Supply of electric vehicles at Canadian dealerships is inadequate to meet demandVehicles
Sep 10, 2020
Kerry Banks

New research commissioned by Transport Canada confirms lack of availability and long wait times for buyers seeking EVs, indicating gaps in current federal incentive policies

New research commissioned by Transport Canada confirms lack of availability and long wait times for buyers seeking EVs, indicating gaps in current federal incentive policies

Canadian drivers keen on buying an electric vehicle typically start with two questions: what kind of range does it have and how long will I have to wait to get it?

Longer-range batteries in many new makes and models of EVs are taking care of the first concern. But anecdotal accounts persist of long wait times for deliveries and dealers with few or no EVs in stock. There’s no doubt demand for EVs is growing, but how much is a lack of supply holding back sales?

A newly released report, “Plug-In Electric Vehicle Availability,” prepared by Montreal’s Dunsky Energy Consulting for Transport Canada sheds light on that question. It also confirms the suspicions: not only is the overall supply of PEVs (fully electric vehicles or plug-in hybrids) inadequate to meet Canadian buyers’ demand, there are also stark regional disparities in the distribution of that inventory.

In the first half of February 2020, only one in three Canadian car dealers had even one electric vehicle in stock

The findings should be of concern to federal and provincial policymakers investing money and energy in incentives to build out charging infrastructure and boost sales of EVs. Those policy implications are particularly acute as Canadians await the coming Speech from the Throne to see how intently the federal government plans to pursue its transition to low-carbon and how much zero-emission vehicles will be a part of that.

One in three dealers

How serious is the issue? Dunsky’s cross-country analysis, based on a review of automaker websites and individual dealer surveys of PEV sales inventories in the first half of February 2020, found that only one in three Canadian car dealers had even one electric vehicle in stock. Outside of Quebec, B.C. and Ontario, that figure fell to fewer than 20 per cent of dealerships. Overall, only 9 per cent of Canadian dealerships had four or more PEVs in stock.

Plug-in Electric Vehicle Availability Report Transport Canada Dunsky Energy Consulting
Plug-in Electric Vehicle Availability: Estimating PEV sales inventories in Canada. Source: Transport Canada and Dunsky Energy Consulting

The study also confirms issues with long wait times for delivery of a requested PEV. More than 60 per cent of dealerships surveyed had a three- to six-month wait time.

Dunsky has been working with Transport Canada since 2018 to track PEV availability by periodically collecting and analyzing dealership inventory data, “but this is the most comprehensive review,” says Jeff Turner, lead author of the report, in an exclusive interview with Electric Autonomy Canada.

For its part, a Transport Canada spokesperson confirms that the federal government “recognizes that limited supply of zero-emission vehicles continues to be a barrier to greater uptake.”

In 2019, the spokesperson says, Transport Canada committed to working with automakers to establish voluntary sales targets to ensure supply kept up with the expected increase in demand following the introduction of the federal Incentives for Zero-Emission Vehicles program.

Today, it is “continuing to evaluate the need for additional measures,” she adds.

Inventory levels down

If so, the department will surely have noted that Dunsky’s latest research shows that the supply shortage appears to be getting worse, not better. While nationwide inventory levels of PEVs in February 2020 were three per cent above those Dunsky observed in November 2019, they were still 21 per cent below those tallied in December 2018. Meanwhile, PEV sales have increased about 25 per cent over that time. This means that while the vehicles that are available are selling faster, consumers are likely having a harder time finding one available that meets their needs.

Research shows that the supply shortage appears to be getting worse, not better

The lack of inventory is clearly a deterrent to sales, says Turner. “A lot of folks need to be able to see one of these cars in the flesh before they will buy one.”

The regional variation in PEV availability, meanwhile, holds several subplots. As mentioned, distribution is heavily skewed in favour of dealers in Quebec, B.C. and Ontario. This clearly reflects both the market size and the presence of financial incentives and policies intended to stimulate the supply of EVs.

Quebec and B.C. both have the latter, and the healthiest per-capita inventory of PEVs as a result. Ontario, meanwhile, has the most dealers of any province. Dunsky also notes that it had purchase incentives from 2010 to 2018, which likely encouraged dealerships to invest in PEV stocking and sales, including investment in PEV-specific repair and servicing equipment and staff training, which may motivate continued stocking of these vehicles today.

Inventory By Province and Total
Inventory by Province and Total. Source: Transport Canada and Dunsky Energy Consulting

Fewer makes and models

Along with the gap in overall volume comes a gap in the variety of available makes and models. Whereas Ontario and Quebec buyers were able to choose from 19 different makes and at least 30 different models, there were just 11 makes on sale in Manitoba, 10 in New Brunswick, eight in Saskatchewan and Nova Scotia, four in Newfoundland and two in P.E.I.

The imbalance extends to individual manufacturers. Take Chevrolet, whose cars make up 30 per cent of the total PEV inventory in Canada. The Chevrolet Bolt is the most heavily stocked PEV in country, yet 77 per cent of its Canadian dealerships didn’t have any Bolts in stock. In fact, Chevrolet had zero inventory in the four Atlantic provinces.

Dunsky found a similar trend with a handful of other automakers, including Ford and Kia, which were sending very little inventory to dealerships outside of B.C. and Quebec. Some automakers are making the effort, however. As the report notes, Audi and Porsche had at least one PEV in 90 per cent of their dealerships.

Number of Makes Models Available by Province
Number of Makes and Models available by Province. Source: Transport Canada and Dunsky Energy Consulting

Dealer challenges

While putting more cars into more dealerships is essential to addressing both the supply shortfall and regional disparities, it’s not the whole answer. Before individual dealerships can sell and service EVs effectively, they need to invest in training, talent and new equipment. As Turner notes, the upfront costs can be a barrier.

“For some dealerships there are significant expenses involved, not just for the training of staff, but also the service costs of buying the equipment and service of the vehicles. It’s hard for some to justify it.”

The policy implications are clear: if the federal government decides to move towards implementing some kind of national ZEV mandate to drive up availability and sales across the board, dealers will be looking for assistance, too.

Turner says this issue has grown more pressing as the EV market has matured. In the past, most first-time buyers of EVs had done their research and knew what they wanted. “They were informed buyers. They may have actually known more about the product than the salespeople. That’s changed today. You see a lot more curious shoppers. That increases the need for an informed salesforce,” says Turner.

Number of PEVs Available Per Dealership
Number of PEVs Available Per Dealership. Source: Transport Canada and Dunsky Energy Consulting

Tesla an outlier

One manufacturer that can’t be overlooked in this analysis is Tesla. Its approach runs contrary to the conclusion that having more inventory encourages sales of electric vehicles. The Tesla 3 is the best-selling EV in Canada and yet Tesla has no traditional dealerships or any stock on hand. Turner says Tesla’s approach — a so-called “factory order model” as opposed to an “inventory order sales model” — is common among luxury vehicle makers.

“High-end customers are willing to wait and get a model with exactly what they want. They are looking for quality and are willing to pay for it.”

Automaker Inventory and Sales Strategy for Top 6 Selling Models
Automaker Inventory and Sales Strategy for Top 6 Selling Models. Source: Transport Canada and Dunsky Energy Consulting

Is there a chance this strategy could move downmarket? Turner says that he has heard talk that some carmakers, such as Volkswagen, might be prepared to follow Tesla’s example and adopt a direct sales model. Other companies are likely evaluating their options as well. It’s already recognized, for example, that as the sales mix shifts to include more EVs, which require less maintenance, dealers that rely on after-sales service business to boost their bottom line will need to rethink their approach.

The spread of COVID-19 could also be a factor, having prompted more buyers to consider moving their new car shopping online.

Absent a rapid, dramatic swing in that direction, however, the report’s primary conclusion — that there needs to be a significant increase in PEV inventory levels in order to keep pace with growing sales — seems beyond dispute.

The question for industry and government, then, is how do they get there?

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