As for the North American market, Ford joins the growing list of car makers that sells electric models from the factory at fixed prices. Jim Farley announced at the Bernstein Strategic Decisions Conference but didn’t specify when the Model e branch responsible for all zero-emission Fords would start with the new distribution model nor when other markets would follow.
The direct agency model bypasses dealerships. Car models are offered online without discounts nor the burden of negotiations. Tesla initiated it, and it has since then been adopted for sales of electric models of legacy brands like Volvo and the Volkswagen Group and some Chinese newcomers on the European market.
2,000 dollars savings
Cutting out the middle man must facilitate and modernize the buying process and redirect more profit into the lap of the car maker. Farley mentioned it should save up to 2 000 dollars per vehicle. This won’t translate into a favorable discount for customers. The switch primarily serves the business model where car manufacturers rely less on volume but more on more significant margins.
With supply not matching demand, there are currently few discounts whatsoever. Quite on the contrary. With customers cueing up for the all-electric pick-up F-150 Lightning in North America, some dealers are asking a steep premium on the listing price.
Excesses of 30 000 dollars were reported, a sales practice that might have motivated Farley to officially introduce the direct sales agency model without specifying a launch date or potential market expansion. It could be a pr move to scare off the cowboys.
Hybrid sales models
In North America, the dealer organization has a firm legislative grip on the sales process. This stirred things up when Tesla announced its ‘dealer-free’ model some ten years ago. But with a production bottleneck dictating distribution processes, Ford can easily stop filling the pipeline of some dealers pursuing unwanted sales practices.
Nobody goes as far as Tesla with the direct sales agency model, where customers can order online and get their car delivered to their doorstep. At Volvo’s electric sub-branch Polestar, the ordered cars are still eventually contracted and delivered at dealerships, still lending them a central role.
Volkswagen conducts a hybrid version of the agency sales model. Their electric cars are sold without discounts, and the contract is direct with the factory, but a dealer of choice still handles the transaction and gets a cut for his services. However, Volkswagen is reportedly looking into the option of home delivery.
During his appearance at the conference, Farley didn’t expose details on how Model e will handle online sales precisely.