Ford halts investments in EV dealers

The electric vehicle market is experiencing its first slowdown and Ford is greatly affected by this situation. The automaker is reevaluating its strategy in the face of changing market conditions by asking its dealers to halt their investments in the EV certification program. In late 2022, Ford CEO Jim Farley announced an ambitious plan to include 1,920 dealers in its EV sales program. However, by the end of the year, some of the original participants had withdrawn from the program, leaving enrollment rates for 2024 at just over 50%. This decline in attendance and large losses at Ford’s Model e unit caused the company to reconsider its approach.

“We have a lot of things to review,” said Andrew Frick, president of Ford Blue (ICE portfolio), acknowledging the need for change. The company plans to meet with the dealer council in early June to complete the updates, based on feedback from meetings held across the country.

One of dealers’ biggest concerns is uncertainty in the EV market. Ford’s postponement of some EV plans and focus on smaller, more profitable models has left dealers hesitant about where to direct their resources. Frick told dealers that the company is working to align its dealer network with its evolving EV strategy.

Although Frick did not go into detail about the upcoming changes, he emphasized that the dealer council and executives are in agreement on the process. “I think we’re pretty aligned on the process,” he said.

It’s no surprise that Ford is asking its suppliers for help to reduce EV costs. The company expects a $5.5 billion loss on its EV business this year, and its Model e unit suffered a $1.3 billion loss in the first quarter of 2024, compared to a $4.7 billion loss last year.

Ford expects its next-generation EVs to be profitable within 12 months of launch, and Farley emphasized the importance of the Model e becoming a self-sufficient division within the company. Meanwhile, the company plans to introduce more hybrid models while developing more profitable EVs.

The situation at Ford highlights the challenges automakers face in transitioning to electric vehicles. The EV market is still in its infancy and full of many unknowns. But it’s clear that established automakers like Ford must be flexible and adaptable to succeed in this rapidly changing market.