Ford eases up on EV dealer requirements

Amid a pullback on electric vehicle investments and growing distrust among its retail network over how it's handling the transition, Ford Motor Co. is again easing key requirements of its EV certification program for dealers.

The automaker said it would cut next year's training costs by half and decrease the number of chargers stores must install. It's also delaying by six months the deadline to install them.

The moves follow a victory by Ford dealers in Illinois — one of a handful of states where the automaker faces legal challenges to the program — after the Motor Vehicle Review Board said Ford broke the law by requiring dealers to invest heavily if they wanted to sell EVs.

Almost 400 dealers have dropped out of the program since initial enrollment figures were announced nearly a year ago. A survey released this month by dealership sell-side firm Kerrigan Advisors found Ford was the least trustworthy brand among dealers, largely because respondents said they expected a decline in profitability as a result of Ford's EV retail strategy.

More broadly, Ford and other automakers are reassessing EV plans as concerns arise over consumer demand. Ford executives said last month they would delay roughly $12 billion in EV investments, and the company this week announced it would reduce size and output of a planned EV battery plant in Michigan.

In a statement, Ford said it was altering the dealer program "as we continue to adapt our overall EV strategy to the market and listen to dealer feedback."

The biggest changes involve chargers.

The company said Certified Elite dealers — the more expensive of the program's two tiers, primarily for those in larger markets — have to install three Level 2 chargers instead of the five it previously mandated. The company also is removing a requirement to add a Level 3 charger by 2026.

Dealers in the lower-priced Certified tier are required to install two Level 2 chargers instead of five.

For both tiers, the deadline to have chargers in place has been pushed back six months to June 30. A spokesperson said the company moved the deadline because of "charger supply chain and infrastructure delays."

Ford also is cutting the cost of dealer training by about half, or up to $20,000, for the 2024 calendar year.

Charging requirements were among the areas of dispute in the Illinois case, in which 26 dealers argued the program violated state franchise laws. The dealers also said more expensive Level 3 chargers were unnecessary.

"No witness testified that any dealer has yet to have a problem charging vehicles nor why, in the future, a Level 2 charger will be insufficient for maintaining cars for test drives," a hearing officer wrote in a preliminary decision upheld by the motor vehicle board. "In fact, many dealers testified that they have never had a problem charging vehicles for delivery to customers or for taking test drives."

The board ultimately said Ford wrongly implemented changes to allocation and distribution models, among other violations of state law.

In a statement, Ford said it would appeal the decision.

"Ford stands by its voluntary Model e EV program," the spokesperson said. "It is designed to make sure that Ford and its dealers provide Illinois Ford EV customers with a segment-leading experience throughout their purchase, service and ownership journey."

Ford CEO Jim Farley has said direct-to-consumer competitors such as Tesla have a $2,000 cost advantage over automakers with franchised retail networks in part because of the investment needed to maintain inventories on dealership lots.

Part of his desire to redesign Ford's retail model for EV sales is to have dealerships carry little to no inventory. The company for the first time is sharing details of what that will look like.

Ford intends to create "retail replenishment centers" from which Certified Elite dealers will restore some of their stock. The sites are intended to reduce costs and are "designed to improve the speed and efficiency in which dealers and, therefore, customers can receive their EVs," the company said.

The spokesperson said Certified Elite dealers will keep "limited" stock and have vehicles available to support customer test drives.
It was unclear how many replenishment centers Ford planned to establish or where they would be.

They would be similar to the three centralized EV fulfillment centers General Motors has opened — two in California and one in the Southeast — to speed vehicle delivery and increase efficiency.

Ford has had mixed results fighting the legal challenges it has faced over the EV program nationwide.

A New York judge in September blocked the company from imposing facility and business requirements on five dealerships to sell EVs until a lawsuit challenging the brand's dealer agreement changes was resolved. But Ford in July got a favorable ruling from a court in South Dakota, where a judge determined the program did not violate state franchise law.

Beyond the legal actions, the program has faced opposition from a majority of state dealer associations since it was unveiled in September 2022. Still, about 60 percent of Ford and Lincoln dealers initially chose to participate, and the company has shown a willingness to tweak certain unpopular aspects.

In January, Ford announced changes that included scaling back the amount of time a dealer would have to offer public charging each day and removing a cap that limited dealers in the lower-priced tier from selling more than 25 EVs per year.

Lincoln this year also modified its version of the program to give dealers more flexibility.

After the changes, Ford allowed dealers to opt out of the program or switch tiers. The company said 53 dealers left the most expensive tier, while 24 joined the lower tier. At the time, Ford said enrollment fell 1.5 percent to 1,891 of its nearly 3,000 U.S. dealers.

The company on Monday said enrollment had since declined to around 1,550 dealers, or about 53 percent of the total network. Ford said this would put 86 percent of the population within 20 miles of a Ford dealership capable of selling and servicing an EV.