"Electric vehicles seem like a major bummer for your local mechanic or auto-parts shop, but there is hope for them yet.
EVs have fewer mechanical parts that are prone to failure compared with those powered by internal-combustion engines, according to a 2022 report from the Auto Care Association and the Automotive Aftermarket Suppliers Association -- no air filters, antifreeze, spark plugs or oil changes.
There are some offsetting factors, though. Electric vehicles have multiple electric motors that create a lot of heat, which require additional cooling components, Greg Johnson, chief executive officer of O'Reilly Automotive, said during an analyst day last year. He pointed out that EVs and hybrid vehicles have more sensors on them. They create more demand not just for the parts themselves but also for the calibration tools that auto-repair shops require to fix them.
While EVs might require less-frequent repairs, they tend to be more expensive. Group 1 Automotive, a Houston-based dealer group, said in its latest investor presentation that it generates more revenue per repair order for cars with alternative powertrains, such as electric vehicles or hybrids.
Whether the EV transition ultimately creates less repair business overall remains an open question.
AAA estimates that maintenance and repair on electric vehicles cost $949 a year, or about $330 less than on a gasoline-powered car on average if maintained according to the automakers' recommendations.
Bill Thompson of IMR cautions that it is too early to gauge the true, long-term cost. "We're not far along enough in the life cycle of those vehicles to know," he said.
Notably, the average age of an electric vehicle in the U.S. was just 3.8 years as of 2022, according to S&P Global Mobility. By contrast, the average age of all light vehicles in operation was 12.2 years. There is also the question of how quickly the transition will change the car population. By some estimates, even a speedy change leaves plenty of traditional internal-combustion-engine vehicles on the road.
If electric vehicles came to account for 55% of new car sales by 2030 (that is more ambitious than the 40% that S&P Global Mobility forecasts and the White House's 50% goal), there still would be more than 270 million internal-combustion-engine vehicles in the U.S. that year -- not far from today's number, according to estimates from equity analyst Scot Ciccarelli at Truist Securities.
The absolute number of vehicles tends to grow every year because the number of aging cars that stay on the road exceeds the scrap rate, he said. His model is intentionally bullish on EV adoption: It assumes that 4.5% of internal-combustion-engine vehicles are scrapped every year and that the scrap rate for EVs is only 1%.
Large auto-dealer groups view the transition as an opportunity: The complexity of electric vehicles means mom-and-pop shops might not have the knowledge or the capital to invest in the right training and equipment to repair EVs.
If auto-repair shops can't catch up in time, more repair business could end up shifting to auto dealers that are closer to the manufacturers and the technology. Parts and service is an important source of profit for auto dealers: Last year the segment accounted for roughly 36% of AutoNation's gross profit and 28% of Lithia Motors' gross profit, respectively.
"There have been many instances where new technology allegedly was going to put the aftermarket out of business," said Bill Hanvey, president and CEO of the Auto Care Association. "Yet here we are, and we still continue to grow." He added that the last big scare happened when cars transitioned from carburetors to fuel injection.
Electric vehicles are a big-step change in technology, but it will take a long time for them to steer business away from the car-repair and parts business, if it does at all." [1]
1. EXCHANGE --- Heard on the Street: Your Mechanic Doesn't Like Your New Car. Lee, Jinjoo.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 13 May 2023: B.12.
Komentarų nėra:
Rašyti komentarą