Ford has set out a series of requirements for its dealers who want to sell the automaker’s electric vehicles, such as no-haggle pricing and investing more than $1.2 million in upgrades such as the recharge, according to Automotive News. The company has defined the investments as necessary if Ford is to compete with — and possibly surpass — direct-selling rivals like Tesla.
Dealers had until October 31 to opt for two levels of EV certification, with varying levels of investment in charging and staff training. Top-tier dealerships, which incur upfront costs of $900,000, will receive “elite” certification and be awarded more electric vehicles, executives said. Dealerships that don’t participate will be relegated to selling the company’s legacy internal combustion engines and hybrid vehicles.
Most of the money will be spent on installing DC fast chargers on site, one of which must be publicly accessible for customers. Installing EV chargers can be expensive, depending on the level of charge offered. The higher the level, the faster the charge and the more expensive the installation. A public Tier 2 charger might cost $2,000 by default, but a DC fast charger of 150 kW or more might cost between $100,000 and $250,000. Only a few dozen of Ford’s approximately 3,000 US dealerships currently have high-speed chargers.
The ultimatums came nearly six months after Ford split its company into two divisions, one focused on its legacy internal combustion engine vehicles and the other on products it sees as its future, such as the F -150 Lightning and the Mustang Mach-E.
Ford introduced the new rules at a dealer conference in Las Vegas this week, where the company was to urge dealers to reduce the cost of delivering an electric vehicle to a customer by up to $2,000. Cutting costs is seen as crucial to helping the automaker better compete with Tesla.
Of course, Tesla outperforms Ford by a wide margin, owning about 75% of the electric vehicle market in the United States. The Tesla Model 3 and Model Y are the two best-selling electric vehicles, followed by the Ford Mustang Mach-E – but it’s a distant third, with 6,734 Mach-E deliveries in the first quarter of 2022 compared to 46 707 units for the Model 3.
At the conference, Ford told its dealers that prices for electric vehicles should not be negotiable and that dealers would not be allowed to carry plug-in vehicles in stock. Ford is trying to better manage dealer profit margins, which it sees as a barrier to increasing sales and getting more customers to buy into the company’s vision of an all-electric future. The average selling price of an electric vehicle is currently around $66,000, or around 40% more than a gas-powered vehicle.
“We bet on the dealers”
“We bet on the dealers. We will not go directly. But we have to specialize,” CEO Jim Farley told reporters on Tuesday after briefing dealers on the plans, according to CNBC. “The main message I have for dealers, which I’ve never said before because I didn’t believe it was true, is that you could be the most valuable franchise in our industry.”
Ford isn’t completely faultless when it comes to EV sticker shock. The automaker recently raised the price of the F-150 Lightning and Mustang Mach-E, citing supply chain constraints and “rapidly changing market conditions.”
Ford doesn’t plan to follow General Motors brands like Cadillac and Buick in offering buyouts to dealers who don’t want to make the upfront investment to sell electric vehicles.
“We think it’s really unnecessary because they have a healthy, strong growing business… We want them to have a choice,” Marin Gjaja, chief customer officer of the Model electric vehicle business, told CNBC. e from Ford.