Ford trying to reduce cost of EVs

Ford is on a mission to bring down the price of their EVs by $2,000. They’re off to what I would call ‘a bad start’ since the prices on Ford EVs have gone up by $8,000 between the 2022 & 2023 model years.

Nevertheless – Ford CEO, Jim Farley, is in Vegas this week to liquor-up the dealers & try to convince them to basically ‘meet him in the middle’ on that $2,000.

$2,000 is the magic number…

Because it’s where Ford thinks they need to be to compete with Tesla. Everything Tesla. Flip the whole company upside down to be like Tesla – a company with 6% of the US car market.

Anyway – Ford thinks that they can drop the price of cars by about $700 per unit on their end by dropping inventory. In other words, having less inventory sitting at dealers… and letting the customers direct-order the car they want online. Like Tesla.

But $700 does not equal $2000.

So for that other $1,300… well that’s what they’re meeting in Vegas to discuss. It will probably entail some sort of fixed pricing plan that puts a ceiling on dealership profits. Let’s hope for Ford’s sake, that Jim Farley is a better salesman than car salesmen. Because on one hand, he’s asking dealers to quickly & heavily invest towards an EV transformation. On things like – charging stations, tools, and training. It won’t be cheap; possibly 7 figures. But on the other hand, Ford’s also asking their dealers to simultaneously take less profit per EV vehicle, and with less inventory on hand. In theory, there will also be less work for the service & parts departments, since EVs tend to require less routine maintenance (aside from those $30,000 battery replacements).

The new Ford EV dealership model might work for metro Ford dealers who stand sell a high volume of EVs, have a busy collision department, & will replace a lot of batteries. But overall – it feels like the kinda thing you do if you really wanted ‘the dealerships out of the picture altogether’ so you could sell directly to customers. But you can’t legally fire them so you have to make them quit or take a buy-out.

Consumers are straight fed-up with dealerships & high markups these days.

And to be fair, the car buying experience has turned to shit. But is that entirely the fault of the dealerships? Or is it more the result of covid-fallout, supply chain issues, supply-&-demand, inflation… and governments restricting the ability of business to operate at full capacity? If we ditch the dealers, will the car buying experience get better? Will legacy car makers be able to sell more cars with less inventory? And will people buy cars as frequently or emotionally… if there’s a lead-time?