The US government and automakers seem to agree on transforming the country’s car culture from one based on an internal combustion engine to one based on battery-powered electric vehicles.
Both sides seem to understand that such a big change will require tens of billions of dollars in investment before consumers migrate to electric vehicles en masse.
The money will go towards training, internal charging infrastructure, e-commerce upgrades, remote delivery and pickup. optionsand upgrades to the digital customer experience.
But 90% of the money will go to charging infrastructure.
Biden to the rescue?
This week, President Joe Biden was in Ford’s backyard in Detroit, Michigan.
The president stopped by the North American International Auto Show to tout his Reduce Inflation Act and the impact the $749 billion bill will have on the auto industry.
The IRA provides tax credits for new electric vehicle purchases, as well as first-time used electric vehicle purchases.
Meanwhile, the Bipartisan Infrastructure Act that was approved last November invests $7.5 billion in building electric vehicle charging stations “across the United States.” At the event, Biden announced that the first $900 million will be approved to build 500,000 charging stations across the country.
Billions of federal dollars are flowing into the EV space, and with EV charging stations being the biggest expense for dealers looking to get certified, that money could come in handy for dealers looking to stay with Ford.
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But individual car dealers are not eligible to apply for financing as direct recipients, according to the bill. Funding is allocated to the states and one of the legal requirements related to funding is that charging stations must be publicly accessible.
Biden mentioned autoworkers numerous times to the pro-union crowd in Motor City this week. But he didn’t mention the car dealers that will be needed to achieve the company’s vision of a future EV.
Ford dealers will have until October 31 to decide what they want to do and will have until the end of the year to start making investments.
Farley also said he wants dealers to cut selling and distribution costs by $2,000 per vehicle to compete with the direct-to-consumer model that Tesla uses successfully.
So dealers have until the end of the year to decide if they want to do business with Ford in the future.
If a dealer decides that EVs won’t sell as much in their area for the next few years, they can skip the first window, but there will be a second window for Model e certification starting in 2027.
Dealers that want to participate in that certification program will need to commit by 2025. Ford is betting big on electric vehicles as the company looks to take over the market lead from Tesla.
The company plans to invest $11.4 billion to build ttwo new electric vehicle production facilities in Stanton, Tenn., and Glendale, Ky., and another $525 million to train skilled technicians to service their new models.
Ford’s plan is to get half of its sales from electric vehicles by 2030 and says it will have the capacity to make more than 2 million electric vehicles per year by 2026. That would represent about a third of the company’s global output.