Ford challenges dealers to match Tesla’s low selling price

Ford challenges dealers to match Tesla’s low selling price


Ford told dealers that one of the main topics of the meetings will be the discussion of a new agreement that will govern how dealers sell Ford’s growing range of electric vehicles.

In July, Mr. Farley told analysts that Ford needed to cut $2,000 per car from its sales and distribution costs to compete with Tesla Inc. and other electric vehicle start-ups that sell directly to consumers without dealers.

About a third of those savings can come from what Farley called a “minimum inventory system,” where customers order a car and Ford ships it to the customer, rather than keeping cars on dealer lots for weeks or months.

“We think that’s about — maybe $600, $700 in our system,” Farley told analysts. Tesla can also adjust prices quickly on its website, keeping most of the profits from price increases.

Ford declined to comment, other than to say “we look forward to meeting with our North American dealers next week to grow and win together.”

Traders said they expect Ford to outline a lower investment for charging stations and other equipment to support electric vehicle customers.

The big question will be how the dealers will need to install the loaders, which dealers say can cost up to $500,000.

“So far the manufacturers have allowed us to adapt and I think Ford will do the same, I hope. You can’t say, ‘Look, we’re going to sell 2 million electric cars in five years and we expect you to install five chargers,'” said Rhett Ricart, owner of Ricart Ford, the main dealer in Columbus, Ohio.

Tesla’s success in selling electric cars without franchise dealers is putting pressure on all established automakers to revamp their retail networks.

According to some dealers, Ford’s move to a Tesla-like build-to-order system may limit the profit dealers can make on new car sales.

“I see dealer margins are still very competitive, but they will change,” Farley said in July. Ford intends to put more emphasis on the sale of products and services after the initial sale of the vehicle, he added.

Dealers have said state trade laws could give them the power to challenge Ford’s efforts to set prices or special fees for transporting electric vehicles.

Last week, rival General Motors said it would offer to buy back American Buick dealers that were unwilling to make the necessary investments as the brand transitioned to an all-electric system. GM has already spent $274 million to reduce Cadillac’s American sales lineup.

Josh Sloan, general manager who oversees two Ford stores and a Lincoln store for Michigan’s LaFontaine Automotive Group, said his company is ready to spend what it takes to switch to electric vehicles.

“I was surprised there weren’t higher standards from Ford before,” Sloan said. “We’re moving into this area very quickly. If you don’t do everything, you’re going to lose.”