Fixed Ops Journal - December 2017 - 16

FIXED OPS JOURNAL

STORM

internal combustion counterpart," Ford says.

continued from Page 15

Tesla's influence

Bolt, for such things as replacement parts, will
be 60 percent less - about $400 a year - than
such revenue for a traditional car.
"This should generate a major challenge for
dealerships, which typically generate 40 percent of their gross profit in service and maintenance," UBS says. The UBS report is available at autonews.com/ubsreport.
Nissan's experience similarly foreshadows
how EVs are likely to change service departments when electric vehicles sell in high volume.
Since 2010, Nissan has sold 300,000 Leafs
worldwide, including more than 113,000 in
the United States.
"You will certainly lose your oil and filter"
work, Burchfield says. "You won't have the
mechanical breakdowns of an internal-combustion engine. We don't know yet how much
we will do in battery repair and module replacements."

Tesla, with three models, sells more electric
cars than Nissan. Through November, Tesla
sold 49,820 vehicles in the United States this
year, according to an Automotive News Data
Center extrapolation from the automaker's
quarterly global sales figures. In the same period, there were 11,128 U.S. sales of the Leaf,
Nissan's sole EV.
Tesla doesn't operate a nationwide network
of franchised dealers and has a different business model for service than other automakers.
Many Tesla cars are repaired with over-the-air
software updates that don't require service
visits. For other repairs, Tesla retrieves vehicles on flatbed trucks.
Maintenance costs for Tesla owners could
be significantly less than those for other luxury cars. Tesloop, a transportation company in
Culver City, Calif., tracked maintenance costs
for a Model S that accumulated 300,000 miles.
Tesloop says it spent $6,900 on scheduled
maintenance for the swoopy electric sedan.
Had the same mileage accrued on a Mercedes
S class, Tesloop says, scheduled maintenance
costs would have been $52,000. A Lincoln
Town Car driven 300,000 miles would have
needed $28,000 worth of maintenance, it adds.

Less shop revenue
The maintenance sections of the owner's
manuals for the Nissan Altima and Leaf illustrate how service department revenue takes a
hit from electric cars.
Nissan recommends at least two oil and filter changes each year for the 2017 Altima, regardless of miles driven. These two services
cost about $80 at most Nissan dealerships.
The Leaf's service schedule calls for annual
replacement of the cabin air filter at a cost of
$31.67, and a tire rotation that costs about $20
- two items that drivers often ignore. So even
if a Leaf owner followed the recommended
maintenance schedule, dealerships would
see 35 percent less service revenue per vehicle
than from the Altima.
Ford has sold an electric version of the Focus since 2012. Its service schedule for the EV
calls for a new cabin air filter, at a cost of
$25.44, every 20,000 miles. No powertrain
maintenance is required until the car reaches
150,000 miles.
Over the same 150,000 miles, the recommended service schedule for the gasoline-powered Focus calls for 15 oil changes,
five new engine air filters, two new drive belts,
four new spark plugs and probably three
brake jobs - roughly $1,500 worth of work.
With fewer moving parts, the electric Focus
also is more reliable. "The Focus Electric has required fewer overall repairs compared with its

PAGE 16

DECEMBER 2017

Window of opportunity
Nate Chenenko is head of the mobility practice at Carlisle & Co., a consulting firm in Concord, Mass., that focuses on transportation. If
dealership service departments lose oil
changes and tire and wheel services, he says,
customer retention rates will decrease.
"That regularity of visits is not happening
with electric vehicles," Chenenko says. "Dealers will have to rethink retention metrics."
But even as electric vehicles mean longer
maintenance intervals and fewer regular wear
items to replace, Chenenko says, dealers still
can persuade EV owners that the dealership is
the best place for service after the factory warranty expires.
"We estimate a two- to four-year time horizon where dealers can capitalize on their expertise with these vehicles," Chenenko says.
"Customers are not as trusting of the aftermarket with new technology for full electric
vehicles."
Nissan's Burchfield predicts EV owners will
buy service the way today's consumers maintain high-tech electronics.
"Much like an Apple product, you are going

On sale now

Battery-powered EVs for sale
in the U.S. market
 BMW i3
 Chevrolet Bolt
 Fiat 500e
 Ford Focus Electric
 Honda Clarity Electric
 Hyundai Ioniq Electric
 Kia Soul EV
 Mercedes B-class Electric Drive
 Nissan Leaf
 Smart FourTwo Electric Drive
 Tesla Model S
 Tesla Model X
 Tesla Model 3
 Volkswagen e-Golf

Powering up

Global automakers have announced
these plans to electrify their fleets.
 BMW: 25 electrified models by 2025
 Fiat Chrysler: Electrified powertrain in
half of its model lineup by 2022
 Ford: 13 new electrified models by
2022
 General Motors: 20 new electrified
models by 2023
 Honda: Electrified powertrain in
two-thirds of its lineup by 2030
 Jaguar Land Rover: All new vehicles
launched starting in 2020 will be
electrified
 Mercedes-Benz: Electrified powertrain
option for every vehicle by 2022
 Nissan/Mitsubishi: 12 electrified
vehicles by 2022
 Toyota: Will reveal electrification
plans in January at the Detroit auto
show
 Volkswagen: All models electrified by
2030

to take it to an Apple store," he says. "You are
not going to go to the local guy who's good
with a computer."
Dealership service departments still will
see STORM, Page 18

http://www.autonews.com/ubsreport

Table of Contents for the Digital Edition of Fixed Ops Journal - December 2017