Electric Vehicles and Their Impact on the Auto Industry

[00:00:00.690] - Dan Paulson

How about how's EVs affecting this? Because now you're taking a gas motor and you're replacing it with electric motor and a battery. How's that going to change the industry?

[00:00:12.220] - Jay Goninen

It's definitely going to have an impact. It's still, if you look at EV adoption rates and you take California out of the mix, it's still a slow roll for EV adoption. You are seeing more Teslas and more Rivians on the road, but it's going to take some time to get to where it's fully EV. I still I don't think the government's standards for that are very, very ambitious, especially given that we can't support the grid that we have right now.

[00:00:38.360] - Dan Paulson

That's a long discussion.

[00:00:40.290] - Jay Goninen

But the fact of the matter is it is changing, right? And we are seeing A shift, with the exception if anybody ever listens Toyota, their CEO has such a great take on this. They're all in on hybrid. They're not in on EV at all. They're basically saying, we're not going to EV, we're sticking with hybrid. And I actually think it's a more sustainable model moving forward. But the EVs that are out there, one, if you've ever driven one, if anybody's ever driven a Tesla, a blast to drive. It's a different experience because it's very quiet, and you hear that weird humming, but they are super fast, a lot of fun to drive, and the technology behind them is insane. I think the new Ford Lightning has over 200 million lines of code, I heard. So It is just it's a different type of repair. They still need to be fixed. Now, what you'll see is it's not so much maintenance items as it is repair items. So like a general repair order, if you go to a shop, you could expect to say on average, and this isn't across the country, this is just maybe in a specific area, but say the average repair order when you go to take your car in is $400.

[00:01:54.690] - Jay Goninen

In EV, the average repair order is $1,800. So it's, again, when we talk about the theme of it getting more expensive to get your vehicle fixed, you're going to see that with the EV side. It's not going to be as much maintenance items as it is true breakdown diagnostic items. And there are some really cool things that you can do. You can diagnose over the airwaves. Tesla is doing that as we speak. But the fact of the matter is, you still have to fix it, and the batteries will still have to be changed. And there's all kinds of different And things that can go wrong with them. And being able to understand that when you're buying an EV, that it's just a different experience altogether. And same with the shop end. They have to understand that this is just a different world, and might move to more of that lab type of shop feel and look. But the fact of the matter is, there's just always going to be work at some capacity.

[00:02:53.780] - Dan Paulson

Agreed. Rich, you look like you're going to say something.

[00:02:58.030] - Rich Veltre

Well, I think you beat me to the EV I was ready with that one right off the top of my tongue. But yeah, and I've listened to people over the years, too, back when the Prius came out, it was the first next big thing, right? And then everybody figured out a few years later that it was five grand to change out the battery in a Prius, and that was a hybrid at the time. So you're resonating exactly with the things that I've already thought about, that this is the way that that it's going to go. And also very interesting that, like you said, it's going to lead to a more trained, a more specialized tech. And EV is just going to add to the complication. But gas is here for... It's going to be here for a long time. So I'm really interested in what you're doing, though, more so on the personnel side, because I think the other thing that was going through my mind is I've got a 16-year-old, and I'm trying to decide, should you go and do the quarter million dollar college education and go work at McDonald's when you graduate?

[00:04:14.100] - Rich Veltre

Or should you look into a technical type of job, a equipment maintenance, electrician, plumbing? I mean, is Is that something that I know you grew up in the automotive industry, but is your platform, bringing you back to that, is your platform something that you can see going down into other technical areas as well? So maybe that's really my question is, tell me a little bit more about the platform.

[00:04:46.390] - Jay Goninen

I think there's potential there. We still have so much room to grow within the niche that we've got right now that I think we'll stick there. And I did want to hit on your point of that young person that's looking at college versus tech school. And I'll never bash college, just because if I have a heart attack, I want to make sure that the doctor that's cutting me open actually knows what they're doing. I think it's very, very important. The one thing I'll say, and I think this is where students of this generation, like your 16 year old, have gotten much, much better. And I do give parents credit for this, is you're actually starting to look at ROI on education. And so you're not just signing up for that liberal arts degree just to check the box as much anymore. You're actually knowing what you're going to do with that degree. I think so many of us over the course of our careers have worked with people that went to a four-year school. They're working in an occupation that has nothing to do with what their degree was, but they have that piece of paper.

[00:05:52.340] - Jay Goninen

It doesn't make sense. I think you might start to see maybe a few more students taking that gap year or two to try and figure out what it is that they like. But at the end of the day, I think it's for you parents that are out there, and even if there's kids listening, actually look at the ROI on it. It doesn't take long to understand what your return on investment is going to be. And if you're going to spend 200 grand on an education that results in a $40,000 a year job, you might want to look at that a little differently, right? And so I I hope that our educators and administrations that are out there in middle schools and high schools are doing a better job at that conversation, because when I went to school, it was basically like, if you don't go to a four year school, you're scum, right? You're not going to be That's exactly right. And I have so many friends that are incredibly successful electricians, incredibly successful plumbers that have started their own businesses, and are doing really, really well. Their return on investment of their education and then maybe they went through an apprenticeship type program, more of a formalized one as an adult, their ROI on that is insane.

[00:07:09.330] - Jay Goninen

Whereas I've got friends that have master's degrees and advanced degrees in different areas that aren't working in that industry, or they're not working in what they went to study for. And when I look at that, I just think it's such a waste. And so I hope, again, I don't want to downplay college. I just want you to go to college for the right thing. And if that's not automotive, that's perfectly fine. Or if that's not diesel, that's perfectly fine, because I don't want you to spend the money going to school for what we do either, if it's not something that you're going to pursue.

[00:07:43.810] - Dan Paulson

Right Well, I think you brought up a lot about parents getting more involved on that ROI. And with the trades, I know a lot of trade programs, you can get a company to sponsor you. They'll pay for your training, they'll pay for your apprenticeship. If you go the union route, for example, there's a whole structure there to help you gain experience and get you paid along the way. So you're actually making money while you're learning your job. You hit on it a little bit in the automotive industry, where now some companies are offering tool credit and stuff like that. But have you seen it to the point now where maybe some of these either dealerships or tech shops are actually going as far as saying, look, we'll pay for your education, and you'll come work here after you're done, and you won't have any debt? Are you seeing any of that yet?

[00:08:40.020] - Jay Goninen

A lot more on the trucking side, and I think the automotive side is going to follow. And there's an an ample in our backyard here in Wisconsin that is doing this as we speak. So Truck Country is a... I've got some really good friends within Truck Country, started not too far away from where you and I grew up, Dan. I mean, it's down the road, but they've They've gotten gigantic, right? They have dealerships all over the Midwest, and they have actually started their own school in Dubuque. They actually have one in Dubuque and one in Indianapolis, where they're going into high schools and say, Hey, listen, not only are you not going to pay for your school, we're going to pay you to come to our school. So that kid comes out and gets that freightliner training or whatever that factory specific training is, and they're getting paid to be there to learn. So not only are they not paying for their school, they're getting paid to even be there.

[00:09:37.400] - Dan Paulson

I think that's going to be the future of all this, because as we hear about more kids graduating with those four year degrees that, as you point out, $40,000 to 50 thousand dollar a year jobs with $200,000 in debt that in most cases, these kids are never going to pay back the way it's structured. I think we're going to see a lot more of that in all sorts of trade industries. It's just going to continue.

[00:10:01.690] - Jay Goninen

Oh, I think, I mean, I've got friends that are pharmacists that hate being pharmacist, but you're going to be a pharmacist for the rest of your life because you have the student loan debt. That's the equivalent of a house payment, right? So I think, again, it's just truly knowing, and we've all been there. When you're a kid and you look at the jobs and what they pay, I'll do whatever it takes to make that money. And then when you're in it every day, you're like, And I love this as much as I thought I did.

[00:10:33.050] - Dan Paulson

Yeah, I think back when all of us went to college many, many, many, many years ago, it was a lot different. The cost was much lower. I know I changed my my major probably three or four different times. But at the same point, you could get away with that to some degree. There was a little bit of learning curve actually while you were going to school. But now there's such a push to get you out in that four to five years, and the cost has grown exponentially. I mean, that's the kicker for me. Times have changed so much. It didn't matter what you graduated in, you could use that degree for something. Now, because the cost is so extremely high, and markets are looking for more specialized people, that's what's making it more difficult to justify everybody going to a four year degree. And I got young kids. I know you got young kids, Rich, you were talking about just a minute ago. I think that's what us as parents are looking at now is, does the prestige of having a bachelor's degree, which actually isn't that prestigious anymore, it's now MBA or something higher if you're going that route, does that really make sense?

[00:11:41.600] - Dan Paulson

And I think we're all agreeing that in certain cases, yes, if you know where you're going and you know what you're going to do, that's fine. But there's a lot of other opportunities out there that we should be aware about.

[00:11:53.150] - Jay Goninen

Yeah, and I look my own family, right? I went to tech school. I went to trade school. My brother went to the University of Wisconsin as a really, really successful financial adviser. And I just think if we can get it through to the school counselors that there is more than one path, and that it's okay to go down whichever path is the best fit for you, you'll be better off. And one of the examples I use is one of my best friends went to UW Platteville to start off, was going to be an engineer, hated sitting behind a desk, ended up getting up and leaving after his first year and going into an electrician apprenticeship program, and has been highly successful off of that. So I do think it's just truly understanding who you are, and I think the parents can do a lot of good in guiding their young kids on what direction to go. And I know those teenagers probably don't want to hear what their parents have to say a lot of times, but I think having that-I can answer that one for you. Good on this conversation with them, I think, goes a long way.