Welcome back to the latest episode of The Future of Automotive on CBT News, where we put recent automotive and mobility news into the context of the broader themes impacting the industry.
I’m Steve Greenfield from Automotive Ventures, and I’m glad that you could join us.
This week’s segment illuminates how dramatically things have changed for automakers since Covid-19 hit just four years ago.
The supply/demand imbalance during the pandemic meant that we all lived through an unprecedented era where upwards of 90% of new vehicles were selling above MSRP. This, coupled with Tesla’s momentum and record profitability turned many of the legacy automakers’ sights on a redefinition of their relationship with franchised dealers, what many called an evolution from the franchise model to more of an agency model, where the automaker would control the consumer experience, vehicle inventories and advertising.
Now that new vehicle inventories are quickly getting back to pre-Covid norms, and a bit of the luster is coming off Tesla’s direct-to-consumer model (and their associated high margins), many of the legacy automakers are stepping back dramatically from their all-EV visions.
It was just two years ago that Ford Motor Company was receiving a lot of negative push-back from dealers who were being forced to make a decision around their level of commitment towards electrification. Ford’s U.S. dealers were being asked to invest as much as $1.2 million and adhere to rigorous sales standards if they wanted to sell electric vehicles beyond 2023. The program prompted criticism and lawsuits from dealers.
Ford had decided that each of their dealers had to opt into one of two EV certification tiers that cover varying investment levels in fast chargers and staff training. Those dealers who chose not to invest would be limited to selling internal-combustion vehicles and hybrids only.
EV dealers were being asked to sell vehicles at nonnegotiable prices, and those who choose the lower-priced certification tier weren’t going to be allowed to carry them in inventory, instead having customers order exactly what they want for later delivery.
Dealers who chose the highest tier — which was called Model e Certified Elite — would have been asked to invest $900,000 initially, most of which to go toward installing two DC fast chargers, at least one of which had to be public-facing. Dealers in this highest tier were likely to invest $300,000 more, and add a third fast charger, by 2026. Certified Elite dealers would carry limited stock of EVs and have demo models.
The lower tier — which was called Model e Certified — would have required a $500,000 investment that would mostly have gone toward installing one public-facing fast charger. Those dealers were going to be allowed to sell only a limited number of EVs a year. Dealers in this program would not carry any EV inventory or have demo units available.
Fast forward two years. Now, we have news that Ford is dramatically relaxing the constraints of its electric vehicle dealer certification program. Which isn’t surprising, given the deceleration of BEV adoption, mounting of inventory, the slowing of OEM production and greater uncertainty about which powertrains will be demanded by consumers in the near to mid-term.
Ford this week asked retailers to pause their EV investments as it finalizes changes to the program. Ford previously said 53% of their dealer body elected to be in the program (at least one of the two EV tiers). Which means that almost half of Ford dealers opted out – sending a message that they weren’t bought into Ford’s approach around EVs.
In response to feedback from a series of in-person dealer meetings with executives, Ford is preparing to reopen EV sales to its full U.S. retail network, instead of limiting inventory of those vehicles to stores that agreed to make significant investments in chargers and training. The automaker also is expected to change the financial requirements needed to sell EVs.
It’s amazing how the world has changed in just two years. At that time, many automakers were contemplating going to a direct sales agency model that would relegate the dealership to a simple point of deliver and service, and many of the automakers were proclaiming they were going to transition to 100% EV by 2030 or 2035.
It looks like both threats were widely overblown. Sometimes the future of automotive doesn’t quite move at the pace that we anticipate.
So, with that, let’s transition to Our Companies to Watch.
Every week we highlight interesting companies in the automotive technology space to keep an eye on. If you read my weekly Intel Report, we showcase a company to watch, and take the opportunity here to share that company with you.
Today, our new company to watch is AutoTrainer.
AutoTrainer is a virtual F&I Coach for your dealership.
Increase your store’s performance by modernizing your F&I Department with AI that offers real-time coaching and compliance tracking.
AutoTrainer’s conversational AI offers real-time objection handling, post-sale instant replay, deal scoring and benchmarking.
AutoTrainer helps dealerships increase PVR by providing advanced AI tools that improve efficiency, productivity, and close rates.
How does it work?
Before each sale, customers use the AI to take your fully customizable survey. The AI provides insights to your F&I Managers about the customers’ buying habits while speeding up the F&I process.
During the sale, every client transaction is monitored by the AI, and each conversation is scored with real-time coaching provided for F&I Managers.
After the sale, AutoTrainer identifies the areas of opportunity for each F&I Manager and provides Dealership Managers with dashboards and analytics to track and improve F&I performance.
If you’d like to learn more about AutoTrainer, you can check them out at www.AutoTrainer.com
So that’s it for this week’s Future of Automotive segment.
If you’re an AutoTech entrepreneur working on a solution that helps car dealerships, we want to hear from you. We are actively investing out of our DealerFund.
If you’re interested in joining our Investment Club to make direct investments into AutoTech and Mobility startups, please join. There is no obligation to start seeing our deal flow, and we continue to have attractive investment deals available to our members.
Don’t forget to check out my book, “The Future of Automotive Retail,” which is available on Amazon.com. And keep an eye out for my new book, “The Future of Mobility”, which is almost done, and will be out soon.
Thanks (as always) for your ongoing support and for tuning into CBT News for this week’s Future of Automotive segment. We’ll see you next week!
