Ford asks dealers to invest in electric vehicles because it chases profits like Tesla

Ford CEO Jim Farley poses next to 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 up to $1 million in upgrades to sell all-electric vehicles, as the automaker tries to cut costs and boost profits at its dealerships. its retailer to better match the EV-led Tesla.

Ford is offering its dealers the option of becoming “EV certified” under one of two programs — with an investment of $500,000 or $1.2 million. Dealers at the higher tier, which have an upfront cost of $900,000, will receive an “elite” certification and be allocated more EVs, the executive said.

Dealers have until October 31 to make a decision and until the end of the year to make investments.

It’s an effort to elevate Ford’s dealerships as the company seeks to increase sales across its commercial and traditional businesses as well as electric vehicles. Tesla and other electric vehicle startups sell directly to consumers There are no authorized dealers.

“We’re betting on dealers. We won’t be direct. But we need specialization,” Chief Executive Officer Jim Farley told reporters Tuesday after informing dealers about the deal. plan. “The main message I have for resellers, which I’ve never said before, because I don’t believe it’s true, is that you can be the most valuable franchise in their industry. I.”

Ford’s plan to sell electric vehicles has been a point of contention since the company separate from its purely electric vehicle business earlier this year into a separate division called the Model e. Farley said automakers and their dealers need to reduce costs, increase profits and deliver a better, more consistent sales experience for customers.

The Ford F-150 Lightning truck is manufactured at the Rouge Electric Vehicle Center in Dearborn Michigan.

Licensed: Ford Motor Co.

Ford’s current line of all-electric vehicles includes the Ford F-150 Lightning pickup, the Mustang Mach-E crossover and the e-Transit van. The automaker is expected to release another series of electric vehicles globally under the investment plan 50 billion dollars in technology in 2026.

Farley wants Ford retailers to cut sales and distribution costs by $2,000 per vehicle so they can compete with the direct-to-consumer model.

“We’ve been doing a lot of research on Tesla over the past few years,” Farley said.

Wall Street analysts have largely viewed direct-to-consumer selling as a profit-optimizing boon. However, it is increasingly difficult for Tesla when it comes to servicing its vehicles.

Farley hopes to increase cost competitiveness before Tesla can scale its domestic business — following its success in scale in Norway. Tesla did not immediately respond to a request for comment.

Do not buy again

Ford, unlike its crosstown rival Synthetic engineallows dealers to opt out of selling electric vehicles and continue selling company vehicles.

GM provided purchases for its Buick and Cadillac dealers without wanting to go out to sell electric cars.

“There’s so much uncertainty,” said Marin Gjaja, customer manager for Ford’s Model e electric vehicle business. “We think that’s really amazing because they have such a healthy and strong growing business. … We want them to have a choice.”

GM did not immediately return a request for comment.

According to Gjaja, about 90% of the upfront investment costs are expected to go towards installing EV chargers, including DC fast chargers that cost $300,000 or more. Only a few dozen of Ford’s 2,991 dealerships have high-speed chargers, he said.

In addition to investments, dealers that choose to sell electric vehicles will need to adhere to five standards to stay in good shape: Clear and non-negotiable pricing; investment fee collection; Employee training; and improve the vehicle ownership and buying experience for customers, both digitally and in person.

Under the new framework, Ford and Farley are asking franchisees to specialize in electric vehicles, commercial vehicles or traditional internal combustion engines. The larger dealers can continue to sell all product lines, but the CEO is asking the smaller stores to specialize in what is right for their market.

“We want people to follow these standards to benefit from implementing them,” Farley said, declining to forecast the goal of electric vehicle dealer certification. “It’s not good for agents or for the company if people follow these standards and they don’t get a return on their investments.”

Tim Hovik, a dealer in Nevada who heads Ford’s national dealer council, which represents the company’s franchised retailers, said the plans have been well received.

“The agency completely agrees with Jim’s assessment, we very much want to be the most valuable franchise on the market. We’re a big fan of that,” Hovik said. “It’s really all about development.”

Dealers that choose not to sell electric vehicles this year will get a second chance to opt in, Gjaja said.

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