Ford sold its dealers on the idea of going on an epic journey into the electric vehicle world last year, but many have recently dropped out of the program.
The transformation to EVs looked promising, especially for Ford. The blue oval brand hit two immediate home runs with the F-150 Lightning and Mustang Mach-E electric vehicles. Unfortunately, this program isn’t as promising as dealers hoped, and nearly 400 locations have dropped out of the program. This could be a huge hit to Ford’s EV future and expansion. The slowing of V sales caused many dealers to take a step back and reevaluate their position in this new automotive market.
How can dealers back out of an automaker’s program?
Being a car dealer is a partnership between the location and the automaker. Like any other franchise, each location is individually owned and operated, with support and supply coming from the automaker’s assembly plants regularly. Certainly, the automaker can dictate that all dealers sell specific vehicles, but dealers also have the ability to join or drop out of specific programs as desired. This individuality is why you won’t find the same vehicle offerings at every dealership under the same automaker across the country.
How many Ford dealers initially joined the EV program?
As of December 2022, 1,920 Ford dealers were part of this program, most of them opting for the highest trim to take full advantage of everything Ford promised them Only 261 dealers opted for the lower program, which meant the Ford EV rollout looked promising and ready to deliver a strong presence in this part of the automotive market.
Those selecting the lower “Certified” tier were required to provide a $500,000 initial investment, and the program included repair and maintenance training and support and one public DC fast charger. The majority of Ford dealers chose the higher “Elite” tier, which required a $1 million investment. For this, dealers receive an additional fast charger, demo units, rapid replenishment, and a presence on Ford.com.
The EV market changed quickly
Although an initial strong push for electric vehicles propelled many Ford electric trucks and SUVs to the road, that has slowed, and sales are sluggish at best. Ford has recently begun to ease dealer requirements in the EV program, which has met criticism from many directions, including many dealers. In fact, 26 dealers in Illinois argued the EV program violated state laws and won a victory in court, enabling these dealers to leave the EV program.
How will Ford address these changes?
Ford dealers have been given the opportunity to change tiers or drop out as desired. The Model e program is supposed to remain voluntary and not forced. Ford has allowed dealers to leave the program or change tiers as desired. Still, these changes require a response.
The Ford EV program needs to keep up with Tesla and other direct-to-consumer EV brands. To make this happen, Ford is creating “retail replenishment centers” where Certified Elite dealers can replenish their stock of electric vehicles. This can help cut costs and improve the speed and efficiency in which dealers can supply desired EVs to customers.
These Elite locations will maintain limited stock for customer test drives, making it easy for consumers to continue to enjoy a traditional purchase experience without the inventory taking up space on the dealer’s lot.
What else should Ford do?
In order to create a traditional sales experience and remain competitive with Tesla, Ford needs to cut the prices of EV models. Remaining subscribers to the Model e program can provide an exceptional sales experience with answers to questions, giving consumers a more desirable sales experience than Tesla or other direct-sales companies.
In addition to providing member Ford dealers with the right tools to sell EVs quickly, Ford intends to improve the speed at which vehicles can get from the production line to customers. Currently, this might not be too difficult, but if electric vehicles become more popular and replace ICE vehicles, lag times could increase quickly.
Has Ford had to cut back?
Unfortunately, like all other automakers pushing EVs that are currently experiencing slow sales, Ford has cut back on production of its electric vehicles. The company has cut one of the three shifts at the EV plant in Michigan, where the F-150 Lighting is built. Ford also slowed some of the Mustang Mach-E production as well.
The trouble Ford faces is only one example of what’s happening in the electric vehicle market. Will automakers continue to push forward, or will EVs slowly leave the market because of the expense and lack of public desire for these vehicles?
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