🚘 Car dealers must evolve

Plus: Ian and climate change | Friday, September 30, 2022

Open in app View in browser   Presented By ADM   Axios What's Next By Joann Muller, Jennifer A. Kingson and Alex Fitzpatrick · Sep 30, 2022 What's a car dealership to do in a rapidly electrifying world? Plenty, as Joann reports today. The 4th item in yesterday's newsletter has been corrected to note that Eviation is based in Arlington, Washington, not Israel. The company was founded in Israel but moved in 2020. Today's newsletter is 977 words ... 3½ minutes.     1 big thing: Car dealers must adapt or die Illustration: Maura Losch/Axios   Gasoline-powered cars could soon start to disappear, but car dealers aren't going anywhere, in part because they're protected by strong franchise laws, Joann Muller reports. Their business is changing fast, however, as car sales move online and electric vehicles get more popular. Why it matters: Consumers have plenty of gripes about the car-buying process. But they still want to visit with knowledgeable specialists to learn about advanced technology and troubleshoot problems. First-time EV buyers have lots of questions about charging and more. Dealerships that adapt best will look something like the automotive version of Apple's Genius Bar, experts say. Driving the news: Carmakers are delivering an ultimatum of sorts to their franchised dealers: Evolve and invest for the EV era, or say goodbye. Ford dealers, for example, have until the end of October to decide whether to invest up to $1.2 million on chargers and other EV-related services. (The automaker wants its dealer network to serve double duty as a public charging network.) Those who refuse won't be allowed to sell future Ford EVs, although they'll have a second chance to get on board in 2027. Other brands, including GM and Hyundai, are demanding similar changes. They all want to compete with disruptive EV makers like Tesla, which sells directly to consumers and handles maintenance through a network of mobile technicians and service centers. The intrigue: Some experts say automakers are using the shift to EVs as a way to thin their dealer ranks. The big picture: Car dealers are raking in profits right now because pandemic-related supply chain disruptions mean they have fewer cars to sell and can charge higher prices. Meanwhile, EVs are becoming more popular. They currently account for about 5% of new car sales, but that share is expected to grow significantly over the next decade. On Thursday, New York Gov. Kathy Hochul said the state will follow California in mandating 100% zero-emissions for new vehicles by 2035. All of this adds up to momentous changes for car dealers and their customers. Yet car shoppers overwhelmingly prefer the dealer experience to online shopping, according to a new study from Escalent, a human behavior and analytics firm. 57% prefer the traditional approach, while just 20% favor Tesla's direct retail model. The surprising results contradict popular opinion that consumers want to buy cars the way they do shoes or groceries. What they want, it turns out, is more education and less hard sell, Escalent vice president K.C. Boyce tells Axios. "When EVs go mainstream, you can't underestimate the amount of hand-holding that will be needed." Yes, but: Secret shopper surveys find that dealers aren't well-prepared to sell EVs. They don't know enough about charging, for example, and don't always inform customers about warranties, rebates and incentives. The bottom line: Carmakers insist their dealer networks can be an asset in the EV era because of their physical locations and their existing customer relationships. But those dealers have a lot of work to do before they're EV experts. Share this story.     2. How climate change made Ian worse Data: National Oceanic and Atmospheric Administration; Note: Category 5 classification begins at 157 mph; Chart: Madison Dong/Axios Visuals Forecasters' worst nightmare came true this week when Hurricane Ian, which had been a Category 3 storm, suddenly jumped almost to a Category 5, Axios' Andrew Freedman writes. Why it matters: It used to be rare for storms to keep strengthening until landfall, let alone to do so rapidly. Now it is not — and studies show this is a dangerous sign of climate change. The big picture: Ian's intensity leap was made possible by warm ocean temperatures and abundant atmospheric moisture — both of which are tied to climate change. In recent years, multiple storms have rapidly intensified as they neared the Gulf Coast, and they kept getting stronger through landfall. What we're watching: Researchers are working on ways to better predict intensity shifts, using new technologies such as Saildrones, satellites and other sensors. The bottom line: Until we figure out how to tell that a storm will dramatically strengthen just before landfall, we're going to be vulnerable to more devastating — and potentially deadly — surprises. Read the whole story.     3. Meta tool turns text into video Thumbnail images of videos generated by Meta's Make-A-Video AI. Image courtesy of Meta   Facebook parent company Meta has unveiled Make-A-Video, an online tool that generates short movie clips based on text descriptions, Axios' Ina Fried reports. Why it matters: Text-to-still-image AI systems, including DALL-E 2, Stable Diffusion, and rival projects from Google, Meta and others, have advanced with great speed over the past year. Now, Meta appears to have won the race to extend AI-based content creation to videos. Details: As with still-image generators, all people have to do is describe something they want to see and the system returns a visual result. Meta is not yet making the tool available for public testing, but plans to do so by November. Share this story.     A message from ADM The future of packaging has to be sustainable     Packaging is an integral part of our daily lives but the environmental impact of the things we buy is a growing problem for the health of the planet. The goal: ADM is pioneering innovative plant-based solutions to help make paper and other packaging materials more sustainable. Learn more.     4. Go ahead, write on this Kindle Photo courtesy of Amazon   Amazon's newest e-reader, the Kindle Scribe, can be written on using a stylus, Ina reports. Why it matters: It's the most significant update to Amazon's Kindle line in years, expanding the devices' use beyond reading. Details: The Scribe, which has a 10.2-inch display, will be available this holiday season for $340, including a stylus. The move puts Amazon in competition with writable tablets from reMarkable, which says it has sold 1 million devices to date. Alex's thought bubble: You'll pry my legal pads from my cold, dead hands — and my handwriting is trash these days anyway. But I'd still give this a try.     5. One fun thing: LeBron's pickleball pickup LeBron James of the Los Angeles Lakers takes a shot against the Indiana Pacers at Gainbridge Fieldhouse. Photo: Andy Lyons/Getty Images   NBA icon LeBron James is partnering with fellow star hoopers Kevin Love and Draymond Green to buy a pro pickleball team, NPR reports. The team is part of Major League Pickleball, a 12-team league with plans to expand to 16 squads next year. Why it matters: It's a big vote of confidence in pickleball, a fast-growing tennis-like sport enjoyed by rec and hardcore players alike. Yes, but: Efforts to commercialize pickleball have been met with skepticism among some longtime players, who value the sport's amateur, all-are-welcome, noncompetitive ethos.     A message from ADM Packaging for a more sustainable tomorrow     ADM is aiming to make packaging more sustainable through innovative plant-based solutions. Why it's important: Environmental impact must remain a priority if we hope to achieve a more sustainable future. Learn how ADM is helping to reduce environmental footprints.   A hearty thanks to What's Next copy editor Amy Stern. Was this email forwarded to you? Get your daily dose of What's Next by signing up here for our free newsletter. Are you a fan of this email format? It's called Smart Brevity®. Over 300 orgs use it — in a tool called Axios HQ — to drive productivity with clearer workplace communications.   Axios thanks our partners for supporting our newsletters. If you're interested in advertising, learn more here. 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