Traditional automakers have one huge leg up on EV startups: A nationwide network of shops ready to service cars

• Traditional automakers have a network of dealers that their customers can use for vehicle maintenance.
• But today's EV startups don't operate that way.

Servicing a car bought from an electric-vehicle startup like Rivian or Lucid looks a lot different than going to your dealer or a local body shop for a repair or maintenance — and that might get the young firms in trouble.

When in need of service, car buyers typically utilize the massive dealership network automakers like Ford, GM, Toyota and others have, or choose to take their vehicle elsewhere. In a vehicle's first three years of ownership, most of its work goes to the dealer versus an aftermarket shop.

Meanwhile, shiny EV startups have leaned into direct-to-consumer business models, meaning they don't utilize dealerships to sell their vehicles — and thus, don't have their associated shops to service those cars once they're on the road.

EVs might not need as much routine work as gas-powered cars. But startups are still going to need a plan to keep these cars up and running.

"When your volumes are very low," Quin Garcia, managing director at VC firm AutoTech Ventures, said, "you may not be as concerned about the aftermarket initially. But as you scale, you have more vehicles out there."

The Tesla advantage

Industry frontrunner Tesla has shown that it's possible for an automaker to operate its own service centers without dealers, and has more than 160 in the US. Some customers do take their cars elsewhere, but Tesla gets most of the work, at least for the first three years, per J.D. Power's vice president of automotive retail Chris Sutton.

That plan comes with some flaws: Vox's Recode reported last August that some Tesla owners are frustrated with its service, locations, long wait times, and poor replacement parts inventory. CEO Elon Musk acknowledged the need for improvement in 2019. Last June, Musk tweeted that his goal was for two-thirds of cars in North America to receive same-day help.

Let's not forget that GM reported seeing a significant number of Tesla customers in its shops. But for the most part, this is working for Tesla, which has a longstanding, loyal customer base that has shown it's willing to wait. The same might not be said for firms like Rivian and Lucid.

"Disadvantages regarding supply chains and dealer networks means when there is a serious problem," Karl Brauer, executive analyst of iSeeCars.com, told Insider, "the logistics and timeframe for repairing the car can be a serious problem.

"It's often worse for low-volume EVs from start-up brands," Brauer said.

Startups say they're ramping up service

Per its website, Rivian currently has 28 service centers in North America, and it delivered just over 20,000 vehicles last year. Meanwhile, Lucid had 32 studio and service center locations in North America as of late January, per a release, and had 4,369 vehicles on the road in 2022. (Both are amping up those centers and mobile service).

"If they want to control the channel for how the customer buys the vehicle, they should want to control the channel for how the service experience is," Sutton said. "I would think they wouldn't want to let that go."

But given how parts and service can be key to keeping customers in a brand, EV startups can't afford to tick their owners off with waits or make prospective buyers worry about the ease of getting these vehicles repaired.

And that doesn't cover whether profits from service will benefit the EV startups as much as it does for the car dealers who rely on after-sale parts, repairs, and maintenance for a big chunk of their overall business. That remains to be seen.

Watch the ways you can fix your startup EV — and your rights

Some companies, like Fixico, are hoping to help startups build out their service ops.

"If they can find a traditional dealer or service center chain to partner with it would substantially shorten their path from just selling cars to having sufficient support for servicing cars," Brauer said. "And it would increase new customer confidence."

The right-to-repair movement is also going to be significant for EV startups moving forward.

"It comes down to how confident a given consumer feels when going with an electric vehicle from a new EV brand versus a traditional car from a traditional car company," Brauer said.

"But if you are the "one-off" case, where an accident damages hard-to-replace parts, or a specific component failure happens to be back-ordered for months," Brauer added, "you won't have the same widespread service support a Honda CR-V or Toyota Corolla offers."