Ford competing with Tesla, meeting with dealers to lower EV prices
Ford is not backing down from a showdown with Tesla as the EV race heats up. According to a new report, Ford’s CEO Jim Farley will meet with dealers next week in a bid to lower the price of its electric vehicles to compete with Tesla.
One of Tesla’s most significant advantages is its ability to effectively sell directly to consumers (DTC) through its online website, therefore skipping the dealership altogether. As a result, Tesla can cut dealership-related costs and streamline delivery.
Ironically, when Tesla first began selling EVs, many saw its DTC approach as a vulnerability with less exposure to buyers, yet the opposite turned out to be true. It’s now one of its greatest advantages.
Elon Musk often cites Tesla’s manufacturing ability. On Tesla’s Q2 earnings call, Elon explained:
With regard to manufacturing and technology, about 5 or 6 years ago, we said we wanted to become the best manufacturer in the world and that is somewhat counterintuitively, to some people, will actually be, I think, our strongest competitive advantage.
He adds:
We are super pro-manufacturing here at Tesla. And in general, we want to encourage other companies to be super pro-manufacturing. And in general, I think it is a very important thing to do. We need to make stuff and make it efficiently and that’s manufacturing.
The key term here is “make it efficiently,” as many startups and legacy automakers are realizing it’s not easy to make a profitable electric vehicle.
Ford seems to be catching on as the automaker took second in EV sales in the US this past month. That said, after trading shots back and forth between Elon Musk and Jim Farley, Ford’s CEO (Farley said, “Take that, Elon Musk” after taking an early lead in the EV pickup truck market with the F-150 Lightning), the automaker may actually be taking a page out of the Tesla playbook.
Ford to ask dealers for lower prices EVs
Don’t worry – Ford is not taking its models off dealership lots to target online buyers. That said, Jim Farley recently told dealers new agreements would be on the table in their upcoming meeting next week to promote sales of its electric vehicles.
In particular, Farley is focused on the cost. In July, Ford’s CEO said the automaker would need to cut costs by about $2,000 to remain competitive with Tesla and other EV makers.
Ford is already implementing some measures, such as selling low-inventory models directly to consumers. Although this will help cut costs by about $600 or $700, according to Farley, it still won’t be enough to compete with Tesla, which can update pricing instantly.
Dealerships expect Ford to implement new policies to promote the growth of its EV line, such as requiring the installation of chargers.
Josh Sloan, GM of two Ford and one Lincoln dealerships in Michigan, claims:
We’re moving into this really fast. If you’re not all in, you’re going to lose.
Electrek’s Take
Is Ford going all in? So far, that does seem to be the case. Ford is making the right moves right now, and they are paying off.
Working with dealers is a smart move on Ford’s part. For one thing, dealerships should be incentivized by the massive growth in EV demand. If they want to remain competitive with Tesla and other EV startups, they will need to be more flexible, in my opinion.
As Elon said, it’s all about efficiency. And if dealerships want to compete in this new EV era, they will need to cut costs somewhere.
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Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.
Ford is not backing down from a showdown with Tesla as the EV race heats up. According to a new report, Ford’s CEO Jim Farley will meet with dealers next week in a bid to lower the price of its electric vehicles to compete with Tesla.
One of Tesla’s most significant advantages is its ability to effectively sell directly to consumers (DTC) through its online website, therefore skipping the dealership altogether. As a result, Tesla can cut dealership-related costs and streamline delivery.
Ironically, when Tesla first began selling EVs, many saw its DTC approach as a vulnerability with less exposure to buyers, yet the opposite turned out to be true. It’s now one of its greatest advantages.
Elon Musk often cites Tesla’s manufacturing ability. On Tesla’s Q2 earnings call, Elon explained:
With regard to manufacturing and technology, about 5 or 6 years ago, we said we wanted to become the best manufacturer in the world and that is somewhat counterintuitively, to some people, will actually be, I think, our strongest competitive advantage.
He adds:
We are super pro-manufacturing here at Tesla. And in general, we want to encourage other companies to be super pro-manufacturing. And in general, I think it is a very important thing to do. We need to make stuff and make it efficiently and that’s manufacturing.
The key term here is “make it efficiently,” as many startups and legacy automakers are realizing it’s not easy to make a profitable electric vehicle.
Ford seems to be catching on as the automaker took second in EV sales in the US this past month. That said, after trading shots back and forth between Elon Musk and Jim Farley, Ford’s CEO (Farley said, “Take that, Elon Musk” after taking an early lead in the EV pickup truck market with the F-150 Lightning), the automaker may actually be taking a page out of the Tesla playbook.
Ford to ask dealers for lower prices EVs
Don’t worry – Ford is not taking its models off dealership lots to target online buyers. That said, Jim Farley recently told dealers new agreements would be on the table in their upcoming meeting next week to promote sales of its electric vehicles.
In particular, Farley is focused on the cost. In July, Ford’s CEO said the automaker would need to cut costs by about $2,000 to remain competitive with Tesla and other EV makers.
Ford is already implementing some measures, such as selling low-inventory models directly to consumers. Although this will help cut costs by about $600 or $700, according to Farley, it still won’t be enough to compete with Tesla, which can update pricing instantly.
Dealerships expect Ford to implement new policies to promote the growth of its EV line, such as requiring the installation of chargers.
Josh Sloan, GM of two Ford and one Lincoln dealerships in Michigan, claims:
We’re moving into this really fast. If you’re not all in, you’re going to lose.
Electrek’s Take
Is Ford going all in? So far, that does seem to be the case. Ford is making the right moves right now, and they are paying off.
Working with dealers is a smart move on Ford’s part. For one thing, dealerships should be incentivized by the massive growth in EV demand. If they want to remain competitive with Tesla and other EV startups, they will need to be more flexible, in my opinion.
As Elon said, it’s all about efficiency. And if dealerships want to compete in this new EV era, they will need to cut costs somewhere.
FTC: We use income earning auto affiliate links. More.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.
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