Ever since September 14th of this year when Ford explained to its dealerships what they would have to commit to in order to continue selling electric vehicles, the big question has been: How many dealers would agree to the terms? Now we know.
During an interview today at the Automotive News World Congress, Ford CEO Jim Farley, announced today that 1,920 of Ford's 2,968 US dealerships (~65%) agreed to become Model e certified dealers and accepted the strict terms that Ford laid out in order to continue selling fully electric vehicles.
That still leaves about one-third of its dealer network without the ability to sell a single fully electric Ford vehicle from January 1st, 2024 to at least January 1st, 2027. We suspect the vast majority of dealers that turned down the Model e offer are in rural areas of the US where electric vehicle adoption is lagging behind the rest of the country. They may not feel the pain immediately, but we can't help but speculate that many will regret that decision in 2025 and 2026 as electrification continues to proliferate across the industry.
Ford dropped the bombshell Model e certification requirements at its annual dealership meetings in September in Las Vegas. InsideEVs was one of only a handful of news outlets invited to get an early look at the new rules, which included a presentation from Ford CEO Jim Farley.
In short, Ford told its dealer network they had to invest, evolve, improve, and offer new services if they want to be a Model e dealership and continue to sell Ford's electric vehicles. Ford Model e is a new division that was created when Ford split the company into three arms: Ford Blue Oval, Ford Pro, and Ford Model e. All of Ford's fully electric vehicles now fall under the Model e umbrella, while plug-in hybrids and regular hybrids are part of Ford Blue Oval.
We reached out to a local Ford dealership, Maplecrest Ford in Mendham New Jersey to ask if they agreed to be a Model e dealership and was told that not only did they, but they did so enthusiastically:
We signed up to be a Model e dealership because it's the future of Ford Motor Company; the future for all car manufacturers, and we want to be part of that future. - David Vorcheimer, General Manager, Maplecrest Ford, Mendham, New Jersey
At the annual dealership meeting in September, Farley talked about Tesla and how the startup electric vehicle manufacturer has roughly a $2,000 price advantage over Ford. He said that Ford and its dealers need to, and have been, working to narrow that gap.
In order to remain competitive, Farley said that Ford needed to change the way it sells electric vehicles, and the first major step to that transformation was to create Ford Model e.
Three Options
Ford gave its dealers until October 31st – less than two months – to make a decision that would have huge implications for the future of the franchise. That deadline was later extended to December 2nd, as many dealers complained that six weeks wasn't enough time for such a major decision. The company offered its dealers three options:
- Become a Model e Certified Elite dealership
- Become a Model e Certified dealership
- Discontinue selling Model e vehicles effective January 1st, 2024
Of the 1,920 franchises that agreed to become Model e dealers, 1,659 chose to be Certified Elite with full sales and service capability. 261 chose to be Certified with full-service capability, limited sales, and a lower investment cost.
Model e Requirements:
At a minimum, Model e Elite dealers will need to install two high-powered DC fast chargers and a level 2 charging station, as well as offer at least one DC fast charger available for the public to use. Ford estimates the all-in cost for dealers to become Model e certified elite to be between $1.0 and $1.2 million, with as much as 90% of the cost attributed to the cost to purchase and install the required charging infrastructure.
Model E Certified dealers are only required to install one DC fast charger, and it must be made available for public use. However, Model e dealers will have a hard cap on the number of EVs they are allowed to sell each year, and that number will be the same for all Model e shops, regardless of annual volume.
Ford told us that it hasn't decided exactly what that number will be, but it will be small and intended to only satisfy orders for the dealer's most loyal customers. Ford estimates the cost for dealers to become Model e certified will be about $500,000, again, with as much as 90% of the cost attributed to charging infrastructure.
We've been studying Tesla closely, especially with how their brand has scaled with units and operations in Norway and what we've noticed is that they have almost 1,200 employees now and they have very much dealer-like facilities and we think that's the direction they'll go as they scale their operations in the United States - Jim Farley, CEO, Ford Motor Company
EV Opt-Out
And finally, dealers have the option of not becoming Model e Certified at all. If they choose that route, they give up the right to sell any fully electric Ford vehicles for three years. At some point in 2025, they will have the opportunity to tell Ford that they wish to become a Model e certified or Elite-certified dealership, and provided they complete the requirements, they will be allowed to start selling EVs in January 2027.
If they do choose to opt out of becoming a Model e Certified dealer now, there will be no opportunity of becoming one until 2027. Therefore, from January 2024 through January 2027, the dealership will not be allowed to sell a single new all-electric Ford.
This first stage of Model e evolution will be in effect from January 1st, 2024, through December 31st, 2026. The decision dealerships make now will be in effect through 2026 and dealers cannot change their Model e certification status until January 1st, 2027. All dealers will continue to be able to sell EVs until January 1st, 2024 when the Model e rules begin.
Five Pillars
Ford explained that its Model e dealership strategy will be built upon five pillars:
- Training: Dealers will need to undergo extensive EV training on an ongoing basis
- Charging: Model e dealers must have adequate level 2 and DC fast charging, with at least one DC fast charger available to the public
- Set Pricing: Transparent, non-negotiable pricing available online
- Excellent physical experience: Model e dealers must deliver an excellent ownership experience, including complimentary pickup and drop off for vehicle service visits
- Develop digital experience: Invest in building a digital ownership experience for the future
No-Haggle Pricing, But Not Direct Sales
When Ford announced the creation of Model e, some speculated that one of the purposes may be to try to implement a hybrid version of a direct sales model in which customers would order their EVs directly from Ford but take delivery from a local dealer.
That won't be the case. The dealer franchise laws are very clear, and Ford cannot sell vehicles to consumers directly even if they wanted to. The only reason EV upstarts like Tesla, Rivian, and Lucid are able to (and even these companies are banned from selling vehicles in some states) is because they don't have an existing network of dealerships, as Ford does.
But Ford believes its dealer network is a strength, not a weakness, they just need to improve the sales process and customer experience with electric vehicles, and that's exactly what Model e aims to do.
The new rules for Model e dealerships require dealers to post set prices for the electric vehicles online at Ford's website. Customers can view the set pricing, complete the purchase online, and even schedule home delivery. But ultimately, it's the dealer's decision what the set pricing will be for the vehicles, and there will likely be price variation from dealer to dealer. Customers will be able to cross-shop different local dealers' prices online, and then choose the one with the lowest set price. The dealers must honor the set pricing for every purchase, and Ford will be checking the purchase orders to make sure that happens.
This new system gives the customer the option of doing everything online and completely eliminates the need to visit the dealership. Of course, if the customer prefers to visit the dealership, kick the tires and complete the purchase agreement in person, they are still welcome to do so. However, it will be for the same price they could have purchased it online from the Ford.com website, the dealers cannot change the price once it's set.
Charging Is Key
A huge (and most expensive) part of the Model e certification is the requirement for dealers to provide DC fast chargers with a minimum output of 120 kW. The chargers must be readily accessible on the property and available to the public. This requirement was born from the fact that Ford knows that a major pain point for consumers transitioning to EVs is the concern over fast charging availability, especially for those that live in apartments and cannot charge at home.
Dealers will be able to tell customers that whenever they need to charge, wherever they are, they can find a Ford dealership nearby where they can plug in. That's because Ford currently has 2,968 dealerships in the US and 96% of Americans live within 25 miles of a Ford dealership, and 85% live within 10 miles.
So basically, you're just about always close to a Ford dealer, and if they all install DC fast chargers, the Blue Oval Charging Network will have pins on the map just about everywhere.
Ford has also established relationships with three charging station installation providers; ABM, EnTech Solutions, and AGI. These companies specialize in facilitating the installation of DC fast chargers, which can be quite complicated as well as expensive.
Depending on where the dealer is located, one of these companies will assist the dealer during the entire process, from filing the necessary permits to utility interconnection, to the actual installation of the stations and even making sure the dealer gets any available public funding available for EV charging infrastructure.
This is a very important component of the plan because installing high-powered DC fast chargers is a complicated process, one that most dealers will require assistance with. Ford also has programs in place to provide financing to its dealers for large capital improvements like this if the dealer needs financial assistance.
Bold New Start
We think Ford Model e's new rules are a good start for the brand and the fact that nearly two-thirds of its dealer network has agreed to participate bodes well. Everything involved in Model e is about building a better customer experience, offering the customer more options, and evolving to meet a changing marketplace.
However, it will all come down to execution, as it always does. How competitive will the new no-haggle set prices be? The dealers are the ones setting the prices, so what if they all set prices of in-demand EVs above MSRP? How reliable will Ford's DC fast chargers be? Will Ford monitor the uptime of the units and force the dealers to quickly repair the chargers when they go offline?
There are still a lot of unknowns to this plan, but we give Ford credit for being the first existing OEM to attempt to improve its EV buying experience in such a significant way. The fact that such a high percentage of dealers agreed to participate in the first wave of Model e indicates that they are willing to work hard to evolve, adapt and survive as the industry transitions to electric drive.
