For the first time in 10 years, demand for EVs has begun dropping below expectations due to issues such as a stagnant economy and inflation concerns.
Based on current sales trends, it took dealers roughly twice as long to sell an EV in October of 2023 than it did in January, just nine months earlier. The Ford Motor Company in particular reports they will be pushing back $12 billion in EV spending because of this, along with slashing prices of EVs such as the F-150 Lightning pickup by up to 16 percent. So what’s going on, will it affect every Ford dealer, and why is it happening?
An Ever-Changing Market
Tesla, the now Texas-based EV giant, seemed to have expected a challenging economy ahead and began cutting prices at the end of 2022. The rest of the EV market, including Ford, was slow to catch up and financial issues began to arise. While demand for EVs is still increasing, the speed at which it’s doing so is much slower than anticipated, prompting companies like Ford to cut spending, or GM and Honda to cancel their upcoming EV partnership.
Something important to consider here is that EVs themselves have begun turning the corner from trendy and luxurious to more utilitarian and commonplace akin to an ordinary ICE-powered car. Coupled with a roughly 30 percent higher price over an average fossil-fueled car and climbing interest rates, the EV’s new and exciting allure seems to be wearing off. While that phenomenon is nothing new and so many popular industries and products of the past have undergone the same cycle, some automakers were banking on that popularity lasting much longer.
Ford’s Dealership Dilemma
Now, let’s focus specifically on Ford. Back in September of 2022, Ford created an EV sales program, coined Model e, for Ford dealers who wanted to upgrade their facilities in order to sell and service EVs. In turn, this would allow the participating dealers to become EV-certified. Of the roughly 3,000 Ford dealerships in the United States, nearly 2,000 signed on to the program in some capacity. The dealers who opted out would have to wait until early 2027 if they wanted to change their minds.
Recently, it was reported that almost 400 Ford dealers have since dropped out of the program due to larger than anticipated costs surrounding staff training and facility outfitting. Because of this backlash, Ford has eased some of the requirements in an attempt to retain the remaining 1,600 or so dealers. Such changes include decreased training costs, a reduction in the amount of expensive Level 2 chargers required on-site, and an extended deadline for all dealer changes to be implemented.
Despite these issues with the Model e plan, Ford confirms they still believe in the program. Only time will tell if these issues continue, or if the changes introduced will prove viable. What do you think?
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