Hybrid and electric vehicles have become more popular in recent years, and data suggests this trend is set to continue. These vehicles now account for almost a quarter of the market share in the US. As dealership inventories grow and consumers gravitate toward plug-in cars, it’s more important than ever for dealers to understand the unique aspects of EV service contracts.

This guide covers what dealers should know about electric and hybrid vehicle service contracts, including how EVs have changed the landscape, why product expertise matters, and how dealers can help customers understand their coverage.

Why EV and Hybrid Vehicles Are Reshaping the Industry

The availability and growing demand for EV and hybrid vehicles are reshaping the finance and insurance industry, including vehicle service contracts and what they cover. Conventional contracts were built for cars with internal combustion engines. While certain elements remain relevant to customers of dealers selling electric and hybrid vehicles, a few adjustments to a standard vehicle service contract may not be enough. Electric and hybrid vehicles have different components and advanced technology that can require specialized attention.

As a dealer in 2026 and beyond, it’s important to recognize how EVs are reshaping the industry and respond accordingly. Demonstrating expertise in EV service contracts can help you earn customer trust, explain contracts in plain language, and work with providers that offer appropriate coverage and responsive administrative support.

How Repair Costs Differ from Traditional Vehicles

One consideration for dealers offering electric vehicle protection plans is the difference in repair costs between hybrid and electric cars and vehicles with traditional internal combustion engines. Key areas to consider include routine maintenance, running costs, and repairs.

In many cases, electric cars cost less to maintain routinely. According to one comparison, maintenance and running costs are around 30% lower than those of petrol or diesel cars. EVs have fewer moving parts, and the absence of an internal combustion engine eliminates tasks such as oil changes and spark plug replacements.

Some EV repairs, however, can be more expensive. Factors may include:

• Specialized components
• Advanced technology and costly electronic systems
• Time-consuming battery safety inspections
• Components that can be difficult to source
• Limited availability of trained technicians
• The high cost of replacing a damaged battery

Common Misconceptions About EV Protection Products

Many people considering an electric or hybrid vehicle have previously owned only petrol or diesel cars. As a result, customers may arrive at a dealership with questions or misconceptions about EV protection plans. Some assume EV service contracts are the same as traditional plans. Others may think F&I products for EVs are unnecessary because these vehicles have fewer moving parts.

Dealers can help by providing clear, accurate information about common misconceptions:

1. Traditional service contracts are fine for electric cars

EV and hybrid vehicles have different components and repair considerations. Dealers should review the specific terms of a vehicle service contract to determine whether it addresses those differences.

2. EVs don’t need service contracts

Fewer moving parts do not eliminate the possibility of repairs. Customers should consider the cost of potential repairs and which components a particular contract covers.

3. EV warranty coverage always includes battery protection

Warranty terms vary. Dealers should be prepared to explain what the manufacturer’s warranty and any additional service contract cover, including battery-related components, performance requirements, and applicable thresholds or exclusions.

Why Customer Education Matters More Than Ever

Customers looking for a new car are increasingly interested in hybrid and electric vehicles. Despite the growing number of EVs on the road, many buyers enter the process with limited knowledge and plenty of questions. For some, a dealership visit is their first opportunity to learn how an electric car works. Dealers can influence how customers feel before, during, and after the purchase, including how they evaluate vehicle protection plans and F&I products.

Customer education can help in several ways:

1. Reducing uncertainty

Customers exploring EVs for the first time may have questions about how they work and what a service contract covers. Clear explanations can address misconceptions and help customers make informed decisions.

2. Building trust

Some buyers are eager to purchase an electric car, while others are hesitant. Knowledgeable answers and transparent advice can help establish confidence and support a lasting customer relationship.

3. Explaining EV coverage

Customer education can help buyers understand the terms of an EV or hybrid vehicle service contract, how it differs from other products, and what coverage may be available during ownership.

4. Supporting customer loyalty

Trustworthy advice can strengthen the dealership relationship. Dealers should explain product benefits and limitations clearly, including considerations involving advanced components, battery performance, and access to qualified technicians.

Service Contract Considerations for Emerging Technologies

Vehicle technology continues to evolve, creating new considerations for service contract providers. As EV systems change, administrators and dealers need to keep their product knowledge current.

Areas to consider include:

• High-voltage batteries and related components
• Software changes and updates
• Advances in vehicle electronics
• Tire wear associated with vehicle weight and use
• Access to technicians with the training required for specialized repairs

EV service contracts should state clearly what is covered while accounting for changes in vehicle technology.

How Dealers Can Prepare for Changing Consumer Questions

The rising popularity and availability of electric and hybrid vehicles have changed the questions consumers ask about buying and owning cars. Alongside familiar questions about maintenance, dealers may now hear more about batteries, warranties, charging systems, and hybrid components.

Dealers can prepare by learning the terms of the EV service contracts they offer, understanding common ownership concerns, and identifying questions customers are likely to raise. Research, product training, and knowledgeable administrative partners can help staff provide clearer answers.

The Growing Importance of EV Expertise in F&I

As EV adoption grows, F&I teams are more likely to speak with customers about electric vehicle protection plans and warranties. Training can help dealers:

• Provide accurate, reliable information
• Explain warranties and protection plans clearly
• Build trust with customers
• Help buyers make informed decisions
• Understand how EVs and hybrids differ from traditional vehicles
• Keep up with changes in vehicle technology
• Address questions about repair costs, coverage, and customer expectations
• Prevent confusion about product terms and limitations

Looking Ahead at the Future of Vehicle Protection

The automotive landscape continues to change, and vehicle protection products may need to evolve with it. Considerations for service contract providers and dealers include:

1. Products designed for electric and hybrid vehicles
2. Clearly defined coverage for high-voltage batteries and electronic components
3. Plans that reflect different vehicle uses and customer needs
4. Software and cybersecurity developments
5. New safety technology and its effect on repairs
6. Applicable state, regional, and national F&I requirements

Final Thoughts

As hybrid and electric vehicle inventories grow, dealers need to understand how service contract terms apply to these vehicles. Customers benefit from clear explanations of coverage, exclusions, warranties, and potential repair costs. By building EV expertise and reviewing products carefully, dealers can answer questions confidently and help buyers choose protection that fits their needs.