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 dealerships to invest more than $1 million in upgrades to sell all-electric vehicles, as the automaker tries to cut overhead and increase its retailers’ profits to better align Tesla, the leader in electric vehicles.
Ford is offering its dealers the option to become “EV Certified” under one of two programs – with investments of $500,000 or $1.2 million. Top-tier dealerships, which incur upfront costs of $900,000, will receive “elite” certification and be awarded more electric vehicles, executives said.
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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 elevate Ford dealerships as the company seeks to increase sales in its traditional and commercial businesses as well as electric vehicles. Tesla and other EV startups are selling directly to consumers without franchised dealerships.
“We’re betting on dealers. We’re not going to go straight. But we have to specialize,” CEO Jim Farley told reporters on Tuesday after briefing dealers on the plans. “The main message I have for dealers, which I’ve never said before because I didn’t believe it was true, is that you could be the most valuable franchise in our industry.”
Ford’s plans to sell electric vehicles have been a point of contention since the company spun off its all-electric vehicle business earlier this year into a separate division known as Model e. Farley said the automaker and its dealerships need to reduce costs, increase profits and provide customers with better and more consistent sales experiences.
Ford F-150 Lightning trucks manufactured at the Rouge Electric Vehicle Center in Dearborn, Michigan.
Courtesy of 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 launch a litany of other electric vehicles around the world as part of a plan to invest $50 billion in technologies by 2026.
Farley wants Ford retailers to cut sales and distribution costs by $2,000 per vehicle to compete with the direct-to-consumer model.
“We’ve studied Tesla very carefully over the past few years,” Farley said.
Wall Street analysts have widely viewed direct-to-consumer sales as an advantage for maximizing profits. However, Tesla has experienced increasing difficulties when it comes to servicing its vehicles.
Farley hopes to increase its cost competitiveness before Tesla can expand its domestic business further – after the scale success in Norway. Tesla did not immediately return a request for comment.
Ford, unlike Crosstown rival General Motors, allows dealerships to opt out of selling electric vehicles and still sell the company’s cars.
GM has offered buyouts to its Buick and Cadillac dealers who don’t want to shell out to sell electric vehicles.
“There’s too much uncertainty. We don’t think it’s fair to force them on the journey to electric vehicles or to force them to buy out,” Marin Gjaja, EV business chief customer officer Ford model e. “We think it’s really unnecessary because they have a healthy, strong, growing business… We want them to have a choice.”
GM did not immediately return a request for comment.
According to Gjaja, around 90% of initial capital costs should be for installing EV chargers, including DC fast chargers that can cost $300,000 or more. Only a few dozen of Ford’s 2,991 dealerships currently have high-speed chargers, he said.
In addition to investments, dealers who choose to sell electric vehicles will need to meet five standards to stay in good standing: clear, non-negotiable prices; invoicing of investments; employee training; and improving the customer experience of buying and owning vehicles, both digitally and in person.
Under the new framework, Ford and Farley require franchise dealerships to specialize in electric vehicles, utility vehicles or traditional internal combustion engines. Large retailers can continue to sell all product lines, but the CEO is asking smaller stores to specialize in what suits their markets.
“We want people to adopt these standards that will be profitable to execute,” Farley said, declining to set a target for electric vehicle dealership certification. “It won’t be good for the dealers or the business if people adopt these standards and they don’t get a return on their investment.”
Tim Hovik, a Nevada dealer who heads the National Ford Dealer Council that represents the company’s franchised retailers, said the plans were well received.
“The dealer body is in complete agreement with Jim’s assessment, we really want to be the most valuable franchise in the market. We’re big fans of it,” Hovik said. “It’s really about growth.”
Dealers who opt out of selling electric vehicles this year will have a second chance to do so in 2027, Gjaja said.