By on November 25, 2019

Roger Penske, the business magnate whose Penske Automotive Group operates more than 150 dealers across the U.S., isn’t very excited about electric vehicles, as he’s seen how easily they sell.

Which is to say, he’s seen how difficult it can be to unload an EV.

While Tesla chooses to go its own way in the retailing space, established OEMs with a strong dealer presence must consider other financial realities in deciding how they offer a new EV. Unlike Tesla, these new EVs often look like the ICE-powered vehicles they share a stable with. However, their price might not have much in common with similar-sized vehicles sitting just across the showroom or lot.

Speaking on an earnings call with Automotive News ears on the line, Penske didn’t come across as bullish on the sales potential of electric vehicles — at least not those offered by traditional automakers.

The numbers reflect this reality. Last quarter, only 1.9 percent of vehicles purchased in the U.S. were battery-electric vehicles, though this actually represents a high point thus far in the vehicle type’s market penetration. Consumers have more choice than ever when it comes to EVs, and the problem of range anxiety is slowly decreasing. Prices, however, are not decreasing at the same pace.

In general, EVs “have not had the lift that [the industry] expected,” Penske said. He added that he’s aware of many Audi E-Tron pre-orders cancelled in the interest of affordability.

“I think there is some sticker shock. The customers that thought these would be more affordable, like a Q5,” Penske said. “But when you’re looking at an $80,000 vehicle in a $1,500 payment, it gets — it’s really aggressive from the OEM standpoint.”

In Audi’s case, most customers will receive theirs by placing a special order, sight unseen. As part of its strategy to go easy on dealers and prevent a niche product from hogging floorspace, the brand didn’t require dealers of a certain standing to stock the E-Tron, though dealers did have the option of ordering them to keep in their inventory.

How or if that setup has changed in the ensuing months isn’t clear.

Thus far, demand for the E-Tron has not overwhelmed Audi dealers, and it would seem that sales haven’t overwhelmed company brass.

“From a margin standpoint, I know one of our stores in Northern California probably will sell six or seven [e-trons in October] and has got 30 in stock. So that certainly has pressure on margin,” Penske said.

Audi first recorded E-Tron sales in the U.S. in April, amassing a volume of 4,002 vehicles through the end of October. While Penske has his doubts about the near-term success of EV luxury vehicles, Audi of America President Daniel Weissland claims the E-Tron isn’t a sales dud.

“I think we’re pretty happy with our sales numbers,” Weissland said. “November is the strongest month ever now on e-tron sales, so we really see a tick up. The question is always, ‘What do you compare it with?’ You can’t compare the e-tron with a car which is $20,000 or $30,000 less expensive.”

Well, you can, as long as you’re willing to entertain the purchase of a non-electric vehicle. And that vehicle would very well be a plug-in hybrid that isn’t as green, but goes the distance. With an EPA-rated range of 204 miles, the E-Tron ranks fairly low on the range ladder, and that’s something many eco-minded customers might take into consideration when weighing their options.

Come next summer, the E-Tron will greet a curvaceous new sibling to the stable, one which ekes out a few extra miles of range.

[Image: Audi]

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44 Comments on “Roger Penske Puts Spotlight on Tepid EV Sales, Singles Out Audi E-Tron...”


  • avatar
    28-Cars-Later

    How much of the 1.9% is Tesla? 2/3rds? 3/4ths?

  • avatar
    dal20402

    Pricing is *the* hurdle for EVs. They don’t have to reach purchase price parity with gas cars, but they do have to reach TCO parity, and they’re not there yet.

    I think they will eventually take over the high end of the luxury market no matter what, because their advantages are compelling and there is less price sensitivity. But batteries need to get cheaper for EVs to work in the mass market.

    It looks like Audi is trying to collect full margin on the e-tron; that’s going to be very difficult for anyone when Tesla is selling at lower margins in the same segment. Unless they chop the price by $10,000 sales will stay low.

    • 0 avatar
      sportyaccordy

      I don’t think the average shopper is making decisions based on TCO. Price parity probably isn’t necessary, but for all intents and purposes EVs from legit car companies are priced 2x an equivalent ICEV. Even with incentives that’s too far of a stretch. If they could get that to maybe a 50% premium- that would put something like a Leaf in the low to mid 20s to start- things would be more interesting.

      But EVs are currently either too expensive for consumers or too unprofitable for automakers.

    • 0 avatar
      Astigmatism

      I doubt price is the hurdle for e-tron buyers, so much as range. Why pay $80k for a vehicle that you don’t trust to make it 200 miles, when for $90k you can get one from Tesla that will happily go 300?

  • avatar
    R Henry

    “In Audi’s case, most customers will receive theirs by placing a special order, sight unseen. As part of its strategy to go easy on dealers and prevent a niche product from hogging floorspace”

    –This from a VW corporate client! VW will painfully learn that it cannot claim dieselgate repentance via BEVs .

  • avatar
    James2

    Besides being too expensive –which is why tax credits (or lack of) affect sales here and in China, Norway, etc.– maybe the design of the cars needs to be the next Prius in terms of ugliness. EVs have to look different from its siblings in the showroom. How else to signal that you are saving the planet.

  • avatar
    SCE to AUX

    The e-tron is a sorry joke. It is one of the least efficient EVs on the road, making it a very poor value. It’s not even better-performing.

    It’s not that people are unwilling to spend $75k; it’s that they want to get the most vehicle for their money.

    Mr Penske might sing a different tune if he had a better EV to sell, and didn’t have ICE cars that dealers prefer selling.

  • avatar
    ToddAtlasF1

    I leased an Audi in San Diego in 2012 and bought one there in 2015. The San Diego Audi dealer has multiple hallways of offices for their salesman. At any given time that I was there for sales or service, there were multiple transactions going on. I would say that California Audi dealers have sales volume that would make the biggest mainstream dealer in most parts of Virginia quite happy. The idea that a Northern California Penske Audi dealer is only selling 6 or 7 Audi EVs a month when they have a huge supply should be terrifying for the companies that have sold out their customers and employees to go along and get along with the EV fascists.

  • avatar
    indi500fan

    I want everybody (except me) to drive an ev.
    Gas will be tax plus two cents a gallon.

  • avatar
    Vulpine

    The affordability factor comes in on the back end, not the front end. Fuel costs, scheduled maintenance costs, etc. add up over the years and the simple fact you’re not paying for that overcomes the higher upfront price in just a few years and even less if you are a high-mileage driver.

    • 0 avatar
      mcs

      VW thinks price parity is near: https://www.express.co.uk/life-style/cars/1165209/Electric-cars-price-parity-petrol-diesel-cars-VW-ID-Volkswagen

    • 0 avatar
      Jerome10

      You might have a point, but battery longevity I think is a big question. I can buy a 10 year old Corolla with 120,000 miles and maybe get another 120,000 out of it without any real degradation in performance, fuel economy, etc. That is not possible with battery charge cycles as far as I can tell.

      EVs (correct me if I’m wrong) have not had particularly strong resale. Take a look at the Leaf or the Volt, etc.

      I’d like to be corrected if I’m wrong, but that degradation, battery replacement costs, limited market to begin with, lack of incentives on the used market all end up in rather poor resale.

      • 0 avatar
        dal20402

        First-gen Leafs had pretty severe battery degradation. Most other EVs, not so much.

        Your 240,000 mile EV may have 85% or 90% of the range of your new one, but otherwise will do fine on a diet of tire rotations and occasional coolant drain-and-fills. Meanwhile, you’re going to be spending quite a lot in maintenance to keep your 240,000 mile Corolla working well. (Believe me, as an owner of a flawlessly running 201,000 mile Acura Legend, I know.)

        • 0 avatar
          ajla

          EVs still have seats and suspensions and touchscreens and HVAC systems and door handles and other things to go wrong on the way to high mileage. It’s still a car.

          Despite the simple “maintenance free” drivetrain CR rates Telsa 23/30 for reliability. I’d certainly still take my 15-20 year ownership chances with a 2020 Corolla hatch over a 2020 Bolt or E-Tron.

          • 0 avatar
            dal20402

            Looking back over all of the wear items I’ve had to replace on my old Legend, it looks like about half of them wouldn’t have existed had it been electric. (And everything that has needed to be done has been mechanical. The electrics have been bulletproof.)

            Tesla is a well-known corner-cutting company, but how much care and feeding do you think it will take to get a Lexus UX EV to 240,000 miles?

          • 0 avatar
            ajla

            Until there’s more long-term data on Toyota BEVs I’d put my faith in the Corolla.

        • 0 avatar
          mcs

          Battery degradation is probably going to be a thing of the past.

          http://jes.ecsdl.org/content/166/13/A3031

          https://www.wired.com/story/tesla-may-soon-
          have-a-battery-that-can-last-a-million-miles/

          https://www.batterypoweronline.com/news/new-battery-patent-for-tesla-with-two-additive-electrolyte/

          https://www.sciencedaily.com/releases/2019/10/191014111723.htm

          For a glimpse of the future, take a look at Tesloops fleet:

          https://carmiq.net/blog/tesloops-high-mileage-teslas/

    • 0 avatar
      SPPPP

      There is some bias against future payback that may blunt the impact of this marketing strategy:
      – Time factor of money
      – I could be investing that $10,000
      – I could get hit by a bus next week
      – Future fuel expenditures don’t show up on my credit report

      • 0 avatar
        Vulpine

        @SPPPP:
        “There is some bias against future payback that may blunt the impact of this marketing strategy:”
        — Some, perhaps. But such bias is not universal. That said, I’ve found businesses to be far more biased in that direction than individuals.

        • Time factor of money
        — The issue here becomes one of which brand or model to buy. If the buyer chooses to lease, the up front costs become negligible but the extended costs can be ignored as they likely will no longer possess the car by the time more expensive repairs are needed. On the other hand, an actual buyer will concern themselves about the warranty length and whatever extended costs may occur. Some brands like BMW and MB are noted for high repair costs and relatively frequent repairs. An EV–hopefully no matter the brand–will have lower extended costs because the electricity costs 50% to 75% less than the cost of any liquid fuel at this time. And if gas and/or diesel fuel prices rise, electric rates tend not to rise by as much or as frequently, meaning the average fuel costs will remain lower than the ICE’s. Other expenses are simply eliminated (oil changes, etc.) to where only the common wear items–tires, brakes, windshield washer fluid, etc.–will continue but even the brakes will see reduced wear in most cases, reducing scheduled maintenance costs as a result.

        • I could be investing that $10,000
        —- You could. But the return on such an investment tends to be very low unless you have either inside information or you happen to choose a fast-growing company and know when to get out. Typical investing tends to be a 50/50 gamble as to gains or losses.

        • I could get hit by a bus next week
        —- But how many people actually plan on such an event, unless they fully intend for it to happen?

        • Future fuel expenditures don’t show up on my credit report
        —- True… but they do show up in your wallet and on your ability to pay back any credit you may receive.

  • avatar
    Lokki

    Right now, EV ownership is about status and cost of ownership isn’t even on the radar of purchasers except as a bragging point to their friends. Owning a Tesla Is tots cool… owning an Audi is… owning an Audi. You are going to have to -tell- your friends it’s an EV or they won’t even notice and then be prepared to answer the question: Why did you choose Audi instead of Tesla?

    It’s easier to skip to the chase and just buy the Tesla to begin with.

    • 0 avatar
      SCE to AUX

      There were several reasons I got a Hyundai EV instead of a Tesla, Chevy, or Nissan EV. And I really did cross shop them all.

    • 0 avatar
      dal20402

      I’ve had the conversation with quite a few people about why I have a Chevrolet EV rather than a Tesla. Most of them agree with the decision once I go through the reasons.

      • 0 avatar
        Vulpine

        @dal: If I may ask, what are YOUR reasons for buying the Bolt over a Tesla? I’m not opposed to your decision, I just want to know what made the Bolt more appealing, outside of the brand name.

    • 0 avatar
      jfb43

      If someone is smart enough and legitimately buying a new car because they NEED one, and they choose to buy a BEV, then TCO does come into play. A good reason to not buy a Tesla is their sparse dealer/service network that requires you to flatbed your vehicle to some far-flung location with nary an idea when you’ll have it back, which is why Teslas are currently not very good at being the only car someone has (and BEVs in general are not good at that either).

      It’s frustrating to see this clamoring towards BEVs when, I believe, the answer has been around since the Prius – PHEVs. Best of both worlds, in my opinion, and I don’t know why more manufacturers aren’t developing those at least alongside their new BEVs.

      • 0 avatar
        mcs

        @jb43: not very good at being the only car someone has (and BEVs in general are not good at that either)

        Why do you think that? That comment makes no sense. Have you actually owned an EV? While my EV isn’t my only car, it’s my main vehicle and I haven’t had any issues in 5 years and 93k miles. It handles long trips just fine. Let’s say you have an EV with 320 miles range. So, what’s the problem here? Having to stop for 45 minutes after 4+ hours of driving? I did that with my ICE cars. But, I don’t take long trips often. Most of the time I’m destination charging. Get in a fully charged car at home, get to my destination. If it’s long-distance I plug in there. Then when I’m done, get back into a car with more than enough range to get home, then plug-in when I arrive. No side trips to gas stations.

        Plugin-hybrids and hybrids still come with ICE maintenance issues and they have limited range and very slow charging. Modern BEVs have more than enough range and ICE range extenders aren’t needed. You end up hauling around a useless lump of iron all day.

        There is also the cost issue. BEVs are going to hit price parity with ICE cars soon according to some manufacturers. That means a hybrid would be more costly to produce than a pure BEV.

        As far as Tesla service goes, distance is not an issue everywhere. I even have two EV independent specialists close to me. One even offers upgraded components over factory original e.g. improved Model S door handles.

    • 0 avatar
      Vulpine

      I don’t agree that owning an EV is all about status but I will agree that cost of ownership is a factor; the potential savings, especially if you’re a high-mileage driver, can pay off the up-front price difference within the first few years–within the warranty period, even. And as more EVs come out and their up-front cost comes down, we can expect the up-front difference in cost to go down at least into parity with ICEVs and potentially lower as it becomes more expensive to build the ICEVs instead.

      And we must keep in mind that the price of cars tends to rise on an annual basis, which means it is just as likely ICEV prices will match the BEV prices even sooner.

  • avatar

    You can buy identical Audi with ICE for much less in the same showroom, you cannot do that with Tesla… So that explains everything – Audi has to stop making ICE cars. And may be even change its brand name.

    And Tesla is a better EV than Audi for less dough.

  • avatar
    thejohnnycanuck

    If Roger Penske buys Formula E I might start paying attention. Maybe that will happen when the cars can actually make the whole race on one charge.

    As for what we can buy in the showroom I’ll look into an EV when I’m no longer capable of driving stick or driving an ICE vehicle is punishable by death. Even then it’s going to be a tough call.

    • 0 avatar
      Vulpine

      To be quite honest, there will always be holdouts like you. You’re not unique. That said, the BEV market will continue to grow and I would bet that within 8 years EV sales will skyrocket and slower-selling ICEs will disappear. I said slower-selling models such as those already carrying questionable futures. My own thought is that BEVs will probably exceed 50% of new car sales no later than 2030; VWs effort to market 40 different models by then will be a prime driver of that, not even considering what the other brands are doing.

      But first, they all need to solve many of the problems Tesla has already solved to a greater extent; battery reliability. The batteries not only need to be capable of major power and fast charging, they need to survive years of hard use and highly variable temperatures over the course of those years. So far, Tesla’s batteries have proven more capable than anyone else’s but the technologies involved are constantly advancing and any one of the major players, including individual battery companies, may realize a major breakthrough which makes them less susceptible to temperature changes while offering longer functional life.

      But any way you look at it, eventually ICEs will only be valid for very specific tasks where, for whatever reason, EVs cannot reach. Even there, if HFC technology continues to improve, EVs may be able to serve the needs in place of the ICE. Yes, that even includes the realm of flight, where electric motors would be more efficient for turning those huge ducted fans we know as jet engines.

  • avatar
    Tstag

    Car makers are banking on the electric car building more market share as fast or faster than the industry brings new products on line. VW is betting the farm….. The question is will consumers ditch the ICE as fast as they hope they do? I have my doubts. This could be the dot com bubble for the car industry but much worse

  • avatar

    What is going to happen when unsold GM and Ford EV’s pile up on the dealers lot. With these EVs, GM and Ford are sitting on one of the biggest consumer miscalculations in automotive history.

  • avatar
    Vulpine

    Your assumption is that BEVs in general are going to do the same as Penske’s experience and I’m not so sure that’s true. Considering all Penske has is the eTron and that model is seeing recalls, etc., it seems to me that the perception simply isn’t there that it’s a BEV worth buying. It’s a first effort from somebody that hasn’t built a BEV before and to be quite blunt, it’s not a pretty car, looking at the photos above. It is also so generic that those who are trying to signal their green-ness (Ok, so I don’t like the stereotype word and can never remember it until I see it) that it simply doesn’t make that visible statement of being an EV. The Mustang Mach-E, the Teslas, the Rivian and a couple others are obviously BEVs so may well sell better than the more generic looking models–at least to start.

    Certainly the eTron and others are doing well in Europe but then many European countries have much larger subsidies out to drive the shift to BEVs than the US has ever offered. Even with the $7500 tax credit, the car just isn’t visible enough in the US to make a purchase worthwhile. It seems the American BEVs will be more obviously visible and may drive more sales as a result–excepting, possibly, the pickup trucks by Ford and GM. I expect their sales will be slow at first but ramp up quickly once their capabilities become more obvious.

  • avatar
    jkross22

    “But when you’re looking at an $80,000 vehicle in a $1,500 payment, it gets — it’s really aggressive from the OEM standpoint.”

    Yeah, it’s an 80k Q5. That’s the problem.

  • avatar
    HotPotato

    The problem isn’t necessarily EVs in general. The problem in this particular case is that Penske is trying to shift the Audi e-Tron. A car that’s almost as good as a six year old Tesla, for more than the price of a brand new Tesla, is going to have pretty limited appeal.

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