stronghold (F) Serious about her move to an electric car company, she’s now making sure her dealer network is on the same page.
Gone are the days of General Motors (GM) is its main competitor, as Ford CEO Jim Farley is now considered to be Tesla (TSLA) Its biggest competitor.
Ford began reorganizing its manufacturing operations. Internal combustion engine (ICE) cars or gasoline cars have separated from battery electric vehicles (BEV). The purpose of this reorganization is to allow Ford Model e, the new electric vehicle entity, to operate more like a start-up, i.e. more flexible and implement over-the-air updates while innovations are made.
But Ford knows its electric ambitions can be as powerful as its delivery network, and now it wants its dealers to pay for the upgrade.
Ford wants dealers until we will
Ford has unveiled plans to ask its roughly $3,000 dealers to invest $500,000, or $1.2 million, to install the upgrades needed to become “EV-certified.”
Dealers who choose the higher tier will get “elite” certification and more electric vehicles will be customized, but they’ll also be in trouble for $900,000 in upfront costs.
“We’re betting on dealers. We’re not going to go head-to-head. But we need to specialize,” CEO Jim Farley said, according to CNBC, after briefing dealers. I didn’t say it before, because I didn’t believe it was true, that you could be the most valuable franchisor in our industry.”
Funds will go towards training, out-of-home shipping infrastructure, e-commerce upgrades, remote delivery and pickup options, and upgrades toward the digital customer experience.
But 90% of the money will go to charging the infrastructure.
Ford dealers will have until October 31 to decide what they want to do and they will have until the end of the year to start investing.
Farley also said he wants dealers to reduce selling and distribution costs by $2,000 per vehicle in order to compete with the direct-to-consumer model that Tesla is successfully using.
So dealers have until the end of the year to see if they want to work with Ford going forward.
The first wave of e-dealer exclusivity will begin on January 1, 2024 and will run until December 31, 2026.
So, if a dealer decides that electric cars won’t sell as much in their area over the next few years, they can skip the first window, but there will be a second window for Model e certification starting in 2027.
Traders who want this certification program will need to commit by 2025.
Ford is betting big on electric cars as the company looks to take the lead in the Tesla market.
The company plans to invest $11.4 billion to build two new electric vehicle production facilities in Stanton, Tennessee, and Glendale, Kentucky, and another $525 million to train skilled technicians to service its new models.
Ford’s plan is to get half of its sales from electric cars by 2030 and says it will have the capacity to build more than two million electric cars a year by 2026. That would represent about a third of the company’s global production.