California Dealers Likely to Have Lost $910 Million in 2022 Profits Due to Tesla and Other EV Makers

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The declining market share of franchised dealers in states like Washington and Colorado, which allow direct sales and follow California’s climate standards, is cutting into their potential profits.

Tesla’s sales of 16,000 vehicles in Washington and 9,391 in Colorado last year resulted in an average of $244,000 and $175,000 in missed gross profit for dealers, respectively. However, with traditional automakers launching more EVs, Colorado dealers are excited to compete.

Luxury legacy brands like Mercedes-Benz and Cadillac are rolling out competitive EV options that will make Tesla models appear outdated in comparison. As more than 50 EVs will be on the market by the end of this year, automakers, including Tesla, will have to face increased competition.

While Tesla’s sales have not affected dealers’ EV volume so far, it has taken share from gasoline vehicle sales.

According to David Long, the executive general manager at Hansel Auto Group in Santa Rosa, California, Tesla’s sales have not impacted dealers’ EV volume as there were not enough EVs available on the market. Instead, Tesla’s sales have affected gasoline vehicle sales.

However, with the arrival of EVs from traditional automakers, dealers like Long are now better positioned to compete in the market, stating that they are “at least in the ring” now.

Source: AutoNews (subscription required)


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