Why Auto Lenders Need a Direct Lending Strategy for the EV Era

For decades, auto loans have been synonymous with a buyer visiting the dealership, where financing options are presented. This traditional "indirect" lending model has worked well for both lenders and auto sellers. Lenders could access new loan assets without needing to invest in the infrastructure to acquire customers or manage the origination process. Meanwhile, dealerships earned extra revenue by facilitating loans on the lender's behalf, essentially acting as the middle-person in auto financing.

But with electric vehicles exceeding 8% of new vehicles sold in 2024, the world of auto lending is changing, and the direct-to-consumer (DTC) trend is reshaping how consumers buy cars and how lenders need to think about auto loans. According to McKinsey, 20-30% of auto loans are now issued directly to consumers, bypassing dealerships altogether—and this percentage is only expected to rise. Need EV manufacturer entrants, led by manufacturers like Tesla and Rivian, is pushing this trend further. With their direct sales models, EV automakers are cutting out traditional intermediaries, making it clear that the future of car sales—and financing—is increasingly digital and direct.

This shift presents both a challenge and an opportunity for credit unions and other auto lenders. The old model of relying on dealerships for loan origination is becoming less reliable. The pool of indirect loans is shrinking, leading to fierce competition and rate reductions. Lenders who fail to adapt could find themselves fighting for a dwindling market share.

A 2022 survey by Progressive found that 50% of respondents had purchased their vehicle online—a trend accelerated by the pandemic, but far from temporary. KPMG’s 2024 Global Automotive Executive Survey suggests that by 2030, more than two-thirds of auto sales will occur outside traditional dealerships. In fact, only 31% of sales will involve dealerships, while 25% will be DTC, 23% via digital retailers, and 21% through agencies. With Tesla and Rivian alone accounting for a significant share of EV sales in the U.S., this shift is happening right now.

For credit unions and other lenders, this means having a robust direct lending strategy isn't optional—it’s essential to staying competitive and maintaining auto lending as a cornerstone of member acquisition and retention.

Introducing electricOS: The Solution for Direct EV Lending

At EV Life, we recognize that while indirect auto lending will still have its place, the future of auto finance is direct. That’s why we developed electricOS, our EV-focused direct lending platform that helps credit unions and other lenders seamlessly step into the DTC auto finance world.

Since launching in 2023, our direct lending program has seen tremendous success, supporting the fast-growing EV market. With a remarkable Net Promoter Score (NPS) of 98 and five-star reviews on Google and Trustpilot, our platform is already proven to delight both lenders and borrowers alike.

electricOS is designed to integrate smoothly with your existing systems, allowing lenders to offer an easy, customer-centric loan process without overhauling their current infrastructure. But, perhaps more importantly, electricOS isn’t just about loan origination—it’s about long-term member engagement and retention. Our platform offers tools that can be used to build ongoing relationships with members, helping you deliver the kind of personalized experience that keeps them coming back. After all, the only thing better than acquiring a high-quality loan customer is doing it while creating a lasting relationship with a happy customer or member.

If you're ready to future-proof your auto lending strategy and tap into the growing EV market, now is the time to explore a partnership with EV Life. We’re here to help you not just survive the transition to direct lending but thrive in it.

Let’s Drive The Electric Future Together

As the auto industry continues its shift toward EVs and direct sales models, lenders have a unique opportunity to stay ahead of the curve. Let’s work together to create a direct lending solution that benefits your customers and your institution.

Reach out today to learn more about how electricOS can power your auto lending strategy for the EV era at: https://evlife.co/lending-partners