Due to many factors, electric vehicles suffered several setbacks in 2023. Last year, Ford asked its US dealers to upgrade their facilities to support the EV revolution or forgo their opportunity to sell electric cars from Ford. Although most followed through, they are now changing their minds due to the recent developments in the EV market.
The EV market has recorded a downward slope from automakers slowing EV production during the UAW strikes to used EV prices plummeting. In addition, satisfaction with the charging network dropped, and 1 in 5 early adopters returned to gas-powered cars. Consequently, hundreds of Ford dealerships are changing their minds about offering EVs.
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Despite the lapses in EV adoption, sources believe greedy franchise owners staged this dealership coup. In addition, it is a shortsighted shakedown of Ford Motor Co. However, if this continues, they might completely kill the franchise-owned dealership network.
The switch to electrification will be a costly undertaking. Also, automakers researching and developing new platforms will lose money for the first time in generations. In addition, there is a need to invest in charging stations and an army of technicians trained in repairing EVs. However, the government, automakers, and dealerships are not ready to foot the necessary bills.
Ford announced a “Model e Certified” program for dealerships that want to sell EVs. Although it is voluntary for other franchise owners, it is mandatory for dealers who want to sell Ford EVs. The program requires the dealerships to train technicians to work on EVs before selling them. In addition, it requires them to install DC fast chargers, as no one will buy an EV with a flat battery.
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Although Ford’s requirements were reasonable, the dissatisfaction with the charger network kept dropping. Experts believe charging is one of the main reasons people are getting rid of EVs.
According to reports, reaching the highest “Model e Certified” level could cost dealerships over $1 million. But average EVs also cost 40% more than comparable ICEs, and thus, dealership markups could increase if they play their cards right.
However, dealerships objected after Ford announced their requirements. Illinois dealerships even took Ford to court and won! Consequently, Ford cut the dealership contribution for training new techs in half.
In addition, they reduced the number of chargers each dealership must install and extended the deadline to meet these requirements. Unfortunately, 400 dealerships still dropped out of the program.
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Also, as part of the “Model e Certified” program, Ford is establishing a series of “retail replenishment centers” nationwide. However, experts say that with such an infrastructure, Ford could dramatically reduce or even eradicate its network of franchise-owned dealerships.
Consequently, the future of dealerships looks bleak in the electrification revolution. Aside from helping buyers navigate a complex EV market, dealerships play other vital roles.
They give buyers and owners a path to lodge complaints with a multinational conglomerate. However, startups like Tesla are replacing franchise-owned dealerships with corporate-owned “showrooms,” which threatens dealership businesses in the U.S.
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