Car loans are every CU’s bread and butter, but the recipe is changing. Any way you slice it, we’re going to see more and more electric cars on the road. Are you ready to electrify your car loans to match?
Electric vehicles (EVs) are going to drastically change the car market
Last week, Tesla delivered the first examples of its new Model 3 to customers, with over 400,000 people having put down $1,000 deposits to reserve their place in line. Production is ramping up fast (Tesla is building huge new factories to meet demand), but it will still be at least 18 months before people at the end of the list will get cars.
And let’s not forget that the other manufacturers are also hard at work cranking out electric cars. You tend to take notice when hundreds of thousands of real people hand $400 million to a competitor to build the car they want.
Here’s what Bloomberg New Energy Finance had to say about the EV outlook:
“The EV revolution is going to hit the car market even harder and faster than BNEF predicted a year ago. EVs are on track to accelerate to 54% of new car sales by 2040. Tumbling battery prices mean that EVs will have lower lifetime costs, and will be cheaper to buy, than internal combustion engine (ICE) cars in most countries by 2025-29.”
In addition, let’s not forget that the costs of renewable energy are falling faster than anyone predicted. At the moment, EVs in the US get about 80% of their energy from fossil fuels, but that is changing quickly — demand for coal is plummeting as cleaner natural gas and renewables ramp up.
What does this all mean to credit union car loans?
There are a quite few potential differences between regular car loans and electric car loans. Can you bundle in the money to install a charging station in the member’s garage? Are you ready to help with the paperwork to claim any tax credits or rebates? Lower costs of operation means members can likely afford newer or better cars. Or maybe they’ll be able to afford better homes, or more travel instead. Start figuring out now how EVs could change your members’ lives, and how to be involved.
EVs will get cheaper
EVs are also poised to head downmarket as well. Tesla’s genius move was to build desire, acceptance and infrastructure by starting with expensive luxury cars. But EVs are fundamentally much simpler and cheaper to design, engineer, and build than internal combustion engine cars. Will you be ready and willing to make a $7,000 loan on a shiny blue plastic Chinese EV dropped off on your members’ doorstep in a crate, or are you going to let Amazon eat your lunch by handling the financing as well as the delivery?
Younger members love EVs
There’s another important perspective: if you’re serious about attracting younger members, electric vehicles are already part of their world and their future, so EVs and the lifestyle changes they enable need to be part of your brand recipe and part of your long-term strategy.