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Ford Will Test Its Dealers To Contest Lower Prices Of Tesla

Ford Will Test Its Dealers To Contest Lower Prices Of Tesla
Jim Farley, the chief executive of Ford Motor Co, will travel to Las Vegas the following week to gamble on a plan to persuade dealers to slash the price of delivering an electric vehicle to a customer by as much as $2,000.
The discussion of new contracts that would regulate how dealers sell Ford's expanding line of electric vehicles will be one of the meetings' main topics, Ford has informed its dealer network.
In order to compete with Tesla Inc. and other electric vehicle startups that sell directly to consumers without franchised dealers, Farley told analysts in July that Ford needed to cut $2,000 per vehicle out of the costs of selling and distributing its vehicles.
A third of those savings might be attained through what Farley called a "low inventory model," in which Ford ships vehicles directly to customers after they place an order rather than keeping them on dealer lots for several weeks or months.
"We think that's about -- worth maybe $600, $700 in our system," Farley told analysts. Tesla can also adjust prices rapidly on its website, and keep most of the gain from a price increase.
Ford would only say that they were "excited to meet with our North American dealers next week to grow and win together" and otherwise declined to comment.
Dealers stated that they anticipate Ford to specify the minimum costs for charging stations and other equipment to support customers of electric vehicles.
How quickly dealers must install chargers, which dealers claim can cost up to $500,000, will be a crucial question.
"The manufacturers so far have let us scale into it and I think Ford will hopefully do the same thing. You just can't say, 'Listen, we're going to sell 2 million electric cars five years from now and we expect you to put in five superchargers,'" said Rhett Ricart, owner of Ricart Ford, a large dealership in Columbus, Ohio.
Because of Tesla's success in selling electric vehicles without using franchised dealers, all major automakers are under pressure to revamp their retail networks.
Some dealers said there may be caps on the profit margins dealers can make on a new vehicle sale if Ford switches to a build to order system a la Tesla.
"I see dealer margins still being very competitive, but they are going to shift," Farley said in July. Ford intends to put more emphasis on selling products and services after the initial vehicle sale, he said.
Dealers asserted that state franchise laws might give them leverage to thwart Ford's attempts to impose fixed costs or prices for delivering electric vehicles.
Last week, rival General Motors Co announced that it would buy out American companies. Dealers of Buick who refused to make the necessary investments as the brand transitioned to an all-electric lineup. GM has already spent $274 million on thinning out the U.S. military. dealers in Cadillacs.
LaFontaine Automotive Group in Michigan is led by general manager Josh Sloan, who is responsible for two Ford and one Lincoln dealerships. Sloan stated that his company is willing to make the necessary investments to transition to electric vehicles.
"I was surprised there weren't higher standards from Ford sooner," Sloan said. "We're moving into this really fast. If you're not all-in, you're going to lose."

Christopher J. Mitchell

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