November 14, 2023 — According to a bulletin from the Illinois Automobile Dealers Association today, the state’s Motor Vehicle Review Board confirmed the October 24th proposed decision by Hearing Officer Mark Kuchler finding for the 26 Ford dealers who filed a protest against Ford’s Model e certification program.
Today’s announcement was a formality as Ford had indicated it would not contest Kuchler’s proposed decision. Ford announced last month it is delaying approximately $12 billion (of $15 billion) in EV-related spending, which includes the construction of a new battery plant in Kentucky. Ford says it is trying to balance the pace of its investment with customer demand, which is declining due to the premium pricing today’s EVs command.
Kuchler determined that Ford violated six state law provisions when it terminated the dealers’ Next-Gen agreements and said they would not be allowed to sell or service EVs after December 2023 unless they enrolled in the new Model e certification program.
The program mandated:
1. Dealers to route EV advertising, sales, and service appointments through the OEM website;
2. Required non-negotiable pricing on EV sales and trade-in valuations;
3. Required dealers to purchase and install expensive EV chargers for public use, including during non-business hours.
Kuchler recommended to the Motor Vehicle Review Board that the dealers’ protests against Ford’s initiative be upheld.
It is a big win for dealers, who were protesting Ford’s EV mandates as part of its Model e initiative.
Ford’s Model e dealer certification program was a big topic at last year’s AUTOVATE conference with the Q&A I had with attorney Leonard A. Bellavia – Sr. Partner at Bellavia Blatt, PC. Our opinion was that OEM certification programs, such as the Model e, typically do not stand up to legal scrutiny once dealers start pushing back.
But last year’s chatter about manufacturers creating agency or direct-to-consumer business models has disappeared.
Ford dealers in Arkansas and New York also filed lawsuits against Ford, protesting the certification program. Ford said approximately two-thirds of its dealers signed up for the program late last year.
Even Chinese automakers, such as BYD or Nio, who are making inroads into Europe and Japan, are partnering with existing dealers in those regions instead of attempting to sell cars directly to customers.
And here in the U.S., Vietnamese automaker VinFast pivoted in recent months from an agency/direct-to-consumer model and now has nearly 30 dealers it plans to partner with to sell its electric vehicles.
Another takeaway from today’s news is that state franchise laws governing automakers’ relationship with their dealers remain strong and difficult to circumvent.
Consider this: the dealership state associations are staffed by experts who know every nook and cranny of their state’s regulatory and legislative process. And typically, the state association headquarters are located just blocks from their state capitol buildings. It’s not so easy for OEM lawyers to come into territory they are not familiar with and win a legal or legislative argument.