The new program requires that dealers integrate outside EV specialists for sellers and customers, build speedy charging infrastructure onsite, include ancillary perks such as car delivery or software upgrades via subscription models, and most strikingly, what Ford calls “transparent, non-negotiable pricing.” Although dealerships will be able to set prices, Ford says they will be monitoring car prices to ensure customers are paying exactly what dealerships promised, in addition to monitoring consistent pricing across different customers. The shifting relationship between dealers and automakers is a departure from the outsized influence dealers have typically held. In the clarifying comments, Said Deep, a Ford spokesperson, stated, “Our dealers are a competitive advantage for us as they are closely connected with their customers and communities they serve.” For the future, Deep added, the company’s network of approximately 3,000 dealerships could provide an “outstanding digital experience.”īut what does that look like in practice? Months after the initial announcement, at the annual Ford dealer convention, Farley announced, “When it comes to selling battery electric Ford products that are part of the new Model E division, you’re either on the bus or off the bus and you have just six weeks to decide.” He was referring to Ford’s new two-tiered EV seller certification program: Model E Certified and Model E Certified Elite, and the deadline was the end of October. To assuage those concerns, Ford representatives clarified that his comments were “simply discussing” DTC models rather than “transitioning 100 percent.” However, actual details of Ford’s plan suggest at the very least a diminished bargaining power for independent car dealerships, and perhaps, a future where they are retrofitted into service centers for repairs and other boutique perks rather than retailers. “Five hundred, six hundred dollars a vehicle on public advertising? Get rid of all of it.”įarley’s remarks garnered confusion from industry onlookers in the following days. “We have all this inventory sitting around in dealers, in transit, we got to get rid of all that.” That’s why, he insisted, “we got to go 100 percent online.” To not just reach price parity with Tesla, but undercut it, he borrowed another strategy from the company: cutting advertising costs. He detailed that Ford’s current distribution model is $2,000 more expensive per car compared to Tesla’s. Earlier this year, at an industry conference, Ford CEO Jim Farley admitted to attendees that Tesla’s “superior profitability” was because its bottom line did not depend on dealers. Now, about a decade later, Ford has realized that the future is electric vehicles, and ripped a page out of Tesla’s playbook. Instead, they are first shipped across state lines, after which you can order the car online and have it shipped back to a Texas address. However, that move has left Tesla facing an onslaught of legal clashes between independent car dealer associations in many states the company sells cars in.įor example, in Texas, Tesla’s new home, vehicles manufactured there cannot be sold directly to consumers in the state. But as classic American automakers sneered at the nascent electric-vehicle startup, Tesla executed a shrewd business strategy that forwent typical marketing campaigns, and cut independent car dealers from the equation by deploying a direct-to-consumer (DTC) purchasing model for its electric vehicles. From the disastrous Cybertruck announcement, to viral clips of exploding cars and Teslas under computer control attempting to drive into oncoming traffic, the company and its egomaniac CEO Elon Musk have lost much of the shine they had five years ago. It’s become trendy to mock Tesla in recent years. This article appears in the December 2022 issue of The American Prospect magazine.
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