Car dealers worry about the low demand for electric vehicles in Delaware

Delaware’s car dealerships are facing new challenges as they prepare for an influx of electric vehicles in the state.

When DNREC Secretary Shawn Garvin officially approved the clean car regulations in November, much of the burden was placed on dealers and car manufacturers, who will be tasked with delivering an increasing amount of electric vehicles to Delaware between 2026 and 2032.

Buyers are under no obligation to purchase an electric vehicle.

Car dealerships and their employees around the country are voicing concerns about the mandates, and Delaware dealerships are no different.

Even though some manufacturers are already shipping fewer gas-powered cars to Delaware, dealers say the demand for electric vehicles seems to be lacking so far.

More: Your questions, answered: What you need to know about state’s new electric vehicle mandate

Too much supply, not enough demand

In November, nearly 4,000 car dealerships nationwide penned a letter to President Biden’s administration to slow down the progress of electric vehicle mandates nationwide. Four Delaware dealerships signed on to this letter including Newark Toyota World, Price Acura, Price Honda and Price Toyota.

A rule was proposed in April by the federal Environmental Protection Agency that would hold automakers to more stringent emissions standards on new vehicles, which would essentially require electrification of most fleets.

“Today the supply of unsold [battery electric vehicles] is surging, as they are not selling nearly as fast as they are arriving at our dealerships, even with steep price cuts, manufacturer incentives and generous government incentives,” the letter says.

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Surplus of electric vehicles in dealership lots has already become an issue in Delaware.

As early as May of this year, Santosh Viswanathan, chairman of legislative affairs for the Delaware Automobile and Truck Dealers’ Association and CEO of Lakeshore Chrysler Dodge Jeep and Ram in Seaford, was told that Jeep would no longer be supplying his dealership with the popular Jeep Wrangler and Grand Cherokee. Instead, they would only send over the electric versions of these models for the dealership’s floor plan.

Chip Sheridan, president of the Delaware Automobile and Truck Dealers Association and owner of Sheridan Nissan and Ford in New Castle and Wilmington, stated that he has had an estimated 30 Ford Mustang Mach-Es unsold on his showroom floor for around a month.  

The letter called for the Biden administration to allow states the time to build out charging infrastructures, for manufacturers to find domestic material sources and for consumers to get acclimated to the technology and changes that electric vehicles require.

How will dealerships change course?

Now that clean car regulations are officially enacted, there are many factors that vehicle dealers need to grapple with.

For one, the mandate only requires car manufacturers to send over an increasing number of electric vehicles to Delaware, beginning with 43% of new cars in model year 2027 increasing to 82% by 2032.

There is no guarantee that these cars will be sold or registered in the state, and based on the relative scarcity of demand in Delaware for electric vehicles, dealers are wary about betting on an increased number of batteries on the road.

More: Your buyer’s guide for an electric vehicle in Delaware, including rebates and deadlines

Sheridan worries that the mandate could lead to Delawareans going to nearby states like Pennsylvania, which does not hold itself to a clean car regulation, to buy the non-electric vehicle of their choice and then registering it in Delaware.

Affordability also continues to be an issue. According to July 2023 Kelley Blue Book values, the average price for a new internal combustion engine vehicle in the U.S. was around $48,000 while a new electric vehicle averaged around $53,000.

Incentives are in place, both at the federal and statewide levels, but they’re usually only applicable for vehicles under $50,000, which most electric vehicles don’t fall under, at least for now.

Projections have estimated that electric vehicles should even out with gas cars in the coming years, and prices have already changed drastically. Despite the higher current price, the average electric vehicle price has dropped by 16% over the past year, according to Kelley Blue Book.

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“We’ve seen prices fluctuate so much over the last few years, I couldn’t even begin to guess what or when that would take place,” Sheridan said.

According to Sheridan, becoming an electric vehicle dealer requires steep investments to install chargers for different car models. Some state dealers have spent around $5 million just on installation and other equipment.

What needs changing?

Charging infrastructure is a major hurdle for Delaware to keep up with the influx of electric cars it’s looking to employ. Public chargers are often busy and don’t have maintenance standards in place to make sure they’re working at all times.

To Sheridan, one of the biggest things that will have to change is consumer attitudes. Electric vehicles are in supply, but demand isn’t up to speed.

Habits that work with combustion engine vehicles aren’t always transferrable. Charging, at least for now, needs to be planned in advance to ensure there’s enough range on the car.

“I have to hope that 43% of the people in the state want to buy electric cars,” Sheridan said. “Having an excess of inventory does not solve our problem.”

Contact Molly McVety at mmcvety@delawareonline.com. Follow her on Twitter @mollymcvety.