This isn’t the first time Paul Suchanek has experienced a sudden drop in car sales from a major disaster or event.
“I've been in the car business for 20 years and went through the 2008 slowdown and 9/11,” said Suchanek, general manager at Niello BMW Sacramento. “We actually had a pretty good used car run for I would say the first 10 days of the shelter-in-place, then the sales were non-existent.”
Shortly after the pandemic began he was forced to lay off three-fourths of his sales staff. “We were tracking a record month and then the wheels fell off,” he said. “So we went through that little gap in the middle of that month and then it actually kind of closed pretty strong.” Almost eight weeks later, he’s now hired the majority of his sales staff back.
Suchanek says all sales are down, including electric cars. Research from Wood Mackenzie, a global research and consultancy group, projects a major decline this year of about 43% in global sales of electric cars. For California that could present both short and long term hurdles to meeting the state’s climate goal of 5 million on roads by 2030.
The BMW dealership sells several hundred a year, but only had three on the lot when I visited. One of them can toggle between electric or gas power.
“If you go just off electric, it'll just power the front,” Suchanek said. “So, you’re basically a front wheel drive. They actually pump in engine noise into the vehicle.”
He says sales are starting to improve, but mostly online. And when ports reopen he expects sales to pick up even more, but he points out manufacturing plants will likely be behind schedule.
Other dealerships, like Roseville Kia, went through a similar process. Business Development Manager Bob Nelson says he had to lay off 50% of his staff, but has hired many of them back.
“March was a tough month and April ended up being a bit of a rebound,” Nelson said. “Business has been down by about 20 to 25%. Not that we're anywhere near where we were before. But it is on its way back.”
As of late April, Brian Maas, president of the California New Car Dealers Association, says 21 percent of dealerships reported a drop in sales of 80 percent or more. More than than half laid off between one and 60 employees.
“It's gonna take us time for the industry to recover at the levels that we saw in January and February of this year,” said Maas. “You can't furlough or lay off 50, 60, 70% of your staff, and then turn around and start anew instantly.”
Maas said the association doesn’t have data around how electric cars are doing, but says that sales are down like they are for gas-powered cars. Shad Balch is a spokesperson for Chevy, which sells the Bolt. He says the first quarter of 2020 was the best ever for sales of the car.
“There was a lot of interest in the vehicle,” Balch said. “When the enormity of the pandemic hit everything just sort of, you know, has stopped.
Sales dropped and then plants shut down. Balch says some plants reopened to make ventilators and masks instead of electric vehicles.
“When we do start to come out of this I think that we're going to emerge in a way with new thinking with new priorities both on a consumer level and then just from an overall societal level,” Balch said. “We're going to be positioned great to sort of pick up and start getting these vehicles back on the roads and replacing gas-powered cars with more electric vehicles than ever before.”
Nissan, which sells the LEAF, has suspended all U.S. manfcaturing until at least mid-May.
“When production resumes, our plan is to continue to match production with market demand; this includes EV manufacturing and sales as well,” said spokesperson Jeff Wandell in an email. “However, we can’t get into speculative territory and discuss any short term and longer term ramifications to our operations or sales.”
But it’s unclear what this means for the state’s climate goals.
“As we go into recovery mode and we think about what the economy looks like on the other side of this, we certainly feel strongly that electric cars should be a strong part of that,” said Josh Boone, Executive Director of the group.
He says California should use the clear results of shelter-in-place orders — that’s cleaner air — to its advantage to encourage people to go electric.
“In regions where there's high air pollution there's a pretty strong correlation with COVID issues being worse,” he added. “So, electric cars have been a natural way for us to clean up the air and so we're really excited about what the future holds for electric cars.”
Even with rebates and state incentive programs it could prove difficult to get low to middle- income earners to buy electric, especially as a recession looms.
And there's another factor: gas prices.
“The cheaper gasoline is, the less of a cost advantage electric vehicles have,” said Austin Brown, Executive Director of the UC Davis Policy Institute for Energy, Environment and the Economy. “We really see that people save a ton of money when gasoline is expensive.”
When gas is around $2 bucks per gallon in California he says it takes longer for the investment in an electric vehicle to pay off. (Compare the cost of fueling an electric vehicle to one that runs off gasoline here). Brown says the pandemic recovery may present an opportunity to invest in green technology.
“Electric vehicles are the future, they just have to be or it's a world that's really not worth living in,” he said. “We could use this as an opportunity to … double down on our efforts.”
The state has a three-pronged approach for attacking emissions: clean fuels, clean cars and reducing the overall need for driving, says Steven Cliff, who oversees transportation programs for the California Air Resources Board.
Even though emissions have declined because of stay-at-home orders and Californians are paying “relatively low fuel prices that we're seeing today, electric fueling is still cost effective,” said Cliff.
With more than 50 models of electric cars on the market and charging infrastructure being built across the state, Cliff says he’s optimistic because “frankly, it's really one of the best times to continue to invest in the clean economy, so that you can grow out of this economy in a very clean way. We’re not just talking about electric cars, but cleaner air and reduced emissions from transportation.”
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