N.Y. judge pauses EV rules for Ford, Lincoln dealerships in suit

A New York judge last month blocked Ford Motor Co. and Lincoln from imposing facility and business requirements on five dealerships to sell electric vehicles until the retailers' lawsuit challenging the brands' dealer agreement changes is resolved.

Premier Ford-Lincoln and Premier Ford of Bay Ridge in Brooklyn, Ford of Smithtown in Saint James, Lincoln of Smithtown in Saint James and Stevens 112 Ford in East Patchogue sued the automaker in November 2022, alleging Ford had improperly changed the rules on Ford and Lincoln dealers seeking to sell EVs.

Under state law, any New York dealership demand for review of a franchise agreement modification automatically halts the program change until the matter can be adjudicated, ruled Suffolk County Supreme Court Acting Justice James Hudson.

Ford told the court its EV program was voluntary, an argument that succeeded in July in a similar dispute brought before the South Dakota Department of Revenue. Ford and Lincoln dealerships that refuse to meet their brand's EV network requirements can still sell and service hybrid, plug-in hybrid and internal combustion engine models. Ford also disagreed that its actions rose to the level of a modification as defined by the franchise law.

"The purpose of the voluntary Model e Program is to make sure that Ford and Ford Dealers are serving and exceeding our EV customers' expectations and to ensure those customers receive an unparalleled purchase, service, and ownership experience," Ford Model e spokesperson Marty Günsberg wrote in an email Friday.

But Hudson ruled Ford modified the automaker-franchisee relationship with plans to cut EV sales and service business to nonparticipating dealerships.

Prior to the change, the plaintiffs had been selling and servicing such models, he said.

"The question before the Court is not whether the Programs are 'reasonable' nor whether participation is 'voluntary,' " Hudson wrote. "Instead, the question before the Court is whether the effect of Ford's electric vehicle Programs modifies the franchise business relationship. Each states that a non-participating Dealer may neither sell nor service Ford EVs. This is a significant change in the current business model."

Opting out of the program "arguably will affect a Dealer's competitive position and ability to comply with its obligation under its franchise agreement to sell and service Ford Motor Company products," Hudson ruled.

Günsberg said the stay applied only to the dealerships in the case.

"There has been no final determination on the Program in the State of New York," Günsberg wrote.

New York's Franchised Motor Vehicle Dealer Act requires automakers to give franchisees at least 90 days of notice before significant changes to their dealer agreement and 180 days of notice before enacting any major facility requirements.

The plaintiffs alleged Ford didn't provide sufficient notice or act fairly when requiring dealerships to install Level 3 chargers and altering the Ford and Lincoln dealer agreement to "dictate the minutiae of Plaintiffs' businesses" as conditions to sell EVs.

"This is a major win for these dealers, who can continue to sell and service Ford and Lincoln EVs without having to comply with the onerous conditions imposed by Ford," the Greater New York Automobile Dealers Association wrote of the stay in a Thursday, Sept. 21, email bulletin.

The disputes in New York and South Dakota are among multiple battles nationwide over the Ford EV program.

Dealers in North Carolina, Florida, Illinois and Arkansas have also initiated legal or regulatory proceedings against the automaker. However, the program has proven to be popular, with more than 60 percent of Ford dealers and more than half of Lincoln retailers signing on to participate in the EV network.