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Ford Motor Co. is facing legal challenges to its dealer certification program for electric vehicles from retailers in three states who argue the plan violates franchise laws.
A group of 27 Illinois dealerships filed a protest with the state’s motor vehicle review board on Friday, and four New York dealers filed a lawsuit against the automaker earlier this week. Those actions come after the Arkansas Automobile Dealers Association filed a formal complaint in October against the manufacturer with that state’s motor vehicle commission.
These are believed to be the first legal actions taken against Ford in opposition to the certification program. Dealer associations in at least 14 states have written letters to Ford demanding changes, and earlier this week the plans drew rebukes from US Sen. Richard Blumenthal, D-Conn., and several state lawmakers.
Ford set a Friday deadline for dealers across the US to decide whether to invest up to $1.2 million in chargers, training and upgrades the company requires to sell EVs after next year. Dealers who want to sell EVs will also have to agree to new sales standards aimed at overhauling the retail experience, including setting non-negotiable prices.
The New York lawsuit alleges that Ford’s EV certification program included “unlawful franchise changes, unfair pricing requirements, margin cuts, and unlawful allocation systems. “
Under New York law, such a suit could trigger an automatic stay of Ford’s certification program there until a judge rules on the matter, according to Rich Sox, one of the attorneys representing dealers. Clarification on whether to end the program could come within months, Sox said Automotive News.
The New York plaintiffs argue that the provision in the program that prohibits dealers from selling future EVs if they do not meet one of the two certification tiers is unconstitutional.
“Each dealer under the current franchise agreement is entitled to every Ford vehicle produced with a nameplate on it, including the latest EVs,” Sox said in an interview. “They are entitled to their fair allocation of those vehicles based on their market size, sales history, etc. It’s about making sure that all dealers have access to EVs and aren’t locked into one of the three category arbitrarily created by the program.”
Ford, in an emailed statement, said the certification program “complies with all relevant laws” but declined further comment because of the pending litigation.
Dealers who do not want to obtain the highest level of certification can choose to spend $500,000 but will be allowed to sell no more than 25 EVs a year. Ford noted that investment figures may vary based on federal and state incentives.
Retailers that do not participate are limited to selling only gasoline-powered models and hybrids.
“A dealer that loses the ability to sell and service EVs — the future of the auto industry — will soon find itself unprofitable and eventually out of business,” the plaintiffs in the New York case wrote.
The protest in Illinois and the complaint in Arkansas raised similar points.
“Ford willfully withhold new and potentially profitable products from dealers, where they have an existing contractual and statutory right, unless dealers agree to extreme, unreasonable, and anti-franchise which conditions Ford insists on,” Illinois dealers said. “To be sure, there is nothing ‘voluntary’ about Ford’s illegal take-it-or-leave-it program.”
Arkansas’ complaint argues that the costs are excessive. Ford responded last month to the Arkansas complaint, contesting allegations that the program is illegal as “nonsense.”
“The AADA is incorrect that the voluntary program goes beyond what is reasonable,” wrote Ford attorney Steven Kelso. “Instead, the voluntary program sets out what is a reasonable and minimal requirement for dealers to effectively sell and service EVs.”
For dealers who didn’t opt into the program by Friday’s deadline, Ford said it will provide another chance to do so in 2025. The automaker declined to say how many dealers have agreed to participate so far. .
“Ford aims to capture customers through the new EV business – an opportunity for the company and dealers to grow together,” Ford said in a statement on Friday. “To do this, Ford and its dealers must take reasonable steps to better serve our existing and future EV customers to compete against startups and legacy OEMs in a rapidly changing of the market.”
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