Ford Forbids Customers from Doing Something Very Unexpected. Here’s Why It’s Such a Smart Move

The all-electric Ford 150 Lightning truck began rolling off the assembly line on Tuesday. But if you buy it, you may have to sign a contract that prohibits you from selling it for at least one year. This is the latest development in a highly anticipated launch that has turned into an eating frenzy.

The Twitter account @F150Gen14 posted a picture of the letter in January and has since been independently confirmed by media sources.

The letter warned dealers against demanding additional fees from customers who had paid a deposit to pre-order trucks, warning them that any dealer caught collecting additional fees could find their truck supply cut off. (Of course, as Motor Trend points out, there’s nothing to stop dealers from raising the price of Lightning well above MSRP, thereby profiting from the supply-demand mismatch in a slightly different way.) At the same time, the letter offers dealers an option. to include a no-resale clause for a year in the sale, to prevent speculators from buying trucks and selling them to impatient buyers at high prices.

This is a stunning move, but not completely unprecedented. Back in 2017, the company imposed a two-year no-resale requirement on buyers of its GT models. It was a special vehicle, a two-seater sports car built to commemorate the company’s victory in the 1966 24 Hours of Le Mans race (also the subject of the film. Ford v. Ferrari). The GT has an initial MSRP of just under half a million dollars, and even if you have the cash, it’s really hard to get one. Ford was serious about waiting periods for resale too–when pro wrestler John Cena tried to sell his, Ford took him to court. However, the temporary GT resale ban affected only a handful of buyers. Assuming dealers use the clause (which is clearly meant to protect their interests) it could affect the 200,000 people who have ordered Lightning, as well as anyone who wants it, and will likely have to wait more than a year to get it. .

Limiting resale in this way is an extraordinary move, but it is an extraordinary time for both the auto market and the used car market. Ford made a very big and very passionate commitment to EVs, having now made electric versions of the iconic Mustang, and the wildly popular F150 pickup truck. CEO Jim Farley told The Verge that the chip shortage facing all automakers would not limit production of the F150 Lightning – suggesting that the company would withdraw the chip from production of internal combustion engine cars if necessary. And indeed, many on social media responded to Ford’s announcement that the Lightning was rolling out from its factory with complaints about how long they waited for the non-electric vehicle they ordered.

Some criticized Ford for imposing a year-long resale ban, questioning whether it was smart–or even ethical–for the company to tell customers what they could and couldn’t do with their own car after they paid for it. But the critics were wrong. Ford has been in business for 118 years, and the company is well aware that if demand for its cars far exceeds supply today, the reverse will come. So Ford is very smart to protect its customers from dealer fraud and both dealers and customers from touts the auto equivalent of concert tickets. Some seem to welcome the move.

Ford is also smart in making big commitments to electric vehicles. The company first started promoting the F150 Lightning in 2019, at a time when fuel costs were less than $2.85 per gallon. Its leaders cannot predict the impending pandemic, or the changes to the auto market it will bring. Today, it seems wise, it created the first large production full-sized electric pickup truck to hit the market at a time when gas prices were over $4, and electric car sales just outpaced diesel sales in Europe. I have to admit, I’m biased in favor of electric cars. But even their detractors have to admit that EVs are the way of the future and that they will inevitably take over the auto market.

A few years ago, before he became CEO, Farley spent some time visiting companies in Silicon Valley and realized that “They were after our customers,” as he told New York time. Cars today are about software as much as anything else, something that has helped give Tesla – founded in California and financed with software dollars – an early advantage in the EV market. (It has to be said that the US automaker’s longstanding disdain for electric cars is not helping.)

Today, based on the company’s relative valuation, investors seem to believe that Tesla’s lead is decisive and that the Big Three can never catch up. The F150 Lightning, the electric version of the country’s most popular vehicle with the full power of Ford in tow, might be enough to rewrite that future.

Opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

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