Automotive giant Ford accused of underpaying dealers for electric vehicle battery replacements
The transition of automakers to electric vehicles is accompanied by difficulties in the service and support of these vehicles, especially regarding financial reimbursement issues.
According to a lawsuit filed in a US federal court, Ford is accused of significantly underpaying two dealerships in New York State for the complete replacement of batteries in electric vehicles.
Lawyers warn that this may be just the beginning of a series of lawsuits that could later turn into a class action, significantly increasing risks for the company.
The essence of the dealers’ claims
Jericho Turnpike Auto Sales and Patchogue 112 Motors dealerships claim that Ford violated state warranty reimbursement laws by paying a fixed and reduced amount for battery replacements instead of covering the actual cost of repair work.
One of the dealers stated that since the beginning of 2024, it has performed 15 battery replacements on Ford models. For 13 of these jobs, the company allegedly reimbursed only $600 per battery, while the actual cost of each was $22,600. This created a financial gap of $286,200. For the other two replacements, the dealer received $13,000 each, but, as claimed in the lawsuit, even these amounts did not cover the full cost.
The second dealer reported a similar situation, also receiving only $600 per battery instead of the expected $22,600.
Legal aspects of warranty reimbursement
The core of the lawsuit is the question of how franchised dealers should be compensated for warranty repairs and work under service contracts.
The lawsuit alleges that Ford ignored state law requirements, which demand that manufacturers reasonably cover repair costs. The law stipulates that payments for work under a manufacturer’s warranty or service contract cannot be lower than the prices and rates the dealer charges non-warranty customers. This includes the cost of parts plus a 40% markup. Furthermore, dealers are allowed to apply their standard retail markup on labor, which can range from 70% to 200% depending on the type of service. The lawsuit claims Ford did not comply with these provisions.
Attorney Leonard Bellavia, representing the dealers, stated that Ford is not the only manufacturer acting this way. His law firm is considering similar lawsuits against other automakers in various states, all focused on what he describes as a system of non-compliance with warranty obligations.
This situation points to a broader problem in the automotive industry related to the economics of electric vehicles. The high cost of batteries makes warranty cases involving their replacement particularly significant for the cash flows of both manufacturers and dealer networks. The conflict over reimbursements could affect dealers’ willingness to invest in the necessary equipment and staff training to service electric vehicles, which, in turn, could slow down the development of infrastructure to support EVs. The success or failure of this and similar lawsuits could set a precedent for settling financial relations between manufacturers and dealers in the new era of electric transport.