Ford Eases EV Requirements After Latest Litigation Setback

In the fall of 2022, Ford introduced an aggressive “Model e Program,” requiring its dealers to invest roughly $500,000-$1 million to install publicly accessible electric vehicle (EV) charging stations, invest in employee training, use the Ford.com e-commerce platform for all EV transactions, engage in “no-haggle” pricing, and provide remote delivery of all vehicle purchases if they wanted to continue selling Ford EVs.

Since the requirements were announced, almost 400 previously-enrolled dealers have dropped out of Ford’s EV program.  Ford dealers also filed legal challenges in Arkansas, Florida, Illinois, New York, North Carolina, and South Dakota.  While Ford scored a quick victory in South Dakota, it suffered significant setbacks in New York, where the court granted the dealers’ request to enforce the automatic stay prohibiting Ford’s requirements from taking effect, and most recently in Illinois, where the Illinois Motor Vehicle Review Board found the program’s requirements violated the Illinois Motor Vehicle Franchise Act by requiring dealers to purchase unnecessary equipment and adhere to unreasonable requirements regarding sales/trade-ins and inventory.

At the Board hearing in Illinois, Ford emphasized the highly competitive nature of the EV market and argued its program ensured uniformity and quality across dealerships and addressed consumer anxiety around purchasing EVs. Ford plans to spend $50 billion on EV development.  The dealers countered that they would bear the full expense of installing charging stations, undergoing EV product training, and purchasing expensive software. Ford’s own evidence indicated the dealers stood to lose money from investing in the program.

In his decision, the hearing officer found Ford’s new requirements violated the Dealer Act by, among other things, terminating dealers’ rights to sell EVs unless they enrolled in the program, attempting to replace their pre-existing EV agreements with one that forced them to accept the program, and requiring dealers to meet costly EV-related requirements at their dealerships.  The hearing officer also determined the program was not truly “voluntary” because non-participating dealers could no longer sell EVs.  The hearing officer’s decision was adopted in whole by the Board on November 16, 2023.

Shortly after the Board’s Final Order was issued, Ford announced it would modify the program, cutting training costs in half, lowering the number of required EV chargers, and delaying the deadline to install them by 6 months.  These latest modifications follow changes earlier this year that also eased a number of the program requirements. Perhaps more than a mere “white flag” in response to recent losses in dealer protests, Ford’s latest moves may signal a broader assessment by the manufacturer of overall opportunity in the EV market as Ford also recently announced that it will reduce planned production of lithium batteries at its Marshall, Michigan plant by over 40%.