Porsche dealers brace for electric era


News / Monday, October 15th, 2018

MONTEREY, California – Porsche is tightening its investment plans as the brand of sports cars accelerates towards electrification. And his American dealers will have to take an important share.

Porsche blamed the number of fast chargers that it would need to be over 700, or about 40 percent more than previously estimated. American dealers are on the hook for at least 200 of the hooks.

It is an expensive demand from the brand with 190 stores. The chargers cost between $ 300,000 and $ 400,000 per store on average, estimates Porsche.

The most urgent motivation for the tool-up is the planned arrival in the US of the Taycan electric sedan in early 2020.

Zellmer: "Heavy investment"

But for Porsche the problem is much bigger than that.

The German automaker has concluded that the heart of its vehicles – the petrol engine – is facing an existential threat from the electric powertrain. And instead of fighting, Porsche embraces electrification.

Porsche expects to invest more than € 6 billion ($ 6.9 billion) by 2022 in vehicle electrification.

"We expect that around 50 percent of our products will be electrified by 2025, either with a fully electric engine or with a plug-in hybrid," Porsche sales director Detlev von Platen told Automotive News.

This technological turmoil translates into a reality in the American retail trade: Porsche dealers must be busy with the installation of electric vehicle loaders.

Porsche Cars North American CEO Klaus Zellmer acknowledges that dealers' financial demand is "a pretty heavy investment" and warns retailers that a payout may take a while.

"It is typical, if you are an entrepreneur, that the investment is not recouped within the first 1-2 months," Zellmer said last month on Automotive News at Porsche's Rennsport Reunion autosport event here.

"It is an investment in the long term."

In the game

But it is also a necessary investment. The ambitious EV product plans of Automakers are based on the availability of a robust and fast charging infrastructure, which is needed to alleviate the fear of failure. Fear that the juice is running out and the inconvenience of long charging times have been major obstacles to widespread EV acceptance.

By the numbers

Porsche increased by at least 40% the number of fast chargers that it wants in time for the American arrival of the Taycan electric sedan in early 2020.

    Total chargers: 700+
    Network loaders of third parties: 500+
    Dealership chargers: 200+
    Average dealer investment: $ 300,000- $ 400,000 per store

Dealers have to invest to be part of the game, Zellmer said.

"You have to determine the technical requirements to show what the car can do, which is first loaded for customers," he said.

The cost of the loader investment will be painful for some smaller dealers, said Todd Blue, CEO of IndiGO Auto Group, which has three Porsche stores in St. Louis, Houston and Rancho Mirage, California.

"The sector is changing and we all have to prepare for the future," says Blue. "There is no doubt that by 2025 the future will have a significant component of electricity."

To offset part of the pre-made costs, the automaker might consider allowing smaller dealers to lease loaders through Porsche Financial Services, said Blue.

The number of dealers of chargers to be installed is based on sales. Dealers are expected to install at least two fast chargers at each location, along with a buffer battery that stores electricity from the electricity grid and that is less expensive than directly charging vehicles from the electricity grid. The 350 kilowatt chargers can fill a vehicle battery up to 80 percent – or about 250 miles – in 15 to 20 minutes.

Necessary costs

Robert DiStanislao, president of Porsche of the main line in the suburbs of Philadelphia, calls the EV loader investment the necessary costs to do business.

"More than likely we will subsidize these ports," said DiStanislao, a member of the Porsche Dealer Board of Regents.

Having the charging infrastructure at the dealer is also about educating potential customers about EV ownership. Tesla and Nissan use such an approach by having chargers installed in many stores.

"We have to make sure that these cars are correctly charged after the demo," DiStanislao said. "You do not get a second chance to make a first impression."

The on-site chargers can create sales and service options, according to dealers, while EV drivers stroll through the dealership while their vehicles are being recharged. Zellmer left it to the dealers to decide whether they would need a fee for the electricity.

"We want customers in our showrooms," said DiStanislao. "We want them to see all models."

Porsche is also in talks with third-party networks, including Electrify America, ChargePoint and EVgo, to expand the network with additional nondalership chargers. That effort requires at least 500 chargers along US highways.

"Hopefully we signed the contract with one of them before the end of the year", Zellmer said about the external companies.

Profit implications

Blue warns against racing in electrification, arguing that customer demand should dictate EV deployment.

"We have to walk slowly and allow healthy demand to dictate the future," says Blue. "Not the government."

While Porsche develops EVs such as the Taycan and a possible electric hatchback, the car manufacturer is working together with Volkswagen Group cousin Audi on a new EV platform.

Porsche's EV ambitions will put pressure on the company's goal to maintain a profit margin of 15 percent.

"With the new components of the EV, the car is on average more expensive with an average of $ 10,000 to $ 12,000," said von Platen. "We have to find ways to compensate by means of very strong and intensive cost management."

For Porsche, the sale of odorless, silent EVs to a fanbase that has emerged from high octane and deafening engines, the brand and its dealers are entering a new and unknown marketing world.

The electric car must have & # 39; Porsche values ​​& # 39; deliver, Zellmer said. He must "behave" like a real sports car – not only in acceleration, but also in the way he brakes and handles corners, "he said.

But Porsche drivers are confident that the Taycan will be worthy of the Porsche summit in terms of design, build quality and driving performance. Von Platen refers to the sporty, low-hanging design of the Taycan as a clear indicator of his characteristic Porsche performance on the street.

"The center of gravity of a Taycan will be lower than the fastest of our 911 models – the GT3," says von Platen. "So that gives you an idea about how the car will behave."