Ford is reviewing dealer requirements for selling electric vehicles

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It was a big shock at the time. In September of 2022, Ford CEO Jim Farley issued an ultimatum to its dealers – invest in the equipment and training needed to successfully sell electric vehicles or you will be shut out. No electric vehicles for you! It was a bold move by Ford, which may have been designed in part to wake up its dealers to the fact that the automotive world was changing and they had better change with it or be wiped out by the coming tidal wave of electric vehicles.

Farley committed a cardinal sin. He did not consult with the merchants. Instead, he dropped a bomb on them and told them to get in line within 60 days or be excluded from selling electric cars. People don’t like being told what to do, especially when the cost of compliance is estimated at between $500,000 and $1 million. A big part of that was the requirement that each dealer install two DC fast chargers that would be available to the general public. These chargers are expensive, but that’s just the beginning. Getting enough electricity to run would mean installing new supply lines and transformers, which would cost a lot of money. Then there’s the issue of the demand fees that utility companies charge to provide all that electricity.

In addition to charging equipment requirements, Ford has also asked its dealers to invest in new tools and training for its service departments so they are prepared to support the needs of customers who have purchased electric vehicles from them. This equipment and training meant another large sum of money that the merchants had to come up with. The dealers refused and some of them sued Ford.

Then a strange thing happened on the way to the electric car future. Suddenly, all everyone was talking about was how people didn’t really want to buy as many electric cars as expected, and how the electric car revolution could be over before it really starts. Today, Ford commercials emphasize that the company offers its customers a choice between conventional, hybrid and electric modes. In September 2022, the word “hybrid” is almost unheard of when it comes to Ford Motor Company.

Ford adjusts its sales program for electric cars

According to Business Insider, Ford has backed down on its requirements for its dealers. Now, instead of DC fast chargers, Level 2 chargers will be needed. Instead of several levels of dealers with different access to electric vehicles, all Ford dealers are now welcome to sell electric vehicles, according to a release. About Marine Gegaja, Ford’s chief operating officer, last week. Ford dealers will no longer be required to invest in certifications to have electric vehicles in their lots, which will open up electric vehicle sales to the entire dealer network. Jigaga said the change in plans aims to increase the company’s electric vehicle sales.

The previous aggressive purchasing program was based on optimistic EV sales expectations that dealers would return their investments as EVs increased in popularity. Gigaga said that a lot has changed in the electric vehicle market in the United States since the fall of 2022, and growth in this sector has not occurred as Ford initially expected. Electric vehicle sales slowed last year. These cars are still on the rise, but at a slower rate than the growth spurt that occurred between 2020 and 2022. With wealthy early adopters largely saturated, car companies are now trying to attract a new group of electric car shoppers who are more economical and practical. B says.

Ford dealers were among the first to sound alarm bells about this slowdown when some stores began rejecting Mustang Mach-E allocations last summer. Later, dealers began reporting issues with demand for the F-150 Lightning, eroding Ford’s relationship with its dealers. Even before the slowdown in electric vehicle sales, many Ford dealers were dissatisfied with the high entry prices for selling electric vehicles. Several dealer associations have filed lawsuits related to the program, and in Illinois the board ruled in favor of dealers’ claim that Ford’s EV certification program violates state laws. As of December last year, just over half of Ford’s roughly 3,000 U.S. dealers had chosen not to comply with the electric vehicle investment requirement, an early sign that the program had backfired.

Since then, Ford and other major automakers have gone back to the drawing board on their electric vehicle strategies. Ford says it will soon offer more hybrid models as GM prepares to add additional hybrid offerings across its lineup. Ford dealers will still need to make some investments to support EV sales in their lots, but they will no longer be bound by the $500,000 minimum investment as was originally the case.

The electric car revolution is still going strong

Credit: Bloomberg

So what’s going on here? Is the electric car revolution still on track or has it gone off track? The answer to this question depends a lot on where you focus. Tesla is the face of the electric vehicle revolution and has seen some alarming sales numbers in the past two quarters. There are reports of unsold Tesla cars being stored in large parking lots in the US, Australia and Germany. The second quarter of 2024 ends in a few weeks and then we will have a better idea of ​​whether Tesla sales are in full decline or if the past two quarters were just an aberration.

As Zachary Shahan recently reported, EV sales in the US are growing very well for many manufacturers, especially Ford and Hyundai/Kia. Overall, six of the top 10 U.S. auto brands saw electric vehicle sales grow by 50 percent or more in the first quarter of this year. Globally, electric vehicle sales rose 25 percent in April. One thing that many people ignore is that the so-called S curve is not just one event. It consists of several sectors, each of which assumes continuous innovation.

With all due respect to Elon Musk, Tesla hasn’t introduced a new mass-market vehicle since the Model Y debuted in the U.S. in March 2020. That’s forever in the automotive world. By contrast, Hyundai/Kia has more than a dozen battery-electric and hybrid-powered models for sale in the U.S., with more on the way. Tesla’s model lineup is old, and although Musk hinted this week that new models are coming, we’ve learned that the promises Musk makes are often two to five years away from being fulfilled. Meanwhile, Tesla has failed to innovate and is paying the price.

Ready meals

It is painful to see the American auto industry trying to transition to electric vehicles. There seems to be no plan. It’s either full speed ahead or full stop. Right now, Ford and GM are in deep decline while the market is actually growing nicely. One gets the impression that these big companies are just making it up and exaggerating in many cases.

Are American buyers really demanding more hybrid cars based on 20-year-old technology? Will Toyota really be the turtle that wins the race? The answers to these questions will not be known for years. All we can be sure of is that the automobile industry in 2030 will be very different than it is today. It may be best to keep your seat belt fastened until the ride has come to a complete stop.

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