A franchised dealership earns, on average, about 50 percent of its gross profit from the service and parts department. That number has been stable for decades, built on the predictable rhythm of oil changes, transmission flushes, brake jobs, and timing belt replacements. Electric vehicles eliminate most of that rhythm. A Tesla Model 3, for example, has no oil, no spark plugs, no exhaust system, and regenerative braking that extends brake pad life by 60 to 70 percent compared to a comparable gas car. The revenue per vehicle per year from an EV owner visiting a franchise service lane is a fraction of what a gas vehicle owner generates.
NADA data from 2024 showed that service and parts revenue per EV in the shop runs roughly 30 to 40 percent lower than for internal combustion vehicles. At current EV penetration rates that might sound manageable, but a dealership in a market like the Bay Area or greater Los Angeles, where EV registration rates now exceed 25 percent of new car sales, is already seeing the early pressure in their service write-up numbers.
Where the Revenue Is Actually Disappearing
The losses are concentrated in a handful of high-margin service categories. Engine oil changes alone generate roughly $90 to $140 per visit in parts and labor combined, and a typical gas vehicle owner returns two to four times a year. Multiply that across a service department doing 1,200 repair orders per month and you understand the exposure. EVs also skip coolant flushes, fuel injector service, air filter replacements, and the full range of powertrain repairs that fill a dealership’s technician hours during shoulder seasons.
What EVs do need, tire rotations, cabin air filters, wiper blades, brake fluid checks, and 12-volt battery replacements, is lower-margin work that takes less time. Tire service is the one bright spot. Because EVs are heavier and generate more instant torque, they chew through tires faster than equivalent ICE vehicles. A Rivian R1T can go through a set of tires in 20,000 miles or less, and dealers who have invested in alignment equipment and tire inventory are capturing that spend.
How Dealers Are Responding
The smarter dealership groups are moving fast on a few fronts. Fixed ops directors at groups like Penske and AutoNation have been expanding body shop capacity, since collision repair is EV-agnostic and high margin. High-voltage battery diagnostics is another growth area. As the first wave of 2019 to 2022 model-year EVs ages out of warranty, dealers with certified EV technicians and DC fast charging infrastructure are positioning to take that out-of-warranty repair work before independent shops can staff up for it.
Software and subscription revenue is also entering the conversation. Ford charges $800 per year for the hands-free driving package on the F-150 Lightning. GM’s Super Cruise subscription runs $25 per month. Dealers are not capturing that revenue directly today, but OEM programs that cut dealers into connected services revenue are being piloted, and fixed ops will eventually include a software line item the same way it now includes tire protection plans.
What This Means for Dealership Valuations
Blue Sky valuations for dealerships have historically given heavy weight to service department performance. An established import franchise with a strong fixed ops base might trade at 4 to 5 times annual earnings. As EV penetration climbs past 30 percent in a given market, acquirers are starting to haircut service revenue projections in their underwriting models, particularly for smaller single-point dealers without the scale to absorb the loss with volume.
The dealers who treat this as a short-term blip are making a mistake. The service revenue model that carried the industry for 40 years is structurally changing. The dealerships that survive the transition will be the ones who recognize which parts of their service business are EV-resilient and invest there now, before the margin pressure becomes a crisis.