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Ford Dealers File Lawsuits Over EV Certification Program

A number of Ford dealers have long been at odds with The Blue Oval’s decision to roll out two different tiers of EV certification – Model e Certified and Model e Certified Elite – for a variety of reasons. These objections mainly revolve around the large investments required mostly for infrastructure such as the installation of new public fast chargers, a mandate requiring them to sell EVs at fixed prices, and a host of standards including limits on advertising and caps on how many EVs can be sold. As such, a number of dealer associations and lawmakers representing Ford dealers have recently voiced objections to the plan, both in the U.S. and Canada, while a handful have now filed lawsuits against the automaker following the Friday deadline for each to make a decision on this matter, according to Automotive News.

These legal actions began when the Arkansas Automobile Dealers Association filed a formal complaint against FoMoCo with the state’s motor vehicle commission back in October, and continued after 27 Ford dealers in Illinois also protested the decision with that state’s motor vehicle review board late last week. In New York, four dealers filed a lawsuit against the automaker last week, marking the first legal action taken against the Model e Certification program.

The New York-based lawsuit claims that the program contains “unlawful franchise modifications, unfair pricing requirements, margin reductions, and unlawful allocation systems,” which could – under state law – delay its implementation until the case is reviewed by a judge, a process that could take several months. However, protests related to these changes aren’t limited to those three states, as a grand total of 14 have asked Ford to make changes to its new program already.

“Every dealer under the current franchise agreement has a right to every Ford vehicle manufactured with that nameplate on it, to include the newest EVs,” said attorney Rich Sox. “They have a right to their fair allocation of those vehicles based on their market size, sales history, etc. This is about making sure all dealers have access to EVs and not being pigeonholed into one of three categories the program arbitrarily created.”

The lawsuit also raises concerns regarding Ford’s decision to bar dealers from selling EVs in the future if they don’t opt in to the program, though as Ford Authority previously reported, dealers will get a second chance to do so in the future. Though the automaker refused to comment on the legal action, it noted that the new program “is consistent with all relevant laws.” “Ford intends to conquest customers through its new EV business – an opportunity for the company and dealers to grow together,” the automaker said in a statement. “To do so, Ford and its dealers must take reasonable steps to better serve our existing and future EV customers to compete against startups and legacy OEMs in a rapidly changing market.”

We’ll have more on the Model e Certified program soon, so be sure and subscribe to Ford Authority for non-stop Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comments

  1. Thurston Munn

    I hope the dealers prevail in this. It’s totally unreasonable to think dealers can survive under these program investments without guaranteed returns or the opportunity to control profit margins.

    Reply
    1. Ruben

      Not to mention for the next 5 years what sort of EV volumes are they going to get? Right now and for awhile it appears it will be a trickle. Salespeople and dealers only get paid once the customer gets the keys. Not when they take an order or put someone on a wait list.

      Reply
  2. RWFA

    Hope they generally fail.

    Ford has to drive consolidation in its dealer base in order to have the remaining dealers be healthy.

    Weak dealers destroy the transaction price as they race to the bottom against each other and in so doing give poor customer experiences as they try to make up for having done that.

    Ford dealers should be competing against other OEM dealers rather than each other.

    If Ford can’t adjust its distribution model, and reduce the associated overhead burden, for the coming onslaught of new entrants, Ford will die a slow death through dissipation.

    Better some dealers see the writing on the door to the future and sell out now, rather than drag Ford down. Because if Ford goes down all dealers suffer and many will sink with the mothership.

    Reply
    1. John

      What Ford dealers are racing towards the bottom? The single biggest knock against Ford is their absurd dealer markups. Ford makes some very nice and competitive vehicles, but the markups at their dealers is the worst in the industry.

      Reply
      1. RWFA

        I see the markups as a product of, at least, two things: dealer greed and over concentration of dealer footprints.

        In a market where product is in short supply, sales may not be able to cover dealer operating expenses, so markups on hot vehicles are one way to offset this.

        As supply recovers and starts to saturate, markups will disappear.

        Then we are back to ford dealers competing against themselves to the bottom instead of against the competition to bring in new customers.

        As indicated before, as BEV market share increases, there will be less service revenue and dealers with fewer sales will feel more pressure to offset revenue loss. What to do? Open convert unused service bays into flea market stalls?

        Of course not.

        Joking aside, there’s not much they will be able do except start competing again in the race to the bottom against other Ford dealers.

        (The worst, in short-sighted desperation, will try cheating customers.).

        Markups will be out because at some point, supply will be back in balance with demand.

        Fewer dealers are an answer to this internal (Ford vs Ford) competition problem.

        Fewer dealers are also the answer to the growing external competition (Ford vs today’s competitors and coming non-Japanese Asian entrants.)

        The challenges requiring these changes will only increase in the future.

        Ford is trying to get ahead of these eventualities and not be forced into truly draconian measures forced by desperation.

        Reply
        1. Scott

          zzzzz

          Reply
          1. RWFA

            Poor Scotty the words and reality are too big for his little sleepy head.

            Reply
  3. Bill Howland

    Seems like a dopey Ford plan. If they are forcing dealerships to arbitrarily increase their expenses then I will have to think twice about another purchase from them. U get generally tested better at a smaller dealership.

    Reply
  4. Rinzler

    Dealerships aren’t people and don’t have the “right” to anything outside of agreements and contracts. I’m sure Ford’s legal team has verified that its restructuring under Ford Blue and Ford Model-E complies with existing dealership contracts.
    I’m glad to see the dealerships squirm in Ford being firm on its requirements for successfully selling EVs. I’ve been in more than my share of dealerships where no one in the building knows more than a few bullet points about a vehicle model, and in my opinion make poor representatives for Ford, regardless of number of vehicle sales. Unlike its ICE business, it seems Ford is committed to providing a better experience than the slimy and predatory experience of today’s dealership.

    Reply
    1. Rube

      Actually I’m pretty sure those dealers have lawyers and franchise agreements also. And they’ve also got lawmakers in their states on both sides of the aisle on their side.

      But nice one sided view.

      Reply
  5. Matt

    What’s the point in millions in infrastructure spend for chargers? If the dealers can adequately charge the cars that come off the truck in time for sale, it’s the local gm responsibility to rightsize his charger count.

    Reply
    1. RWFA

      You’re missing the larger point.

      Reply
      1. matt

        do feel free to expound.

        Only an idiot thinks putting charging infra at a dealer is somehow going to attract ‘passers by’ or local residents to use the dealer’s charger rather than their own with any frequency and somehow monetize the visit. Could it be useful in a pinch if I lived in an apartment complex or parked on the street such that at-home and at-work charging was not an option? Sure, but again why would I bother owning an EV in the first place, and how come the existing dealer charging facilities wouldn’t suffice?

        Reply
        1. RWFA

          “…why would I bother owning an EV in the first place…”
          I think this is a foundational blocking issue to how you view the issue.

          @Rueben
          Right! Thanks for noticing!

          Reply
          1. Ruben

            Because yours is so free of bias right?

            Reply
  6. Chris

    Both our local dealers said they’ll make sure no EVs are sold. Good for them fighting this Communism. Ford is already hurting financially, they can’t afford to make dealers mad.

    Reply
    1. RWFA

      Dealers saying they’ll “make sure no EV’s are sold”?

      The BS detector pegs at 11 on nonsense such as that pal.

      Communism? 😂

      Fighting communism one denied EV sale at a time? 😜 That’s ignorant crazy pants talk man.

      But if that conversation actually, really, truly, happened, then this is exactly why Ford has to cull the dealer herd.

      Or it’s an example of whoever you spoke to being afraid to tell you that you’re talking laughable nonsense.

      As for your analysis, Ford afraid of making dealers mad? That’s also giving the BS meter a workout too.

      Dealers that don’t want to sell Ford product won’t have much of a going business as long as other dealers in the area are happy to pick up their business. Dealers that so select for self destruction actually help Ford to accomplish any consolidation goals it may have.

      Reply
    2. Ruben

      Imagine if Ford had a good reliable small gas powered sedan right now, they would have sold bucket loads (like Toyota with the Corolla right now). Instead dealers get a bunch of gas heavy SUVs and pickups and EVs that they can’t delivery until ????. Now a gun to the head to spend money on providing energy infrastructure? Why are they making dealers get into that business?

      Reply
      1. RWFA

        And they would have sold it at a loss. They made that experience with Fiesta and Focus. Even Fusion didn’t bring the revenue.

        Reply
  7. MikeS

    Communism is forcing people to do something. That is exactly what Jim Farley us unsuccessfully attempting.

    Reply
    1. RWFA

      If you are trying to show the world you have a 5 year old’s or FoxNewsMax concept of what communism is you have achieved it.

      Reply
  8. Ruben

    1/3 of dealers said NO to this insanity.

    Will be interesting what it will do to Ford as a brand when the dealer says “No I’m not allowed to service your EV.”

    Reply
    1. Larry

      Exactly. Ford is shooting its own self in the foot. They are setting themselves up for complete failure. Even the CEO stated their trucks are keeping them afloat.

      Reply
      1. RWFA

        Sure because that’s where the money is. That’s why they abandoned unprofitable car segment sales.

        That’s the smart long term move for both Ford and its dealers.

        Reply
    2. RWFA

      LoL. Those are probably among the dealers with the worst customer satisfaction scores.

      As for not servicing EV’s the customer will probably be lucky and happier to go to a professional and respectful dealer.

      Sooner those hard core “gonna prevent EV sales” dealers dry up and sell out the better.

      Reply
  9. Mike says...

    The Ford way forward still seems very confusing and damaging across the board. As a comment, I am surprised that Ford did not insist on selling their new BEV on line, directly to the customer eliminating the dealership presence in the supply chain. The carrot for existing dealers would follow more naturally for those that want to service the BEV product to step up their dealership infrastructure and grow with the times or wind down. Ford should launch smaller new stores that service their BEV and possibly other brands. Traditional dealerships that do not step up would continue to rely on ICE products and would not be caught up in the ‘choose or die’ plan Ford has set out. The irony here is that Ford has fostered its own problems with a weirdly complicated 2 company plan forcing traditional Ford stores into a corner. Ford could also seize the opportunity to partner with any number of competitive brands in opening and running BEV service centers. Over time, dealerships footprints would shrink, and better economies of scale would emerge. The new business opportunities that could come with ‘new BEV service centers’ are many including public charging stations, food/restaurant presence, while being located closer to things people want to do. As much as Farley is seen as a futurist, I think he is still stuck in the past with this current way forward for Ford. The legal issues surrounding the existing dealership networks is a red herring that will eventually go away on its own. I had 2 cups of java this morning so there it is… your thoughtful business, industry and marketing comments are requested…

    Reply
    1. hot toddy

      very good point. Let the individual Ford stores/franchises decide what their individual markets and customer bases can bear. Farley has a lot of people fooled and that’s suprising since the people I know he has fooled are usually pretty smart IMO. As far as the java goes, let’s keep those endorphens lined up !!

      Reply
  10. hot toddy

    will be interesting to see just how many dealers in the region where I live have conceded to Ford’s EV mandates and if they will include their decision in their local future advertising campaigns.

    Reply
  11. Anthony

    I personally have a few friends that own car dealerships. The last couple of years have been the most profitable years for them for a number of reasons, first most if not all of their sales have been at sticker, no negotiating with buyers at all, secondly a large percentage of their operating costs under normal conditions is interest expense which is paid on their inventory which is called their floor plan expense. As you well know the lots have been bare, no inventory no interest being paid on the floor plan, in my opinion a $500k to 1.2 million improvement cost is a minuscule amount to be asked to insure a dealer is prepared to represent sales of EV’s. If a dealer doesn’t want to improve their dealership it’s their choice, there are certain standards dealers should be held to. EV’s are a whole new breed of automobile, I honestly feel Farley is doing this to better the brand in my opinion.

    Reply
    1. RWFA

      Great behind the scenes for folks trying to understand the cost to dealer aspect. Thanks!

      Reply

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