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Ford CEO Jim Farley poses next to a model of the all-new Ford F-150 Lightning electric pickup truck at the Ford Rouge Electric Vehicle Center in Dearborn, Michigan, April 26, 2022.
Rebecca Cook | Reuters
LAS VEGAS – Ford Motor is asking its nearly 3,000 dealers to invest upwards of $1 million in upgrades to sell all-electric vehicles, as the automaker tries to cut overhead costs and boost profits at its retailers to more in line with the EV-leader Tesla.
Ford offers its dealers the option of becoming “EV-certified” under one of two programs — with investments of $500,000 or $1.2 million. Higher-level dealers, who carry initial costs of $900,000, will receive “elite” certification and be given more EVs, executives said.
Dealers have until October 31 to make a decision and until the end of the year to make the investments.
It’s an effort to boost Ford dealers as the company aims to boost sales in its traditional and commercial businesses as well as EVs. Tesla and other electric car startups sell directly to consumers without franchised dealers.
“We’re betting on the dealers. We’re not going direct. But we have to specialize,” CEO Jim Farley told reporters Tuesday after briefing dealers on the plans. “The main message I have for dealers, which I’ve never said before, because I don’t believe it’s true, is that you can be the most important franchise in our industry.”
Ford’s plans to sell EVs have been a point of contention since the company split its all-electric vehicle business earlier this year into a separate division known as Model e. Farley said the automaker and its dealers need to lower costs, increase profits, and deliver better, more consistent customer sales experiences.
Ford F-150 Lightning trucks built at the Rouge Electric Vehicle Center in Dearborn Michigan.
Courtesy: Ford Motor Co.
Ford’s current lineup of all-electric vehicles includes the Ford F-150 Lightning pickup, Mustang Mach-E crossover and e-Transit van. The automaker is expected to roll out a litany of other EVs worldwide under plans to invest $50 billion in the technologies by 2026.
Farley wants Ford retailers to cut sales and distribution costs by $2,000 per vehicle to be competitive with the direct-to-consumer model.
“We’ve been studying Tesla very carefully for the past few years,” Farley said.
Wall Street analysts increasingly viewed direct-to-consumer sales as a benefit to optimize revenue. However, there are growing pains for Tesla when it comes to servicing its vehicles.
Farley hopes to increase its cost competitiveness before Tesla can scale up its local business — following the success of scale in Norway. Tesla did not immediately return a request for comment.
No buyouts
Ford, unlike its crosstown rival General Motorsallows dealers to opt out of selling EVs and continue to sell the company’s vehicles.
GM offered buyouts to its Buick and Cadillac dealers unwilling to shell out to sell EVs.
“There’s so much uncertainty. We don’t think it’s fair to force them to go on the EV journey or force them to buy,” Marin Gjaja, chief customer officer of Ford’s Model e electric vehicle business. “We think it’s really inappropriate because they have a healthy and strong, growing business. … We want them to make the choice.”
GM did not immediately return a request for comment.
About 90% of the initial investment costs are expected for the installation of EV chargers, including DC fast chargers that can cost $300,000 or more, according to Gjaja. Only a handful of Ford’s 2,991 dealers currently have high-speed chargers, he said.
Aside from investments, dealers who decide to sell EVs have to adhere to five criteria to stay in good standing: pricing is transparent and non-negotiable; investment charge; employee training; and an improved vehicle buying and ownership experience for the customer, both digital and in person.
Under the new framework, Ford and Farley require franchised dealers to specialize in either EVs, commercial vehicles or traditional internal combustion engines. Large dealers can continue to sell all product lines, but the CEO asks smaller stores to specialize in what fits their markets.
“We want people to take these standards that will be useful in implementing them,” Farley said, declining to forecast a target for EV dealer certification. “It’s not going to be good for the dealers or for the company if people take these standards and they don’t get a return on their investments.”
Tim Hovik, a Nevada dealer who chairs the Ford national dealership council that represents the company’s franchised retailers, said the plans have been well received.
“The dealer body wholeheartedly agrees with Jim’s assessment, we want to be the most important franchise out there. We’re big fans of that,” Hovik said. “It’s really about growth.”
Dealers who opted out of selling EVs this year will have a second chance to opt in in 2027, Gjaja said.
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