Ford and Lincoln have been temporarily halted from implementing new requirements for dealerships to sell their all-electric vehicles (EVs) in New York. Five dealerships in the state filed a lawsuit against Ford Motor Co., claiming that the new certification process for EVs favored dealerships with deeper pockets and required significant financial investments. The judge ruled in favor of the dealerships, stating that Ford’s programs modified the franchise business relationship and effectively prevented non-participating retailers from selling and servicing EVs.
Ford introduced its tiered dealer program for EVs nearly a year ago, dividing stores into “Model e Certified Elite” and “Model e Certified.” The former required an investment of around $900,000 for the installation of two DC fast chargers and other modifications to the dealership. It also required an additional investment of $300,000 to have a third charger installed by 2026. In exchange, dealers were given access to demo vehicles and a factory guarantee for limited EV allocations. On the other hand, Model e Certified stores needed to invest $500,000 in a single publicly visible charger but were not guaranteed allocations or demo models.
While dealer requirements are common in the industry, they can sometimes backfire. General Motors faced years of conflict with its dealer networks due to demanding requirements under Cadillac’s Project Pinnacle. Finding the balance between necessary changes and overbearing demands can be challenging. However, Ford’s requirements may work out for Lincoln as the brand aims to reduce the number of dealerships and focus on creating upscale retail experiences.
Ford’s motivation behind the new certification process was to prevent dealerships from marking up EV prices excessively. By requiring an investment, Ford aimed to identify dealerships committed to selling EVs long-term and reflecting positively on the brand. Overpriced automobiles have become a problem in recent years, but the economic downturn has naturally reduced demand for new vehicles. Ford’s program was voluntary, allowing dealerships to opt-in later, and dealerships could still sell other vehicles in Ford’s lineup.
The issue arose in New York due to the state’s Franchised Motor Vehicle Dealer Act, which requires a mediation process and notice periods before making changes to dealership agreements. The five dealerships claimed they were not given sufficient notice regarding the installation of EV fast chargers. Suffolk County Supreme Court Acting Justice James Hudson ruled in favor of the dealerships, stating that Ford’s programs modified the franchise business relationship and prevented non-participating dealerships from selling and servicing EVs.
It is assumed that dealerships unwilling to make the required investments have been forced out of selling an entire vehicle segment they previously had access to. However, Ford’s defense that these dealerships can opt-in later has been successful in legal disputes in other states. The outcome of the case in Suffolk County remains uncertain.
In conclusion, a New York judge has temporarily halted Ford and Lincoln from implementing new requirements for dealerships to sell their EVs. The judge ruled in favor of the dealerships, stating that Ford’s programs modified the franchise business relationship and prevented non-participating retailers from selling and servicing EVs. Ford’s motivation behind the requirements was to ensure dealerships were committed to selling EVs long-term and reflecting positively on the brand. The issue arose due to New York’s Franchised Motor Vehicle Dealer Act, which requires mediation and notice periods for agreement modifications. The outcome of the case in Suffolk County is yet to be determined.
