Chief Executive Ford Motor Co., Jim Farley, will visit Las Vegas to roll the dice on a strategy to convince dealers to cut approximately $2,000 from the cost of delivering an electric vehicle to a customer. Ford has said dealers that one key topic for the meetings will be a discussion of new agreements governing how dealers sell Ford’s expanding lineup of electric vehicles. The article contains Ford To Challenge Dealers to Match Tesla’s Lower Selling Costs.
Mr. Farley told analysts in July of 2022 that Ford needs to eliminate $2,000 a vehicle out of selling and distribution costs to be competitive with Tesla and other electric vehicle startups that sell to consumers without franchised dealers in a direct way. About a third of those savings could come from what Farley called a low inventory model, where customers order a vehicle and Ford ships it to the clients, rather than stocking vehicles on dealer lots for weeks or months.
“We think that’s about the worth of maybe $600, $700 in our system,” Mr. Farley stated. Tesla can adjust prices rapidly on its website and keep most of the gain from a price increase. Ford declined to comment other than saying, “we are excited to meet with our North America dealers to grow and win together.”
Dealers expressed that they expect Ford to outline minimum investments to charge stations and other equipment to assist electric vehicle customers. A prime question can be how quickly dealers will be required to install chargers, which dealers said can cost as much as $500,000. In addition, Tesla’s success at selling electric vehicles without franchised dealers puts pressure on all established automakers to overhaul their retail networks.
Some dealers said that a shift by Ford to a Tesla-style build-to-order system could come with caps on the profit margins dealers can achieve on a new vehicle sale. He noted that Ford intends to emphasize selling products and services after the initial vehicle sale. Dealers said state franchise laws could provide dealers leverage to resist efforts by Ford to set the fixed prices for delivering electric vehicles.
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