Ford reverses course, allows all dealers to sell EVs amid slower sales

In a strategic shift, Ford Motor Co. has announced that all its dealers will soon be able to sell electric vehicles (EVs), a move aimed at boosting slower-than-expected EV sales. This change, effective from July 1, marks a significant departure from Ford’s previous selective allocation system.

COMMERCIAL BREAK

SCROLL TO CONTINUE READING

In late 2022, Ford introduced stringent requirements for dealers wishing to sell its EVs, including models like the F-150 Lightning and Mustang Mach-E. Dealers were required to invest between $500,000 to $1 million in charging infrastructure and training programs. These investments were meant to ensure that dealers could adequately support EV sales and educate customers about the new technology. Approximately half of Ford’s 2,800 dealers enrolled in this program.

Rationale behind the change

Marin Gjaja, Chief Operating Officer for Ford’s EV business, explained the reasoning behind the new approach. “We want to make these great vehicles more accessible to everyone,” he stated. Gjaja emphasised that simplifying the process of introducing EVs could help remove perceived barriers for both dealers and customers.

Dealers had previously been required to meet specific training standards and install chargers to prepare their staff for the complexities of EV ownership. Ford CEO Jim Farley had stressed that dealers would be held to high standards to remain competitive and serve customers effectively during the transition to EVs.

Also read: Tesla reinstates FSD transfers for another quarter

Challenges in the EV transition

The transition to EVs has proven to be more challenging than many automotive executives anticipated. While Ford has prioritised the production of hybrid vehicles, their sales growth has outpaced that of pure EVs. From 2022 to 2023, Ford’s hybrid sales increased by 25.3%, whereas EV sales grew by only 17.9%.

New players in the EV market, like Tesla, sell directly to consumers, bypassing traditional dealerships and gaining a financial edge over legacy automakers. Farley has noted that Ford spends about $2,000 more per vehicle than Tesla due to its franchise dealer model.

Dealer reactions

The new policy has received mixed reactions from dealers. Those who invested heavily in the required infrastructure feel let down by the sudden policy reversal. Some dealers have struggled to move EVs off their lots and are even refusing shipments of new electric models due to the difficulty of selling them at a profit.

Scott Kunes, Chief Operating Officer of a Midwest dealer group that sells Ford vehicles, expressed his concerns. His group invested in the necessary infrastructure only at their two largest locations in Wisconsin and Illinois, anticipating limited demand for EVs. “The dealers have been kind of screaming from the sidelines for a while here that the EV demand is just not there,” Kunes said. While he appreciates Ford’s decision to make EVs available to all dealers, he believes it comes too late to address the challenges dealers face.

Looking ahead

Ford’s decision to allow all dealers to sell EVs reflects an ongoing adjustment to market realities. By broadening access to EVs, Ford aims to accelerate sales and enhance customer adoption of electric vehicles. However, the company must also address the concerns of dealers who have invested significant resources under the previous program.

As the automotive industry continues to evolve, Ford’s move highlights the balancing act between innovation and practicality. The success of this strategy will depend on how well Ford can support its dealers and customers through the transition to electric mobility.

(Inputs from Reuters)