Ford dealers who want to sell EVs will have to spend money to make money

Ford outlined a series of requirements for its dealers who want to sell the automaker’s electric vehicles, such as setting no-haggle prices and investing upward of $1.2 million in upgrades like charging, according to Automotive News. The company framed the investments as necessary if Ford is to compete with — and perhaps overtake — direct-sale competitors like Tesla.

Dealers were given until October 31st to opt in to two EV certification tiers, with varying investment levels into charging and staff training. Dealers in the higher tier, which carries upfront costs of $900,000, will receive “elite” certification and be allocated more EVs, executives said. Those dealers who don’t opt in will be relegated to selling the company’s legacy internal combustion engine and hybrid vehicles.

Most of the money will be spent on installing on-site DC fast chargers, one of which is required to be public-facing for customers. Installing EV chargers can be expensive, depending on the level of charging that’s being offered. The higher the level, the quicker the charge and the more expensive it is to install. A public Level 2 charger might cost $2,000 out of the box, but a DC fast charger of 150kW or more can cost between $100,000 and $250,000. Only a few dozen of Ford’s nearly 3,000 US dealers currently have the high-speed chargers.

The ultimatums came nearly six months after Ford split its company into two divisions, one focused on its legacy internal combustion engine vehicles and the other on the products it views as its future, like the F-150 Lightning and Mustang Mach-E.

Ford delivered these new rules at a dealership conference in Las Vegas this week, at which the company was expected to urge dealers to cut as much as $2,000 from the cost of delivering an EV to a customer. The cost reduction is seen as crucial to help the automaker better compete with Tesla.

Of course, Tesla outsells Ford by a wide margin, owning some 75 percent of the EV market in the US. The Tesla Model 3 and Model Y are the two top-selling EVs, followed by the Ford Mustang Mach-E — but it’s a distant third, with 6,734 Mach-E deliveries during the first quarter of 2022 compared to 46,707 units for the Model 3.

At the conference, Ford told its dealers that EV prices were to be non-negotiable and that dealers would not be allowed to carry plug-in vehicles in inventory. Ford is trying to get a better handle on dealer markups, which it views as a barrier to higher sales and more customers buying into the company’s vision of an all-electric future. The average selling price for an EV is currently around $66,000 — about 40 percent more than a gas-powered vehicle.

“We’re betting on the dealers. We’re not going to go direct. But we need to specialize,” CEO Jim Farley told reporters Tuesday after briefing dealers about the plans, according to CNBC. “The main message I have for the 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 isn’t completely blameless when it comes to EV sticker shock. The automaker recently jacked up the price for both the F-150 Lightning and Mustang Mach-E, citing supply chain constraints and “rapidly evolving market conditions.”

Ford doesn’t plan on following General Motors brands like Cadillac and Buick in offering buyouts to dealers who don’t want to make the upfront investments to sell EVs.

“We think it’s really uncalled for because they have a healthy and strong, growing business … We want them to have the choice,” Marin Gjaja, chief customer officer of Ford’s Model e electric vehicle business, told CNBC.