DETROIT — General Motors is asking its U.S. dealers to sign an agreement committing to costly upgrades in anticipation of its coming deluge of electric vehicles, a request that has been opposed in swaths of the country where EVs remain a tough sell.
Some retailers are concerned the investment won't pay off if their customers continue to have little interest in EVs — and they question the need for a separate EV agreement in the first place.
Only a third of dealers in Virginia signed the contract, according to the Virginia Automobile Dealers Association. GM is "shooting a shot across the bow to see how we respond and what people say and think," said the association's president, Don Hall.
But in states aligned with California's Zero-Emission Vehicle Program, dealers seem more receptive. The head of the New Jersey Coalition of Automobile Retailers called signing the contract "a no-brainer."
The agreement outlines requirements and estimated costs for facility upgrades GM wants in preparation for selling EVs. It's among the latest steps in GM's $20 billion push into EVs and autonomous vehicles. Last week, the automaker announced an alliance with Honda Motor Co. designed in part to help fund and streamline its EV portfolio.
GM sent the agreement to dealers to help plan its EV rollout, GM North America President Steve Carlisle said.
"It's a necessary step that we need to take to achieve our vision of an electrified future," he told Automotive News. "We can communicate what we think is required to create the environment, and we've got to work with the dealers, the dealer councils and the associations to arrive at a conclusion. But we're not at that point yet."
GM did not disclose the number of dealers who have signed the agreement. The process is ongoing, Carlisle said last week.
Hall said the dealers who have balked at the contract aren't against selling EVs, but they want more information on how GM will help them before dedicating hundreds of thousands of dollars to EV sales and service.
"You've got some rural dealers where the demand is not going to be there for the time being," Hall said. "You can't really expect them to want to spend with great enthusiasm a lot of money on something that hasn't hit our marketplace yet."
Carlisle said that as GM continues to reveal its upcoming EVs, awareness and demand will increase. Today, GM has just one U.S. EV: the Chevy Bolt. The automaker plans to launch a crossover version of the Bolt next year and has unveiled the Cadillac Lyriq, a midsize battery-electric crossover, though production is still two years away. GM also plans to reveal the electric GMC Hummer pickup this year and start building it in late 2021.
"As we roll out products and that adoption curve kicks in, the volume will grow," said Car- lisle. "We certainly expect that there will be a return on that. That's our mutual future."
The presidents of the state dealer associations in Colorado and New Jersey said they believe the vast majority of their members signed the contract. Both states are part of the California ZEV program, which requires automakers to offer a specific number of battery-electric, hydrogen fuel cell and plug-in hybrid vehicles for sale. Ten states are part of the program, and four others have announced plans to join.
"When they have to start spending money, that's when things might get a little dicey," said Jim Appleton, president of New Jersey's dealer association. "But for now, I think the dealers are enthusiastically looking forward to the new product."
If there is significant EV inventory and market demand when it's time for dealers to update their stores, they'll make the investment, he said.
GM is asking dealers to spend between $120,000 and $200,000 to ready their facilities for EV sales and service, Appleton said. But that bill could be substantially reduced if dealers can meet the requirements through their own vendors. For example, rather than installing a new lift for $30,000, dealers could rent one for a few hundred dollars per month as needed.
If automakers give New Jersey and other states in the ZEV program priority on EV shipments and support EV sales with additional incentives and marketing programs, "the dollars they are asking dealers to expend is completely reasonable in light of the potential return on the investment," Appleton said.
Some dealers are reluctant to sign a contract separate from their sales and service agreement, said Ted Smith, president of the Florida Automobile Dealers Association.
"It's the actual requirement for a separate agreement that has caused some dealers to stumble," said Smith. "Dealers wonder, 'What am I signing and how is it different from anything else?' "
Members of the North Carolina Automobile Dealers Association also were skeptical of a separate EV agreement, President Bob Glaser said.
"They do not believe that all of a sudden when the factory comes out with a new car or a new line of cars that they should have to sign a separate agreement," he said. "If I'm a Buick dealer, I should be able to sell all Buicks."
In North Carolina, fewer than 1 percent of new vehicles sold last year were electric. But when demand increases, "you'll see dealers lining up right away on this," Glaser said. "The dealers are hoping that the OEMs will move in tandem with consumer demand."
GM has just started to show off the 20 EVs it plans to launch globally by 2023, and excitement is building as dealers glimpse the vehicles heading their way, Carlisle said. Of about 880 Cadillac dealers, 800 tuned into an early virtual reveal of the Lyriq, and many of them hosted watch parties, he said.
"There's a lot to look forward to here," Carlisle said. "The reality is we have a fair amount of work to do to sort through a lot of details."
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