More and more electric vehicles (EVs) are making their way into the independent dealer inventory pipeline every year as they grow in popularity. With no need for oil changes, no engine or transmission, and fewer moving mechanical parts, EV owners may think there’s no need for a vehicle service contracts (VSC).

Educating EV buyers on why a VSC is a sound investment requires a slightly different approach than what works with gasoline vehicle buyers. It’s important for dealers to understand how to talk about the value of a VSC for this type of vehicle so buyers understand the risk and reward.

Start by learning the differences between electric and gas vehicles, then tweak your tried-and-true word tracks can make the difference between an EV buyer who says yes to a VSC and one who says no.

Comparing EVs and Gas Vehicles

The powertrain systems for EVs and gas vehicles are inherently different. So, the typical big-ticket repairs you may be used to educating customers about like engine and transmission are different in EVs. Make sure you do your research to understand the differences before you talk VSCs with an EV buyer.

While the forces that move gas vehicles and EVs are very different, they have over 70% of components in common—like heating, air conditioning, steering, technology, electrical, and more. When an EV buyer seems hesitant to say yes to a VSC, make sure to remind them about the traditional repairs they may have experienced with a previous vehicle and let them know that risk still applies with an EV.

Hefty Repair Bills

EV repair costs are slightly higher than their gasoline vehicle counterparts—a combination of OEM parts and a higher number of labor hours. More than 90% of EV parts come from the original automaker, versus only two-thirds for gasoline vehicles. On average, labor costs for EVs are roughly half the total RO amount, as compared to a 41% average for gas vehicles.¹

First time EV buyers often fear the unknown cost of an EV component breakdown, but our claims data shows that at least 75 percent of VSC claims are on parts that EVs have in common with gas vehicles—like brake components, electronics, and air conditioning. So, the risk of a large out-of-pocket repair bill is still something EV buyers should consider when they purchase their vehicle.

Plus, what’s the buyer’s plan if their EV battery dies and they’re not near a charging station? A VSC with roadside assistance would come in handy to tow the vehicle to the nearest station.

Presenting the Value

It’s no surprise that most EV service contract concerns fall into the same categories you see with gas vehicle buyers. How you respond, though, is a bit more nuanced with an EV.

Cost: Help the buyer understand that the VSC extends past the manufacturer warranty to cover them when their risk is higher—and make sure to show them the estimated cost of repairs for the pricier EV components. Also make sure to illustrate any additional VSC coverage like 24/7 emergency roadside assistance, substitute transportation, and trip interruption.

Payment: Most have a budget they must work within, but often don’t take into consideration the cost of not having transportation to work or the impact to their household budget in the event of a needed repair. Help reframe the conversation to how the buyer would handle unexpected out-of-pocket costs to replace a pricey component and how they’d get to and from work while their vehicle is in the shop for covered repairs.

Vehicle Quality: Explaining the need for a VSC while not creating fear of the EV your customer is considering can be a tricky proposition. Try reminding your buyer that it’s common practice for people to purchase extended warranties for computers and cell phones. An EV is significantly more complex than a phone so that may help your buyer visualize all the computers that have a risk of needing repair.

I Do My Own Repairs: This objection is much less likely when your customer is purchasing an EV than a gas vehicle, but you should still be prepared to address is. While simple repairs may still be possible on the components EVs have in common with gas vehicles, it’s unlikely that a buyer or their personal mechanic friend will have the skillset to diagnose and repair EV components. Make sure to ask if they or their friend has experience repairing EVs and remind them that without a VSC they’re still on their own for 24/7 emergency roadside assistance, substitute transportation, and trip interruption.

Prepare for the Future

As EVs continue to move through the pipeline from new to used, the impact on independent dealers will grow. Learning how to educate EV buyers on their VSC options can have positive results on a dealership’s bottom line and provide the ultimate peace of mind for the EV consumer.

¹ Cars.com