Ford to Impose Non-Negotiable Pricing on EV Sales as Part of Model E Plan
macheforum.com
macheforum.com
This is sort point for me. I once custom ordered a BMW with the exact options I wanted. Made a downpayment. Waited 3 months for it to arrive taking the bus to work and getting rides home from friends. It arrived at the dealer and they sold it someone else and then told me I could order another if I wanted. You can probably imagine the rage I felt.
Some dealers won't do this, but you'll need to put in some work to find them.
Right now Tesla is coasting on VC and IPO and being early entrant innovator. The bitch slap of truth that is automotive manufacturing and marketing is about to land it's hand. Ford understands that bitch slap better than anyone.
Tesla literally ship with AMD Ryzen CPUs, while other manufacturers still can't even get CPUs. They got 8 cameras, 4 of which you can watch live....anytime on your mobile phone. The supercharger experience sets a standard that no 3rd party comes close to reaching. The supercharger network itself gives Tesla customers the ability to confidently travel and easily charge - fast.
I actually test drove a Mach-E and a Model Y. Ford was straight up trying to rip me off, and made the whole experience really off-putting. On top of that, the Ford dealers literally had no idea what they were doing, or any of the facts. There is no passion in it.
Tesla is all passion. Every Tesla employee wakes up to do one thing; make the world's best EV. Ford (and every other legacy) is trying to change engines in an airplane midflight while trying to learn how to build EV's.
It isn't for the lack of trying - in any area, that Tesla isn't the best at something. Tesla has the smartest people in the room/industry. Their energy and focus is on AI, scaling up manufacturing, battery tech, charging tech, etc. They spend nothing on marketing, and get more free press and word of mouth than any brand but Apple.
Marketing like legacy car companies comes off as desperate and thirsty. Just listen to the two CEO; Ford CEO will play buzzword bingo and talk high level corporate empty-speak. Elon Musk will talk to you about the challenges in battery manufacturing, the nuances of the minutia of building these amazing vehicles. Elon Musk will sleep on the factory floor to get it done. What other CEO has slept on the factory floor?
The man is not without his defects, but literally consider his life accomplishments; PayPal, Tesla, SpaceX, tunnel digging because why not, solar panels, residential utility scale battery storage, 30000 "gas stations" around the world.
Literally Ford can't even build vehicles right now. Like production down. Assembly stopped. Tesla is pumping out EV faster than ever before. And Elon Musk is trying to fly rockets to Mars in his spare time.
I respect the history of the legacy's; but they are simply not in a strong position. Musk won. His cars are the cool ones everyone wants.
It isn't that Ford has crazy demand; they have no production. Same as Rivian, etc. It markets well to say Ford/Rivian deliveries of EV are way out to 2024 - but has to be taken in context that they are struggling to produce 50k EV a year.
Tesla has the proven product. Literally no one knows how well a Rivian or Lucid will hold up, or what defects will haunt their early buyers. There isn't enough data out there yet. Same for the Mach-E. Tesla has 10yrs of data for customers to look at; and Tesla has what feels like a 100yr head start...
So, let's check list, shall we?
Paypal, wasn't him (at least not even close to the level of what people think)
Tesla, there Elon had to sue to get the title of founder
SpaceX, at least as much Shotwell than him
Tunnel digging, well ever herd of subways?
Solar panels and residential solar, one isn't even noticeable in terms of market share, the other had to be bailed out by Tesla (did I mention some strange corporate governance and financial links between tesla and SpaceX around that time? And that the bailed solar company was owned by his cousin?)
30k "gas stations, impressive... Just ask BP or Exxon how many they have. Credit where credit is due so, Tesla did build the first true charging network. The first, not the only one.
And let's not pretend SpaceX will be the first to reach Mars.
SpaceX without Elon would still have been SpaceX, SpaceX without Gwynne Shotwell would have been another Blue Origin.
I ended up canceling my reservation.
> That’s a good thing. Buyers are able to know the exact price without having to waste hours driving to a dealership and haggling.
Your comment doesn't address the point about markup at all. Knowing an "exact" with a higher markup doesn't seem live much of a good thing to me.
I'm not so sure. You're giving a rather tendentious account of the practice, and I'm pretty skeptical of handwaving "regulatory capture" as justification to get rid of regulation some corporation dislikes. As far as I understand, the dealership system was meant to engineer more competition into the auto market [1], and frankly I prefer something like that than giving more control to larger companies.
[1] And that passes the smell test, at least. A dealership is buying in bulk and can probably be assumed to be more savvy in negotiating with the manufacturer than a private consumer. And putting those dealerships in competition with each other should put downward pressure on prices.
I'm pretty pessimistic on this. For one, middlemen traditionally increase costs, due to the reduction in inefficiency and well, their cut. Furthermore there already exists a competition layer at the manufacturer level.
In the supply constrained world, this is even more so, as middleman will happily arbitrage prices upwards (see GPU scalpers), meaning that they get to extract value, while providing minimal service of their own.
What do you mean "at least not for Tesla." Don't they famously lack dealers, so there's no point of comparison for them?
> as middleman will happily arbitrage prices upwards (see GPU scalpers)
That's certainly true for some middlemen, but I don't think that can be generalized into a rule. Naively, some people think that everyone in a market should act like price gougers, but that's obviously not true, and I don't think the the reason is that there's something special about being the original manufacturer.
Or perhaps I'm just bitter about the GPU shortages, who knows.
With dealers anymore, they make you hustle to get some of that markup knocked off, then once you think the negotiation is over, you're tossed into the next stage of the negotiation gauntlet.
I'd rather know up front that I'm going to pay $50,000 for a vehicle, rather than think I'm going to pay $40,000, then upon arriving at the dealership, find out the market price is $55,000, which goes down to $45,000 after negotiation, and after all that, have to deal with finance secretly adding $10k in options and fucking around with interest rates.
That's obviously not true. I've never paid MSRP for a car and I've never bought a Tesla.
With Teslas, you pay MSRP. With any other car you pay whatever the dealer wants to charge, which is usually dealer cost plus some markup, which is usually less than MSRP. On some rare occasions you can even buy a car for at or below dealer cost.
You obviously haven't tried to buy a car during the pandemic.
Thus, you can sometimes get a lower price by ordering from the factory (dealer is passing along this savings) than buying from inventory. Not to mention this also eliminates price competition amongst dealers. Some dealers take a loss on sales to earn manufacturer incentives.
Service however is where they make money, and as time progresses and cars are more software based and self-repair becomes impossible - total cost of ownership goes up.
You are absolutely correct that these things typically do not happen with the major car manufacturers, and that Tesla needs to get its act together. But it is worth considering the other car manufacturers have been doing it at scale for a much longer time often with better understood materials and technology.
People often ask "What are the other carmakers going to do to compete?" and this is exactly one of those things that they'll bring to the table.
The opinion and memery about this brand is just unbelievable. Cars are big and complicated devices and selling them is equally complicated, and I'm sure there are people who have bad experience buying them, as is basically inevitable. But the overwhelming majority of owners think it's great.
[1] If you don't count the incessant, obsessive checking to see what the current delivery estimate is, of course.
I don't care at all what the overwhelming majority of owners think. Maybe 95% of customers are happy to have saved a few hours in a dealership, but when the 5% are without a car for six months that's pretty cold comfort.
The problems I am discussing are very serious. It is not enough for them to be uncommon; they must be unheard of.
This is sadly quite common right now. If you own any vehicle with Tesla production levels, it's possible there's a shortage of certain parts for it.
It's worth noting that Ford was one of the major automakers who funded the lobbying effort against the very Tesla model they now seek to join.
Ford and GM tried to cut the dealerships out of the equation several decades ago, and dealerships banded together in many states to lobby for legislation barring automakers from directly selling to customers.
BTW: you link to the NADA wikipedia page and claim that they represent the major automakers. They do not. They represent dealerships that sell cars made by the major automakers. The major automakers are not members of NADA.
0: https://tesla-cdn.thron.com/static/WIIG2L_TSLA_Q4_2021_Updat...
This source provides some historical context as to where the franchise laws originated from, albeit, I cannot find anything that directly links Ford to my original assertion [2].
The National Automobile Dealers Association (NADA) is responsible for representing 16,500 dealerships across the nation. While NADA abstracts away the ties between dealers and automakers, the vast majority of NADA participants are the legacy/typical automakers [3].
[1] https://en.wikipedia.org/wiki/Tesla_US_dealership_disputes
[2] https://www.cato.org/regulation/summer-2014/tesla-car-dealer...
[3] https://en.wikipedia.org/wiki/National_Automobile_Dealers_As...
I don’t see where in [3] this is supported. NADA is an association of dealerships not auto makers. I think there might be some confusion between say Ford the auto manufacturer and a franchise Ford dealership.
I consider that pretty telling of the markups they have been getting during the pandemic.
If they can't provide service I'll be going to other brands that's have a larger service network.
The app does a pretty poor job of not allowing you to specify issues outside of the standard flow. I could have called a service center but between how hard it was to source a 12v battery independently(I know it's a deep-cycle battery but still!) and high mileage I just don't think it's a car for us any more.
One thing to note though is that not all repairs are mobile serviceable. For example, when my Model 3 needed its front control arm replaced part of that service involves doing an alignment. The Mobile Techs aren't going to be able to do that one.
Shouldn't have to replace it for a long time (if ever) and seems to work fine. More expensive than lead acid but more convenient than service appointment for a 12v battery.
* unless the car we're talking about is _really_ expensive
I’d happily get in line to buy a particular car at MSRP directly from the manufacturer. If I won’t get it for a few months that’s fine. I will not overpay a dealer.
Cars like that are weird though. Some dealers dump them for a steep discount, since they don't sell in volume, can sit for multiple model years, and bring in a lot of tire kickers, while some lock them up in a showroom and ask 30% over market value for them.
The one thing dealerships do is that they do have a very slight incentive to address issues related to recalls. This is because dealerships are incentivized to do recalls because these service calls are covered by their agreements with the manufacturer as an independent entity, where as a company owned site would not be.
It could then be argued that dealerships provide some level of accountability to manufactures to be independent in reporting defects.
I think this is a weak argument and does not justify the existence of dealerships, but it is a real argument nonetheless, even if it's not sufficient to justify its own existence.
It’s the games they play with new cars, especially popular/hard to get models like EVs or the new Bronco that make people hate them.
I think things would work better if the brands owned/ran the dealerships. But I don’t know we can get there from here, at least with traditional cars.
EVs may give brands leverage to change the rules. But dealerships may fight back with more regulations from friendly state governments.
I bought a Mach E in part because I knew the dealers existed. They’re not perfect, but they’re there.
This is where Tesla has an incredible position. They can invest in becoming a logistics company in every possible part of the chain and maximize value at every point.
The other manufacturers have to undo their dealership footprint which is predicated on a +60 year relationship. That divorce will eat alive most classic manufacturers and will permanently block them from making good progress in direct to consumer.
This is what being disrupted looks like.
In the case of Tesla, their gains in reliability are directly transformed into a lesser demand for servicing. Once they get into a inflection point with their fit and finish quality they will likely become less dependent on having a traditional service infrastructure. Instead they can double down on more unorthodox models like mobile service.
Traditional manufacturers, in particular Japanese manufacturers, already achieved peak reliability in ICE vehicles. But even with that, they still need to have a service and maintenance footprint because their cars still break.
The average-reliability EV breaks way less than the top-reliability ICE, so you really need way less service infrastructure if you only sell EVs.
I think not. I have a Hyundai Ioniq, and I still have to change tires 2x a year, fill up wiper fluid, change the pollen filter, get AC/heatpump fluids checked. I had to get an axle boot repaired for 200€ - these things happen to any car. EVs (even Teslas) also have a conventional car battery for backup power - this will die every 4-5 years. People might key your car, or bump into you. If you own a „Monday“ Tesla, chances are you‘ll spend more time at a garage in the first few years than a gasoline Kia or Toyota.
Will you spend less on maintenance? Very likely. An order of magnitude less? Highly unlikely!
A welcome change as there’s no reason to charge different prices for the same product in the same state, same county and sometimes even the same town.
There is, and that reason is that you want to charge the maximum amount that the customer will pay. And different customers have different maximums.
Airlines are the kings of a low-margin industry being incredibly aggressive about optimizing pricing, and the exact same ticket will cost you wildly different amounts through different sales channels, on different days, etc.
For another example, I'm thinking about buying a laptop this month. Companies like Lenovo completely turn me off with their $4,500 prices minus $2,450 in "eCoupons". Another pain point is manufacturers that give different prices for the identical laptop configuration, simply because I started the customization wizard with different base models. I have no respect for these companies as they waste my time. I like the Apple pricing approach. I can feel confident making a purchase at any moment, because I know their prices don't fluctuate weekly, and they're not going to have a 30% off coupon code a month after launch that makes me feel like a fool.
Tesla has a few major advantages. First, they aren't tied to a dealership network. Second, since they sell online, they can dynamically change pricing with demand, something Saturn and Scion couldn't really figure out.
The last couple of times I asked for the exact amount for the car, told them I was getting a cashiers check for that amount, got said check, and then left if they tried to change the price afterwards.
Buddy of mine, ~15 years ago, bought a couple cars by spamming the sales department via email what he was looking for in a 1000 mile radius then playing them against each other. I tried it to a lesser extend a few year after that though and they basically weren't playing ball.
There is a reason a lot of auto communities call them the "stealership" and then post their $1200 radiator replacement quotes.
This happened with the SRT Viper. Dodge overestimated prices in the first year of new model production, so they dropped MSRP by like 15k the next year. Owners sued successfully to get $15k back.
Now these $80k cars are selling for ~$150-250k. People who purchase Vipers made out like bandits.
It takes a lot of money and time to spin up a new production line, and you don't really effect total sales that much... as someone willing to spend an extra $50k for a C8 Corvette or a Bronco will also happily pay sticker and wait 12-18 months.
Once this change is implemented, what will the experience at "dealership" be like for customers? I can't help wonder if they'll be met with deep resentment and frustration. Just a bunch of "deadbeats" coming in stealing dealers' time and money preventing them from selling "real" cars and trucks that have predictable kickbacks, incentives, add-ons, service-costs, etc.
As if the experience isn't horrible enough, I can only imagine what it will be like in the near term as these employees' livelihoods as they know (or expect it) are in jeopardy.
(owner of a Ford Explorer, VW eGolf and Tesla stock)
Also, I predict Ford is going to experience some legal difficulties with this. States govern the operation of dealerships, including pricing regulations, and they are not uniform. The dealers themselves are not powerless either, some being large, well heeled enterprises and associations that have fought and won against manufacturers.
While it is true that Tesla has managed to operate under a double standard, I suspect the entry of traditional manufacturers and dealerships into the all electric market will lead to some resolutions of that. That story is still being written.
Assuming it's an option. The Ford electric company could go the same route as Tesla and dealerships would have the same recourse they have now against Tesla, because it's a new company.
They can try. Unlike Tesla there is a vast number of incumbent Ford dealers with the political pull and legal resources within their states to contest such a scheme.
With EVs and the current semiconductor shortage, batteries/semis are in short supply and so production volumes are lower than demand, so there isn't a use case for dealerships that's apparent.
Once EVs mature and excess inventory builds up and has to sit on the books of the automakers and depreciate on the lot waiting for buyers - the dealership model will look more interesting. The bean counters will then team up with marketing department to (re)introduce independent dealerships under a different branded customer UX name.
[1] Chrysler adds dealer incentives to clear stock https://www.nbcnews.com/id/wbna12691116
I don’t get how people buy a car without trying it
With Tesla, the most you can do is refuse delivery, but you won't get to drive it before you do that...
GP's not wrong, but as someone who only started driving frequently well into my 30s, I've personally never had the "I must kick the tires" mentality -- and Tesla's at-the-time "7-day return policy" helped a lot with concerns about a lemon.
Haven't been disappointed yet. But then, I drive a car for transportation, not for a driving experience.
I just want to know if it will fit a double bass.
That doesn't justify their existence in a world where cross-continent orders over the internet are possible. But historically they've had a real role to play.
0: https://www.transportation.gov/rural/ev/toolkit/ev-benefits-...