Photo: Ford
Ford is among the legacy carmakers having a hard time trying to find buyers for its electric vehicles. Faced with thousands of unsold EVs on dealer lots, the Blue Oval is now encouraging its dealers to rent out the Mustang Mach-E. Ford's electric pickup, the F-150 Lightning, is also a tough sell, with thousands of units on dealer lots.
Unless you're Tesla, selling EVs in the US is not the easiest thing to do. Legacy carmakers like Ford and GM are scaling down their EV plans, while Stellantis is still delaying the launch of its first US-made electric vehicles. It's not by chance that everyone is backing out from the EV market while at the same time smearing electric vehicles in nationwide FUD campaigns.
All carmakers except Tesla are losing money on their EV business and are now facing a difficult decision. They can increase production and hope economies of scale will make them profitable. Or cut production and reduce losses, but without making any progress towards profitability. It looks like legacy automakers have chosen the latter, sacrificing their EV future for short-term profitability.
Ford is a particular case in the EV market. On the one hand, it brags about EV sales increase and bold expansion plans. On the other hand, it announced cutting EV production in half for 2024, claiming people are less willing to buy electric vehicles. This is not very different from what we hear from other carmakers, including GM and Volkswagen. Ford is now in a predicament because its EVs are piling up on dealer lots in the tens of thousands, and it will not be long before it will have to admit its failed EV strategy.
If you want to know how it's possible to have EV sales increasing and unsold inventory at the same time, the devil's in the details. In the legacy car industry, carmakers report vehicles as "sold" when their dealers order them. Even though customers have not paid to drive them off the lot, from Ford's perspective, they are somebody else's problem. That's right, they're dealers' problem now.
The problem with this approach is that dealers cannot take in an unlimited number of cars. Filling up the parking lots will not help anyone, especially as the lack of actual buyers disrupts the flow of money. Ford may have offloaded the problem for now, but it will come back and haunt them if it doesn't find a solution for the cars piling up on dealer lots.
Ford thinks it has found a solution, though, and that is renting out the unsold EVs. The carmaker has implemented two new programs, Dealer Daily Rental (DDR) and Ford Rent-A-Car (FRAC). CarsDirect, which first reported on this, says that about 17,000 Mustang Mach-Es are still on dealer lots, and Ford wants them rented, including to Ford ICE customers who need a loaner. This way, Ford solves the inventory problem and hopes to introduce more customers to an electric vehicle without making them commit to a purchase.
All 2023 Mustang Mach-E models in dealer stock are eligible for these programs, but Ford favors well-equipped vehicles. To incentivize this, the Blue Oval offers a $1,750 "off invoice credit" or "adjustment" on Mach-E Premium and GT grades. This could be a win-win-win situation for Ford, dealers, and customers who get to test an electric vehicle without purchasing it. Of course, it could also increase the pre-owned Mach-E inventory down the line, making buying one an even worse proposition.
All carmakers except Tesla are losing money on their EV business and are now facing a difficult decision. They can increase production and hope economies of scale will make them profitable. Or cut production and reduce losses, but without making any progress towards profitability. It looks like legacy automakers have chosen the latter, sacrificing their EV future for short-term profitability.
Ford is a particular case in the EV market. On the one hand, it brags about EV sales increase and bold expansion plans. On the other hand, it announced cutting EV production in half for 2024, claiming people are less willing to buy electric vehicles. This is not very different from what we hear from other carmakers, including GM and Volkswagen. Ford is now in a predicament because its EVs are piling up on dealer lots in the tens of thousands, and it will not be long before it will have to admit its failed EV strategy.
If you want to know how it's possible to have EV sales increasing and unsold inventory at the same time, the devil's in the details. In the legacy car industry, carmakers report vehicles as "sold" when their dealers order them. Even though customers have not paid to drive them off the lot, from Ford's perspective, they are somebody else's problem. That's right, they're dealers' problem now.
The problem with this approach is that dealers cannot take in an unlimited number of cars. Filling up the parking lots will not help anyone, especially as the lack of actual buyers disrupts the flow of money. Ford may have offloaded the problem for now, but it will come back and haunt them if it doesn't find a solution for the cars piling up on dealer lots.
Ford thinks it has found a solution, though, and that is renting out the unsold EVs. The carmaker has implemented two new programs, Dealer Daily Rental (DDR) and Ford Rent-A-Car (FRAC). CarsDirect, which first reported on this, says that about 17,000 Mustang Mach-Es are still on dealer lots, and Ford wants them rented, including to Ford ICE customers who need a loaner. This way, Ford solves the inventory problem and hopes to introduce more customers to an electric vehicle without making them commit to a purchase.
All 2023 Mustang Mach-E models in dealer stock are eligible for these programs, but Ford favors well-equipped vehicles. To incentivize this, the Blue Oval offers a $1,750 "off invoice credit" or "adjustment" on Mach-E Premium and GT grades. This could be a win-win-win situation for Ford, dealers, and customers who get to test an electric vehicle without purchasing it. Of course, it could also increase the pre-owned Mach-E inventory down the line, making buying one an even worse proposition.
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