SuperCharge Your EV Knowledge with these Insights from CDK Global

This episode is sponsored by CDK Global, a leading provider of retail technology and software as a service (SaaS) solutions that help dealers and auto manufacturers run their businesses more efficiently, drive improved profitability and create frictionless purchasing and ownership experiences for consumers. Today, CDK serves nearly 15,000 retail locations in North America. Visit http://www.cdkglobal.com/ 

Episode Highlights:

 

(0:00) – Introduction

(0:37) – Episode beginning

(0:57) – Some background on Peter Kahn

(1:49) – What Peter sees on the horizon

(4:03) – Dealers moving to EVs

(6:15) – Cost of ownership

(7:56) – The pro’s and con’s of EV ownership

(12:39) – Episode wrap-up

 

Links

Connect With Peter Kahn

Transcript

Elena: Peter from CDK, I am so glad that you are on the show. Good morning Peter. How are you?

Peter: Good morning. It’s great to be here. It’s fantastic. Excited to talk about EVs.

Elena: I am excited as well and you are such an expert in electric vehicles. I would love for you to talk about your background with CDK Global and just your background in general in automotive and technology.

Peter: I’ve been doing work in automotive retail for about 23-24 years started at a company called Cobalt. I don’t know how many of your listeners have heard of that company, but it was a website company that helped dealers move from classified ads in the newspaper into this crazy idea of the internet and putting cars online from there did a lot of research for the manufacturers and that graduated into being the Senior Director of Research here at CDK Global understanding you know, shopper needs, dealer needs, things like that. So it’s been a great career so far. I’m really having a great time doing it.

Elena: Well, when I met you back in January at the JD Power Summit, we were having such a great discussion about EVs and I said yes, you have to be on this podcast, so we have to do an episode together. So let’s talk about some of the research that you’re doing at CDK Global I picked up at the CDK booth, one of CDK Insights book, and it is just jam packed with lots of stats and really just eye opening metrics about electric vehicles. And buyer behavior. So let’s talk about what you really see on the horizon for automotive retail and electric vehicles.

Peter: Sure, a little bit about why we do EV research, you know, our customers, the dealer and we want to make sure that dealers are successful and continue to thrive in North America. And to do that we have to really understand we have to start with the shopper you know, what are shopper motivations? What are they interested in? And dealers now face a lot of them face a big decision, which is a conversion if they choose to go down that route of bringing on EVs into the dealership I mean, that’s a issue as it relates to potentially facility upgrades, training of their staffs, certainly on the fixed operation side, so any manufacturers are asking them to really invest so it’s a big decision. So we want to help them understand the EV buyer, the EV owner and then what it takes for them to convert to start to support EV sales and that’s why we did that research. In 2022. We started this, I want to say we did our first study, probably January February timeframe, and that was the EV buyer study where we wanted to really understand folks that are out there shopping, you know, where was their interest, would they gravitate to an EV would they consider an EV or were they just still wedded to you know, getting a gas or diesel powered car and we learned a lot from that study. We can talk about that. And then in April, we moved over to what we call the EV owner study, which is now that we’ve heard from intenders. Let’s find out about people who bought a car and driven it and what they think about it, but their driving experience has been like as well as their service experience. And then the last thing we did in 2022 is we went off to dealers mostly on the fixed operations side to understand, you know, how were they looking at converting to EVs, and of course, we talked to folks that had already done this brands that already sold EVs for a number of years all the way to brands that were just starting to get into that and it was a really interesting experience as well talking to those folks. So that’s the range of work that we did in 2022.

Elena: I love it. And so we had previously talked a little bit more about dealerships EVs in the fixed ops department, and I would love for you to share a little bit more about your findings there.

Peter: So I’m personally I’m very bullish on the idea of dealers moving to EVs. We do research in the service area, and after folks, you know, post warranty after they’ve gone through warranty, dealers lose a lot of customers off the independence and chains. There’s various reasons for that. But the thing about EVs is that it’s a more complex vehicle. And so generally speaking, customers will take a car that has advanced technology such as an EV such as a connected car, and they will rely on the dealership for service and so where we see a 70% defection rate on gas vehicles we see about a 20% infection rate on EVs and connected car. So we’re folks thinking about EVs, particularly on the service side, which is where most of the profit is made, is it they’re going to have a much better retention rate now, they may not get as much per unit because you know, the oil change is gone and all that but at the same time, they’re going to retain those customers. Now, in one of our services. The owner survey we asked folks, you know, what kind of service have you been getting? The number one service has been a health battery check so that something like an oil change still exists? And then there’s of course tires, you know, the tires is going to wear out faster and an EV because the EV is heavier. So, overall, again from our EV owners study about 56% said, yeah, it’s actually costing me less than service. But the other side of that is 44% said, Well, it’s about the same or it’s actually more. So we have this conversation, and I think the jury’s still out as relates to the long term costs from fixed operations side as to whether or not EVs are going to cost the customer less for more, but again, for the dealers. I think it’s a great story. And I know the listeners out there, I encourage you guys to really think about the idea of, you know, we’re going to be able to keep those customers and make money off of them. And I think there’s ways of looking at EV service that can actually grow the business.

Elena: Yeah, exactly. And to your point, I don’t want someone who is not an expert in making model of my vehicle, my electric vehicle, like messing around with my vehicle, I do not want that right. So total cost of ownership. I have a little bit of a laugh and a smile when we talk about total cost of ownership because in our previous conversations, Peter, like, well, jury’s still out. But I would still love for you to talk about your perspective and view on total cost of ownership as it relates to electric vehicles versus ice vehicles.

Peter: We start with the actual purchase or lease which is because of the tax credit can be complex. Where was the car manufactured? What’s the income of the shopper? Those types of things? And where do they qualify for the credit? Of course, that’s the going in price. So there’s that. Then there’s the service that we just talked about, which is over the life of the car, and then there’s the finally you know, when does the battery start to lose its ability to recharge and what do you have to do about that? So there’s word new into EV ownership, quite frankly, there’s not enough data out there. I think understand, you know, what does that really look like over the say, a five year seven year life, people are now doing long term loans on their vehicles and so you know, they have to have that car service, they’re going to have to have that car running well with that whole cost of ownership. And then there’s the other thing about saving money that pumped you don’t have to fill it up. You’re gonna save a lot money there as well. So I gotta admit that I honestly don’t know and I think that’s what we saw on our surveys as well from our shoppers is that they’re kind of split on that whole idea of is it saving me more than saving me less? Again, majority say I’m saving money, but we haven’t got to the end of the story yet.

Elena: No, we haven’t. I think the story is still being written. I think we’ll need to do a follow up episode. Maybe it’s more towards the end of the year when we have more data and of course, when you also come out with your 2023 study, of course, we’re gonna have to have you back and do another follow up episode. So Peter, I got to ask you about kind of the pluses and minuses of EV ownership. Walk me through from your perspective what that looks like and what CDK has found through its research

Peter: So let’s talk about why people buy these. And again, we’re, we’re looking to our Eevee owners study, why did you buy this Eevee And interesting enough, and I’m going to kind of get a little maybe academic on this as well. There’s this whole idea of who first buys EVs and this goes to a book that I’m a big subscriber to Geoffrey Moore’s Crossing the Chasm. And initially, it’s, you know, it’s folks that like new technology and like to tinker, and also folks that are visionaries. And so if you think about the early adoption of Eevee, with a Tesla last and then later, the Tesla three, which is a more economical vehicle, you’ll these folks are, you know, they just want to drive something new. And so what we saw on our Eevee owners study is that was the primary motivator, is people like and want advanced technology. The second one was, quite frankly, around the idea of eco friendly and being environmentally conscious, but it was advanced technology to push the needle in that direction. That changes on generations. By the way, it’s really interesting that Ubers are much more interested in that advanced technology where the other side of the spectrum Gen Z is much more interested in that environmental friendly type of approach. Now, as we go on, we’re now starting to see folks kind of weighing in on the cost effective side it goes back to your total cost of ownership. People are moving from again The tinkerer, the advanced technology person to visionary and to all right, I want something that’s really economical, and we’re seeing more of that coming to the fore. So that’s kind of cool from a what’s driving adoption, the other side of it and of course, you know, I think everybody’s very aware of this is the concerns around how far can I drive this vehicle you know, am I going to find a charging station that works? And how long will it take to charge this vehicle and so those are the big concerns that people still have. The number one concern right now is the time it takes to charge so we need a supercharger network, we need chargers that work. The driving range is really interesting. And we’re going to investigate a little a little bit more. We think the tipping point between gas and electric is probably 350 miles. And of course, the more money you pay, the more likely you can get to that 350 mile mark and buy these long range vehicles. So you know, going back to that cost effective thing is it worth it to spend more to solve that concern about how far you drive? Or do you want to make sure you can save money and that’s still a question out there as well. So this is a again from our owner study. Those are the things that motivate people toward buying EV, those are the concerns that people have that may not be ready to get a EV.

Elena: So so interesting. There are a lot of considerations right and also to I was on one of the previous episodes we had here we had talked about you know being an E V consider and you’re just being slammed with headline after headline like, Peter, you’re sending me different articles. From different publications when like people want to know, right, it’s just again, another kind of reason for this podcast is you know, getting experts like you to really talk about, you know, some of the hard facts. So I thank you for doing that you are doing a great service.

Peter: I mean, we want to inform the public again, our real audience is helping dealers understand the market. Again, more good news. I just saw a Wall Street Journal article where EV sales were up by two thirds from I think 3.2 to 5.8 and 2022. So sales are moving in that direction. Again, that acceptance curve and at some point it’s going to I think it’s going to really take off that’s a big question on supply. The manufacturers are coming up with models like crazy. So that’s exciting is well, when we asked our shoppers about, you know the consideration I’m going to be the majority say I would actually consider either a hybrid as a migration step or go full BEV and when we ask our owners about what do they think about their EV where they recommend it. Would you recommend this to your friends and family it’s really really high. Most folks who drive a BEV love it. They love the performance. They love that it’s quiet. They love that they don’t have to go to a gas station and they own a house you know they park the car and the next morning he’s got a full tank of gas. And so there’s a lot of things that are driving that acceptance people telling other people this is a great car, you should consider it. And so I’m really bullish on the idea that you know, over the next two to three to four years, we’re going to see continued rapid growth in EVs. I think to some extent, that’s a regional thing right now. But eventually that will, you know, start to spread out throughout, you know, all over the United States and, again, to our dealer audience. I think it’s really a strong consideration. It’s a big decision, but I think that you know, that’s where the future is.

Elena: Peter, thank you so much for your time this morning. This is amazing. Again, we will have to have you back when CDK publishes your new round of research on EVs. That’ll be fascinating. So, but in the meantime, if someone wants to reach out to you and connect where’s the best place for someone to do that?

Peter: peter.kahn@cdk.com 

Elena: I will put that in the show notes so you have easy access to it. Peter, thank you once again for your time. I so enjoyed meeting you and talking with you and this has been great. Thank you so much, Peter.

Peter: Thank you, Elena. It’s great to be here.