Ford CEO Jim Farley meeting with authorized dealer next week to talk about their role in the company as the American automaker transitions to electric vehicles. Farley will try to get dealers to simultaneously cut up to $2,000 from the cost of each EV delivery, while also requiring dealers to make major investments in the company’s retail EV infrastructure, like Reuters report.
In July, Jim Farley told analysts Ford needed to cut sales and distribution costs to compete with Tesla and other electric vehicle manufacturers sell directly to customers without the need for dealers to act as a supplier or a party in between.
That means cutting EV delivery costs by $2,000 per vehicle, something Ford plans to do by setting prices and fixed fees, which dealers can’t change arbitrarily and by how to set up a “low inventory model”. Under this model, customers order from Ford themselves, and Ford delivers their electric car or truck.
Great resellers and franchises will still exist, strangely; they will only have fewer models and will have to focus on “selling products and services after the initial sale of the vehicle,” according to Farley.
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Dealers will have to install an undisclosed minimum of EV charger – can cost up to $500,000 – and other equipment needed to service electric vehicles. Farley says the model will prevent excess inventory from remaining in dealerships for weeks or months, and will save the company between $600 and $700 per vehicle.
That’s about a third of the money Ford needs to save to stay competitive with electric vehicle makers like Tesla and Tesla. Rivian, has completely walked away with the dealer. Much of Tesla’s retail network is on a single server, and the company has made service centers the sole physical point of contact for buyers. Legacy automakers like Honda’s motobike, Volvoand now Ford, is attracted to this model.
But dealers aren’t happy about having to spend more money to make less money per sale, and one of the big questions is that Ford expects dealers to set up and operate its EV infrastructure. how fast they are. Dealers also said they were worried about Ford placing a profit margin cap on electric vehicles under its sales-to-order model.
It looks like being a Ford dealer is about to become a little less lucrative in the short term, and while Ford struck a mild tone in a statement, speech it expects the meeting to discuss how to “grow” and “win-win” with its dealers, potentially pushing back.
