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By Sean Tucker
Dealerships will have to make a significant investment and agree to sell EVs without haggle pricing.
In September, Ford gave its dealerships an ultimatum: Commit to selling electric cars or lose the right to sell them. About two-thirds, the company says today, have bought into the plan.
Of Ford’s ( F ) roughly 3,000 franchised dealers, 1,920 have signed up for plans that require them to build new infrastructure to sell the vehicles. They also agreed to sell EVs at fixed prices without negotiation.
Commitment is not free. This required dealers to spend a lot of money to build the infrastructure to sell and service electric vehicles.
But those who don’t sign will lose the right to sell EVs for several years.
Dealers have a choice of two tiers. One level requires that they invest at least $500,000 and install a charger. At that level — called Certified — dealers win the right to sell 25 EVs a year. A higher level — Certified Elite — required them to invest at least $900,000, install two chargers (with one facing the public), and invest in additional staff training. Those dealers won the right to sell more EVs.
Check it out: Does driving an electric car really save you money? A cheapskate runs the numbers
Ford is less aggressive than most
The automotive industry is in the process of going electric. Four states have moved to ban the sale of new gas-powered vehicles by 2035.
Many foreign rivals have set a date for when they plan to sell their last gas-powered vehicle — often 2030. Domestic automakers haven’t gotten there yet, but some are even farther along than Ford. GM (GM), for example, plans to sell a mostly electric lineup by 2035.
See also: EU bans new gas-fueled cars from 2035
Ford resisted setting big public goals. Instead, the company introduced its first mass-market EVs while keeping the lineup gas-powered and making no commitments to one or the other.
Its all-electric Mustang Mach-E was a sales success. Dealers are struggling to keep the sporty electric SUV in stock
But its big bet is on the F-150 Lightning–an all-electric version of the company’s best-selling product, the F-150 pickup. Ford received so many reservations for Lightning trucks that it had a 3-year backlog and was forced to build new factory capacity to speed up production.
The plan sees pushback
However, not all dealerships are on board.
Dealers have had a bumpy ride despite the COVID-19 pandemic. They sold new cars at record prices. But they had trouble getting enough inventory to sell, because the lack of microchips left automakers making fewer cars.
That roller coaster meant many couldn’t easily shell out half a million dollars or more to meet the mandate.
Businesses in three states have sued the company, saying the mandate violates franchise laws.
See also: 2.1 million EVs and plug-in hybrids on US roads, and here’s how much gas they save
But rivals have stopped dealerships altogether
But Ford has a stick to go with the carrot of EV sales — Tesla’s ( TSLA ) example.
Tesla has a big lead in EV sales. Its Model Y SUV and Model 3 sedan are the two best-selling EVs in the world. Most months, Tesla sells more Model 3s than the rest of the industry selling EVs of all kinds — and the Model 3 is Tesla’s second best-selling car.
Tesla does everything without dealerships. The company sells cars online, delivers and services them through company-owned and operated stores.
See: Tesla finds loophole in states where dealerships are banned: Tribal lands
Ford CEO Jim Farley has openly mused about moving toward a similar model where dealerships exist to deliver and service cars. He took that off the table in exchange for dealers buying into the EV certification plan.
“We bet on the franchise system,” Farley said of the plan. “The No. 1 EV player in the US bet against dealers. We want to make the opposite choice.”
This story originally ran on KBB.com.
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(END) Dow Jones Newswires
12-12-22 0503ET
Copyright (c) 2022 Dow Jones & Company, Inc.
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