Ford will challenge dealers to match Tesla’s lower selling costs | Daily News Byte

DETROIT, Sept 9 (Reuters) – Ford Motor Co(FN) Chief Executive Jim Farley will be in Las Vegas next week to roll out a strategy to convince dealers to shave up to $2,000 off the cost of delivering electric vehicle to a customer.

Ford told dealers that a key topic for the meetings will be a discussion of new agreements that will govern how dealers will sell Ford’s expanding lineup of electric vehicles.

Farley told analysts in July that Ford needed to shave $2,000 a vehicle from sales and distribution costs to be competitive with Tesla Inc ( TSLA.O ) and other electric vehicle startups that sell directly to consumers. consumers without franchised dealers.

About a third of those savings could come from what Farley calls the “low inventory model,” where customers order a vehicle and Ford ships it to the customer, rather than stockpiling vehicles on dealer lots for weeks or months.

“We think that’s about — worth maybe $600, $700 in our system,” Farley told analysts. Tesla can also quickly adjust prices on its website, and keep most of the profits from price increases.

Ford declined to comment other than to say “we are excited to meet next week with our North American dealers to grow and win together.”

Dealers said they expect Ford to outline minimum investments for charging stations and other equipment to support electric vehicle customers.

The main question is how quickly dealers will need to install the chargers, which dealers said could cost up to $500,000.

“Manufacturers right now are letting us get into it and I think Ford is going to do the same thing. You can’t just say, ‘Listen, we’re going to sell 2 million electric cars five years from now and we expect you to put in five superchargers,'” said Rhett Ricart, owner of Ricart Ford, a large dealership in Columbus, Ohio.

Tesla’s success in selling electric cars without franchised dealers is putting pressure on all established automakers to overhaul their retail networks.

Ford’s move to a Tesla-style build to order system may have limits on the profit margins dealers can make on a new car sale, some dealers said.

“I see dealer margins still being very good, but they’re going to move,” Farley said in July. Ford intends to put more emphasis on selling products and services after the first vehicle is sold, he said.

Dealers said the state’s franchise laws could give dealers the power to fight Ford’s efforts to set fixed prices or fixed fees for the delivery of electric vehicles.

Rival General Motors Co ( GM.N ) said last week it would offer buyouts to US Buick dealers unwilling to make the necessary investments as the brand moves to an all-electric lineup. GM has already spent $274 million to reduce the number of US Cadillac dealers. read more

Josh Sloan, the general manager who oversees two Ford stores and one Lincoln store for Michigan’s LaFontaine Automotive Group, said his company is willing to spend what it takes to switch to electric vehicles.

“I’m surprised there wasn’t a higher standard from Ford sooner,” Sloan said. “We’re moving into this really fast. If you’re not all-in, you’re going to lose.”

Reporting By Joe White and Ben Klayman Editing by Nick Zieminski

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