCharge New York. It’s a partnership between the utility and a Canadian company called FleetCarma, in which FleetCarma signs up EV drivers in Con Ed’s territory and arranges for them to charge at off-peak times. Actively managing demand in this fashion saves Con Ed money—enough money, in fact, for FleetCarma to make a business of it, by aggregating EV drivers, educating them, and arranging for sharing of the resulting savings among Con Ed, FleetCarma, and the EV customers. The utility, the aggregator, and the EV customers “share the pie.”

With a front-row seat and access to new EV owners, forward-thinking auto dealers could do the same thing: turn a looming challenge into a chance to make some money. In his song “Horses,” songwriter Slaid Cleaves tells a story about meeting a guy who’s down on his luck. In Willie’s tale of woe, Cleaves sees an opportunity. And that’s just how auto dealers need to start thinking about EVs:

I met Willie by the still, he was brewin’ a batch
He had a short cigar and one last match
He was tellin’ me ’bout his latest trouble with the government
He had child support and alimony
He was looking depressed and kinda lonely
Just tryin’ to figure out where all his hard-earned money went

“Well I’ll be go to Hell,” he said,
“I got nothing but a Ford and a barn full of hay
If it weren’t for horses and divorces
I’d be a lot better off today”

Well I said, “Willie, that sounds like a song,”
He said, “Son you know you may not be all wrong
Could you give me a little piece of the pie if you make it a hit?”