Inside Automotive with Jim Fitzpatrick, powered by CBT News

How tax credits expiring reshaped EV demand, dealer strategy, and what’s next for affordability

• Jim Fitzpatrick • Season 1 • Episode 23

Share episode

We sit down with dealer-owner and NADA board member Jeff Aiosa to unpack how expiring EV tax credits, shifting production, and affordability pressures are reshaping demand. We dig into used EV values, plug‑in hybrids as a bridge, and a realistic road to price and range parity.

• leasing demand cliff after 45W credit ends
• used EV depreciation driving approachable prices
• ACV challenges and improving valuation discipline
• production pullback to match true EV demand
• plug‑in hybrids as low-friction bridge tech
• sales culture, research-heavy buyers, and delivery experience
• tariffs, shared cost pressures, and affordability
• Mercedes strategy to protect share and attract younger buyers
• 2025 SAR near 16 million and stable used pricing
• long-run optimism grounded in parity and infrastructure


Inside Automotive with Jim Fitzpatrick is powered by CBT News, your go-to source for the latest news, trends, and insights in retail automotive. Subscribe for more interviews with top industry leaders, dealership innovators, and experts shaping the future of automotive.

For more content, visit CBTNews.com and follow us on your favorite podcast platform.

Announcer:

You're watching Inside Automotive with Jim Fitzpatrick.

Jim Fitzpatrick:

Hey everyone, Jim Fitzpatrick. Welcome into another edition of Inside Automotive right here at the CBT Automotive Network. Federal tax credits for new and used electric vehicles officially expired on September 30th, as all of you know. Joining us today to share his perspective on it is and how business is shaping up is Mr. Jeff Aiosa, who is the president and owner of Mercedes Benz of New London. He's also a member of the NADA board. So we'll ask him some questions about the overall industry and some of the things that are pressing uh at the NADA today. So, Jeff, thank you so much for taking the time out of your busy schedule to join us on the show.

Jeff Aiosa:

My pleasure, Jim. Thanks for having me.

Jim Fitzpatrick:

Sure. So uh first and foremost, how is business today at your dealership?

Jeff Aiosa:

Business is good. Um you know what we uh are looking forward to um some things that have been a little bit of a challenge in the past, and I'm referring specifically to uh transition to EV, where we perhaps as an industry got a little too far too fast, um, not in alignment with the market. But but I do think that the future is going to represent um price parity, eventually range parity when we get into solid state technology, if that's the next iteration. Sure. Um and I think um, you know, a more robust charging infrastructure, public charging infrastructure will be helpful. So I'm optimistic about the future of Electric.

Jim Fitzpatrick:

Sure. What what impact has the uh the uh tax credit had coming into the end of no uh uh September? And then what do you think it will have with it going bye-bye now moving forward on your EV sales?

Jeff Aiosa:

Sure. So so with my line makes and other high-line luxury um line makes, it's the 45W regulation, which is the 7500 uh on the leasing commercial side of it, which obviously expired two days ago. So I think as it relates to leasing, um that is the proverbial cliff that we'll go off as it relates to the EVs. Um we're sold out. We don't have any EVs that we could lease because they've been absorbed thanks to the 7500. Predictable, but there is still something like 135, 140,000 units on the ground in dealer inventory, all brands, um, that were not absorbed. So there's still some work to be done.

Jim Fitzpatrick:

Yeah, for sure. And do you think that consumers are are it seems as though consumers are a little bit more open suddenly to EVs. I mean, obviously it's because of uh this this uh incentive that is going away as kind of pushed some business forward, but uh but beyond that, it you know, it almost felt like the EV sales were starting to pick up some momentum. Did you see that in your in your market?

Jeff Aiosa:

So so absolutely on the yeah, absolutely on the pre-owned side, Jim. Um we are seeing the prices of the um pre-owned EVs um starting to get closer to the ICE vehicles. And of course, that's because of the uh uh accelerated depreciation that they they would realize, specifically in that first year. But I do think that um the the market is getting more familiar with it, more comfortable with it, again, as charging infrastructure starts to become a little bit more available. Um and look, it's a it's a really great buy if you're in the market for a used car.

Jim Fitzpatrick:

Right. Yeah, that that's for sure. That's for sure. When uh when an EV comes in, is it is it hard to put an accurate number on for an ACV of a of a trade-in because of the the free free uh flow of the market right now?

Jeff Aiosa:

It has been a challenge and um again getting better because of that EV adoption picking up. But um yeah, that that is, you know, what we see, I think industry-wide close to 30 percent um depreciation on average in the first year, and and obviously that's significantly more than ICE.

Jim Fitzpatrick:

So yeah, for sure. How does this shift your inventory planning for EVs moving forward? Do you uh how do you kind of settle in on a number that's that's comfortable for you?

Jeff Aiosa:

Yeah, that's a great question. You know, uh if if you look at where we have been in the 16 million-ish SAAR per year, um approximately 8% represents something with a battery, right? And and we know that about half of that is Tesla. So with incentives going away, which uh absolutely we know from not just our market but worldwide markets, those incentive supports um deteriorating or evaporating um can cut that in half. So I think manufacturers and and and especially mine are doing a really good job of dialing back that production. And I think it's smart because again, we will get to those three legs of the stool price parity, range parity, and the charging infrastructure that's gonna make people more comfortable with this technology.

Jim Fitzpatrick:

Yeah, for sure.

Jeff Aiosa:

I often say we're on an irreversible path to electrification. Yeah, I just feel that the time line is much longer than what was initially.

Jim Fitzpatrick:

And it seems as though the plug-in hybrids uh have been bridging that gap, right? And you do you agree that that is pretty much the way a lot of consumers are feeling uh or finding their path to uh to an all uh you know an EV?

Jeff Aiosa:

So that's a great point and an interesting one because and I can't speak for other brands, but in my brand, if I ran a lease on a plug-in hybrid and we have, I think, uh industry leading technology that's bringing you up to approximately 60 miles on a charge, um, there are people that did not come into my store with the um interest in anything electric. But when we ran the lease numbers with the $7,500 and the payment was less, they said, I don't ever have to plug it in then, right? I'm gonna save money. And we said, yeah, but then they'd come back and they'd say, hey, we love it. We plug it in and it's great. So that's right. So it isn't bridge, right? It's the best of both worlds. And you know, initially, I think a lot of manufacturers, including mine, thought, well, you know, this is the duplicity of technology, more expensive, doesn't really make sense. We're gonna go right to the BEV. And and perhaps that would have been the right play if we had the technology. I sometimes use the analogy of the big screen TV. The first one I bought was probably hundreds of pounds. Four people had to lift it on a wall. It was thousands of dollars, and it was anything but flat, right? Today, that same TV you can put on the wall yourself. It's hundreds of dollars and it's wafer thin, right? So technology is gonna advance.

Jim Fitzpatrick:

That's right. Yeah, I and I think if we're having this conversation, you know, 10 years from now, I think you you're right. I think that it'll, you know, the EV situation will be substantially different, and consumers will be saying, why would I ever buy a nice vehicle, you know, with the technology and the range that's out there, right?

Jeff Aiosa:

That's right. There's so much fun, they're fun to drive, the technology is awesome. Yeah. Um, we're gonna get there. It's just gonna take longer than everybody thought about it.

Jim Fitzpatrick:

What if you had to guess a percentage of the people that purchased or leased an EV from you that repurchase an EV from you? Because that's uh that's always a good indicator. Do are consumers liking them, right? Is that is that how high is that percentage?

Jeff Aiosa:

Yeah, I I I'm guessing, Jim, because I've never done the the numbers, but I would say that it's approximately 50%. 50%. Somewhere in the middle where some thought, gee, this would be fun. You know, it it's like the the 1% is in the beginning, right? They had to have something that no one else had.

Jim Fitzpatrick:

That's right.

Jeff Aiosa:

And and and then I I think, you know, in some instances they found that, well, that charging infrastructure isn't as accommodating as I thought it was going to be, and now it's really impeding my ability to get from A to Z, right?

Jim Fitzpatrick:

So sure, sure. What are you hearing as a as an NADA board member? What are you hearing from your uh fellow uh dealers uh on this topic?

Jeff Aiosa:

Yeah, I I I really do think that um there's a tremendous amount of optimism. And look, uh truth be told, Jim, we've made huge investments, right? Like the building that I'm in, right, my dealership that I'm talking to you from has a thousand solar panels on top of it, right? We are net positive in our generation of electricity.

Jim Fitzpatrick:

That's great.

Jeff Aiosa:

I've I've got hundreds and hundreds of thousands of dollars worth of level three charges. We've made the investments. So we're we're we really are very much embracing the future. Um we wish that we were further along than we are now, but again, um I think a lot of that was regulatory. But to answer your question, I think the dealers are very optimistic that the future is going to be as as bright as we thought it would be earlier.

Jim Fitzpatrick:

Sure, sure. I've I've spoken to a number of dealers that said one of the concerns they have and uh and and they're they're they've they each have different plans as to how to win this game on or this or overcome this challenge. But salespeople are in this business, as you know, are kind of where the rubber meets the road. And when a customer comes in and they say, Hey, I'm thinking about an EV, I'd like to take a drive in an EV, if that particular salesperson is not sold him or herself on an EV because they don't drive one for their personal vehicles, and as you know, there's not really demos any longer in the in the industry, um, then they have a tendency to sell what they know or what they're most comfortable with, and maybe even steer the person off of the EV. Have you found that to be the case, or do you think that that is is a concern out there among uh dealers?

Jeff Aiosa:

I I think it comes back to your culture. I've been driving EVs for over seven years, and there's times where a salesman will say, wait, I need to get the owner. That's a question that I've but he may because he drives these things a lot more than I ever have.

Jim Fitzpatrick:

Yeah.

Jeff Aiosa:

And it's kind of a I think team effort until we really get further along. Yeah. Because the truth is, Jim, a lot of the a lot of the customers that come into the store today know what they want, right? They're doing almost 90% of their research online. When they come in, they're here to buy. And it's not uncommon for a customer who's coming out of an EV and transitioning to our brand to know more than the salesperson does because they've all known it, they've lived it. So they don't expect them to be the subject matter expert per se.

Jim Fitzpatrick:

Yeah.

Jeff Aiosa:

Um, they just they need them to be the professional to facilitate what needs to be done.

Jim Fitzpatrick:

So well, I would be remiss if I didn't ask, since you're a NADA board member and you've got the hand on the pulse of what's going on in DC, what is your take on tariffs today, as as we sit here? Um, we've heard, you know, obviously we're doing the best we can. OEMs are doing the best they can to absorb what they can. It has hit some OEMs pretty hard. Um, I'm sure obviously as a dealer today, uh, what concerns do you have? What do you think the future looks like?

Jeff Aiosa:

Yeah, great, great question. A lot to unpackage there. I think in the beginning, there was a lot of pent-up demand by the consumer to get in, right? And and you know, pull that future business into the present because they thought that the the full tariff increase was going to be passed on to them. We know that that wasn't true, right? We didn't have increases on model year 25.

Jim Fitzpatrick:

Right.

Jeff Aiosa:

I think on average in the industry we're seeing approximately 3% with the model year 26. I don't know if that's as sticky as we would like it to be, because now we're memorialized with 15%. There's going to be shared paying, right? It's gonna it's going to be uh manufacturer, it's going to be dealer, and it's going to be consumer. And that really is the segue into the elephant in the room, Jim, and that is affordability. I mean, we are pushing against $50,000 for a new vehicle.

Jim Fitzpatrick:

That's right.

Jeff Aiosa:

Um the average ownership cycle is pushing up against 13 years. Um we really need to talk more about fleet turnover with our regulators than we do the conversations that we've had in the past about EV adoption.

Jim Fitzpatrick:

Well, since you went there on affordability, um, it seems as though Mercedes-Benz might be pivoting on on this very topic and going after more of an affordable uh vehicle for maybe more of a mass uh market.

Jeff Aiosa:

Yeah, and look, I I don't fault them back. Um I'm thinking it was 21 where there were no chips. So if you have a limited amount of chips, are you gonna put them in your entry-level kind of um mainstream, not high margin vehicle, or are you gonna put them in your top-end vehicles, right? So they did. And of course, money was 0% nothing, right? It was free, and demand was exceedingly high, right? Supply was very low. So that was great while it lasted for them. That was then this is now, right? I mean, we can't we can't allow market share to erode. We need to get back into the game and pull in that youthful buyer that's going to grow with our product line.

Jim Fitzpatrick:

Yeah, yeah, for sure. Um thank you so much for all the quite the time you've given me today. But just one last question. What is your take on the uh as we close out 2025? How do you think we will we will we will fare at the end of the day in the industry?

Jeff Aiosa:

So I think we're going to get very close to 16 million. Um I think that's what we've been talking about all year. I I think that used car prices have stabilized uh by and large. And I I think that 26 is going to be an awesome year. I think it's gonna be great.

Jim Fitzpatrick:

Yeah, I agree. I agree. Jeff Aiosa, president and owner of Mercedes Benz of New London, and an NADA board member. Thank you so much for taking the time into your schedule to join us here on CBT News. I know that our dealer viewers, your fellow dealers, and your fellow members at NADA will get a lot out of your visit with us. So thank you so much.

Jeff Aiosa:

Thank you, Jim. Pleasure.

Announcer:

Thanks for watching Inside Automotive with Jim Fitzpatrick.