ELECTRIC CARS ARE HERE TO STAY

Electric Cars Are Here To Stay

In spite of all the efforts to make it difficult for electric cars to gain momentum, all indicators are showing that sales are growing, and popularity is increasing while the challenge for further growth remains. Let’s take a look. Tesla is prepared to launch its first Robotaxi called the “Cybercab” by the end of June 2025 in Austin Texas. Here are the highlights of the Cybercab:

  • It is the first autonomous vehicle without pedals and a steering wheel.
  • Inductive charging capability without any cables.
  • Cost is estimated to be about $0.20/ mile, which brings the cost of rideshare per mile below private ownership, the tipping point going forward.
  • The price of a Cybercab is estimated to be around $30,000.
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As promised Waymo also expanded its self-driving service to Atlanta through Uber app. Following Tesla, Lucid, Polster, Rivian, and now Scout/VW and Honda/Sony joint ventures are poised to sell consumer direct electric vehicles. In 2024, EV sales at 1.3MM were a 7.3% increase over the prior year.it also reached a record high market share of 8.9%. In spite of the roadblocks of the government lifting California mandate of 100% electric by 2035, EV popularity along with green awareness of Californians, will naturally transition into 100% electric by 2035. The only challenge that is holding back greater EV sales still remains to be the availability of Charging Stations. California currently still around 180,000 chargers is far behind the 2.1MM needed by 2035.

Its time for the retailers start exploring their options in order to avoid to become dinosaurs, or better yet losing the value of their investment all together. Writing is on the wall:

  • Vehicle registrations among 18–34-year-olds fell below 10% in the last two quarters
  • Fewer teenagers are inclined to even get a driver’s license
  • Autonomous ride per mile coming in under private ownership
  • Manufacturers are on a mission to bypass retailer network with direct sales
  • Temporary shift to hybrids will be eliminated by increased charging station availability and longer ranges in EVs.

In an ever so rapidly changing business environment in the auto retail industry, which is worth 5 trillion dollars in retail sales, time has come to think outside of the box and quickly. Especially in California, but also in the rest of the US market there are exciting opportunities if you take advantage of this evolution and stay proactive, electrification may very well be the new business model and charging stations are the very first opprtunities. I would like to hear from you to discuss such opportunities. See you next month…

Yours truly,

Arlan Tarhan

 (310) 717 1876, or Arlan@convergentalliance.com

Valuation Is An Opinion

Valuation Is An Opinion

Most business broker in the U.S. that specializes in auto retailers have their version of predicting how the buy/sell market is going to look like ahead in 2025 and beyond.

Some of them use published investment banker’s data by simply subscribing to their publications and then offering it to their potential clients under their own marketing means such as newsletters, “Buy/Sell” reports or on their websites. The trouble is almost without exception, the information has motive, and it is misleading in order to drum up business. Almost all of the automotive brokerage firms operate with the same strategy of going after listings, then announce the opportunity to the entire market, start rumors and upheaval, disrupt business and just knock on doors until they find a potential buyer. Once a letter of intent is executed, they sit back and hope for an escrow close to collect in most cases as high as 5% of the purchase price. But the most troubling part is that they have opinions on the valuation of these dealerships and the multiplier for each of the franchises across the United States. Hardly anyone of them has automotive retail experience not to mention any finance or accounting experience. 

No two transactions are the same, they have unique circumstances that need to be taken into consideration After being in the industry as an automotive retail operator for almost 30 years, and assisting retailers as an advisor for the past 18 years, through my Company Convergent Alliance, we offer a specific expertise that combines operational forensics with diverse accounting expertise. We are not a brokerage firm and rather an advisory company for the buyers or the sellers first to assess the opportunity with proven methodology, then through our very in conspicuous connections, seek out potential opportunities whether you are the buyer or the seller. Hold hands with our clients throughout the very complex transition of the process and assist in every aspect from documentation, factory, bank and regulatory approvals, business plans and ultimately the escrow process.

In order to determine a realistic multiplier and or a purchase price for a dealership, there are many variables that need to be considered, other than just the brand, the location and the profits that are reflected in the financial statement. Operational forensics is the expertise needed to analyze an auto dealership beyond surfacy documentation and operational specifics. In most cases, what you would pay for an underperforming opportunity store is a lot different than you would pay a reputable franchise with healthy looking bottom line which has to be put through extreme scrutiny to verify. In fact, in most cases, opportunity stores, even those not profitable, present a more attractive picture for the future and therefore maybe worth more than just a multiplier of the net profits. Of course, the reason being that once improved offers a much higher multiplier for a resale value. Business is changing rapidly, for most retailers, there are exciting opportunities looking ahead that require willingness and proactive approach. For those who are reluctant, next few years are critical to make decisions to maximize value. 

I offer free consultations for those who want to explore. Please visit our website, and or reach out by email or phone. Look forward to hearing from you, See you next month.


Yours truly,

Arlan Tarhan