During its annual dealership meeting in Las Vegas, Ford unveiled new rules for selling EVs under its Model E business unit that could put an end to markups and haggling—although they require significant upfront investment by dealers.
Ford earlier this year split itself into three business units, with Model E focused on electric passenger vehicles on software, Ford Pro handling commercial vehicles, and Ford Blue Oval encompassing internal-combustion passenger vehicles—including hybrids and plug-in hybrids.
Dealers have until October 31 to decide if they want to be part of the first group of Model E stores. They will have another opportunity to sign on at a later date, or they can opt out of Model E completely and continue working with the Ford Pro and Blue Oval business units.
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Those that do get on board with Model E will have to make changes to the way they operate, as well as upgrades based on two dealership tiers—Certified and Certified Elite.
In an outline of the new dealership rules provided to Green Car Reports, Ford said the lower-tier Model E Certified dealerships must install at least one public DC fast charger, while Certified Elite stores must have at least two public DC fast chargers, plus additional chargers for customers.
Ford estimates Model E Certified dealerships will spend an average of $500,000 on these upgrades, while Certified Elite dealerships that get a direct connection to Ford.com direct sales will spend $1 million to $1.2 million to meet requirements for that tier. Ford expects charging infrastructure to account for 90% of upgrade costs in both cases.
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And while Ford is sticking with franchised dealerships rather than moving to Tesla-like direct sales, the Model E spinoff will mean non-negotiable EV prices and fewer vehicles in stock.
"Transparent, non-negotiable pricing is part of our customer experience across Certified and Certified Elite," Model E spokesperson Marty Ginsberg confirmed to Green Car Reports.
Ford CEO Jim Farley said earlier this year that he sees these changes as a step for the health of the automaker in the face of what he anticipates will be "a huge price war" and era of "democratized EVs."
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For now, dealerships that don't jump on the Model E bandwagon will have to stop selling that business unit's vehicles effective January 1, 2024. Ford will offer another recruitment opportunity, but dealers that sign on that later date won't be able to sell Model E vehicles until January 2027.
While GM has been offering buyouts for Cadillac and Buick dealers uninterested in those brands' electric future, Ford is taking a different approach, essentially offering a middle tier between all-EV sales and forcing dealers to give up their franchises. In an interview with CNBC this morning, Model E chief customer officer Marin Gjaja reiterated that point.
"We don't think it's fair to force them to go on the EV journey or force them into a buyout," he said in reference to dealers' pending decision to invest in upgrades and an altered business model or opt out of selling Ford electric cars.