Ford Motor has finally stopped denying the rumors and admitted that they are splitting their EV business from the franchised dealer business. The company will be split into Ford Blue (Traditional Dealers and ICE engine) and Ford Model E (Their EV division). Let’s look at what they’ve said and how this may impact Dealers. If anyone has not yet read the article at Automotive News I highly recommend they do (linked below.) What follows are my comments and speculation as we try to navigate this massive new development.
What Ford said: “Ford expects 30 percent of their global sales to be EV by 2030.”
I would suspect that most of that growth is going to come at the expense of traditional ICE sales. Specifically Ford ICE sales.
Best Case:
Ford is unable to actually deliver these vehicles either at a cost competitive level or due to supply chain constraints and the impact is less severe on traditional dealers.
Worst Case:
Ford diverts most resources from ICE manufacturing to EV and accomplishes this 30% growth causing a 30% loss of sales to Ford Dealerships worldwide.
What Ford said: “The automaker wants a certain number of retailers to “opt-in” to selling EV’s.”
In copying the Tesla model, Ford is looking for non-negotiable prices, no inventory on the ground and primarily local service centers per major market.
Best Case:
Some Dealers will be selected, possibly 600 or more and there will be money to be made on the servicing of these vehicles.
Worst Case:
Less than 600 Dealers will be selected, given new franchise agreements that keep all the risk and expense on the Dealer but very little of the profit.
What Ford said: “The automaker is shuffling some executive roles.”
Many of the top leadership is leaving Ford Blue in favor of Model E, effective immediately.
Best Case:
Ford will be fair in the distribution of rare resources and future planning for supply and demand.
Worst Case:
With the Ford Leadership team leaving the franchised dealer side of the business. Dealer needs will become second tier to the needs of the EV company.
What Ford said: “Model E also will handle upcoming digital services, software and over-the-air update experiences”.
This means Ford will do all the app development and vehicle software development, within the confines of the Ford Model E company, not the Ford Blue company. Giving the EV side of the business full control of the future direction of the FordPass App and internal vehicle software.
Best Case:
Cool tech being developed for self-driving will bleed over to ICE vehicles.
Worst Case:
Ford will use the Ford Pass App, to directly sell EV to ICE customers. They will leverage their direct sale model to directly impact current and future sales for Franchised dealers as they have all of the Franchised dealer’s data.
What Ford said: “Ford hopes to take out $3 billion in structural costs from its Ford Blue business by 2026.
Ford is pulling $3 Billion dollars out of the Ford Blue portion of the company to fund the Ford Model E business.
Best Case:
Ford will be able to empty $3 billion out of the ICE business without it having ripple effects across the ICE side of the business.
Worst Case:
Ford Model E will effectively strip the assets of Ford Blue and build their company on the dying carcass of Ford Blue.
Questions worth Asking
Why are there no legal challenges on behalf of Dealers concerning this? If there are, are they just not making the news?
If we are using a Ford Direct certified CRM, what is stopping Ford Model E from poaching our customer lists and current leads for themselves?
If we are using any Ford Direct product, what is protecting us from them harvesting Dealer customer data for their own uses?
How is Ford Model E not the biggest competitor to Ford Blue? They are using the same Blue Oval they are selling to the same people, who represents us against Model E?
Conclusion:
In the period of a day Ford Dealers may have just been introduced to the biggest competitive threat they’ve ever faced, and it’s coming from within. Ford Model E has all of our data, all of our financials. They control how many vehicles we get, how many chips are allocated etc. Ford may address these concerns/questions in the near future, but it is absolutely worth preparing for some of these worst case scenarios.
Ford separating EV, ICE businesses | Automotive News (autonews.com)