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Electric vehicles have been around for quite some time, about over a century with a long history of many ups and downs. “The history of electric cars can be broken up into five distinct periods: the early pioneers of electric mobility (1830-1880), the transition to motorized transport (1880-1914), the rise of the internal combustion engine (1914-1970), the return of electric vehicles (1970-2003), the electric revolution (2003-2020), and the tipping point (2021 and beyond)” (Simpson & Barlingen, 2021). The drawbacks of electric vehicles were the limited range and slow speeds compared to gasoline-powered cars. Consumers were not interested in EVs but over the next twenty years, new cars with different electric variations such as improved battery with a higher range and speed were almost comparable to gas-powered cars. The major turning point was when Toyota introduced its Prius, the first hybrid electric vehicle to be mass-produced. When gas prices were increasing and carbon pollution became a concern, Martin Eberhard and Marc Tarpenning took that opportunity and formed Tesla Motors in 2003 which started producing luxury electric sports cars. In the years since, almost all automotive manufacturers wanted to be a part of the electric movement and many of them has pledged to stop the production of internal combustion engine (ICE) completely.

With these new companies driving growth in other industries which in turn puts great strain on the mining and transportation of raw materials needed for the boom in the EV industry. The government’s proposal for carbon reductions in the new decade has helped give this industry a push. There will be some unique outcomes of this new industry since there is a mix of new manufacturers. The more established, well-known companies such as Ford and GM can adapt to this change relatively fast since they already have an established distribution channel. Most of the newcomers will face some challenges such as starting from scratch. How will they adapt to come out on top? That is the million-dollar question and some companies may not come out of this at all. The key factors that will be explored is the distribution models of the leading electric vehicle company, Tesla and one of the oldest, most popular car company Ford.

Tesla has taken outsourcing out of the equation and purchased their own refineries and their own battery manufacturing facility. Not all companies will take this route since it comes at a significant cost. Tesla nearly went belly up due to the outstanding cost. Tesla or Tesla Motors as it was known back when it was founded in San Carlos, CA in 2003 by two engineers Martin Eberhard and Marc Tarpenning. Who wanted to prove that people didn't need to compromise in order to drive electric vehicles and to prove that these vehicles could be quicker and more fun to drive than there internal combustion counterparts. If you hadn't guessed they named, the company after the inventor Nikola Tesla who invented an electric induction motor that ran on AC current and its concept is used in Telsa vehicles today. Due to the market interest of General Motors electric vehicle car experiment in the mid to late 90s they set out to create their company at its infancy Martin served as the company's CEO and mark served as the company's CFO. Unfortunately, Elon Musk is always the first person that comes to mind when somebody hears about Tesla. He wasn't involved in the company until 2004 at which point, he invested $30 million and ultimately became the company's chairman on the board of directors. In 2008 Tesla released their first production vehicle the completely electric roadster. The vehicle could achieve 245 miles to a single charge something a production vehicle had failed to achieve until now. It's 0 to 60 speeds were reached in less than 4 seconds very comparable to any of the gasoline powered luxury sports cars of its time. Both original founders ended up leaving the company in 2008 and Musk took over as CEO at which time he fired 25% of the company’s staff. Under Musk the company would continue on to release the Model S the model 3 and the model Y to name a few

Tesla puts the customer in control with their direct sales model which helps to skip the franchises altogether which allows better control over the customers' experience and without the middleman it reduces the price to the end customer as well. They not only manufacture vehicles, they also sell, deliver, and service them. By retaining control of the entire system, they can speed the process of product development. In their model you place an order online, fill out a credit application with some digital signatures and you wait for approval. Tesla makes the car buying experience a more enjoyable one due the significantly reduced time compared to traditional brick and mortar dealership model. Once approved you choose your delivery date or pick up date along with some required documents. On the day of delivery or pickup you sign any required documents and you're on your way with your brand-new car total time taking maybe 15-30 minutes. That's enough to keep any customer coming back which builds brand loyalty.

Tesla utilizes small showroom style galleries within busy malls and shopping centers with heavy traffic since they know you're going to have people curiosity get the better of them and come on in for a look around. This is great free marketing at its best you can’t beat it. Their sales personnel are actually product specialist that are not commission based they are on salary and they're not commission driven to get the sale. They are merely there to provide information on electric vehicles that you are interested in, not to pressure you into buying a car. The Laxer environment in these galleries compared to traditional OEM manufacturer dealerships is a breath of fresh air. We all hate dealing with the pushy salesman trying to get you to buy a car that you don't want or need. With this strategy Tesla saves on inventory costs only having a few models at each location for demonstration purposes and a handful that are actually for sale. The size of the showrooms are relatively small so they only need a handful of employees to run a store compared to a dealership that needs a whole crew of salespeople, financing staff, managers, lot porters, service technicians and the list goes on. The location of these is a great strategy because you don't have to go out of your way to drive to the mile of cars per say to go look at cars it's already somewhere you will be near if you're out shopping.

Their service strategy is on the same page as their sales strategy although they do have standard service locations like the traditional OEM manufacturers they also have technicians that make house calls or in most cases on site repairs. This is a key strategy that sets Tesla apart from other vehicle manufacturers in that they come to the customer instead of the customer coming to them for service. The vehicles being so software driven that sometimes technicians don't even have to physically touch the cars they can do everything from a computer and repair the issues. Tesla also offers upgrades to their systems unlike the traditional car manufacturers where if last year's model didn't have a feature in the entertainment system you can upgrade to the New Years without getting a whole new car. But with Tesla you can upgrade just like you do with your phone you upgrade the firmware and you get the most up-to-date features which is a great benefit.

Ford Motor Company is an American automotive corporation and was founded by Henry Ford in 1903. The company manufactured cars, trucks, auto parts, and accessories. The Model T was the very first experimental car to become successful and mass-produced into the world’s first moving assembly line in 1913. The company started to expand internationally in Paris and as they continued to grow it was producing more than half of America’s automobiles by 1923. They have assembly plants overseas in Australia, Asia, Canada, Europe, Latin America, and South Africa. Ford was the most well-known brand of its time. Fast forward to the 21st century, Ford announced in 2018 that its primary focus will be on pickups, SUVs, and crossover vehicles along with discontinuing their passenger cars. The F-Series pickup trucks were the best-selling vehicles in the late 20th and early 21st century in the U.S. For being in service for over 100 years of operational experience, Ford has been through it all such as every significant development in the automotive industry and was influential in the development of the American infrastructure by assisting in World War II.

Ford has had great success with its established distribution model. With new carbon reduction proposals, Ford has now started to produce Electric Vehicles. Ford currently has the Mustang Mach-E and their new Ford Lightning that is being manufactured now. Fords flow of goods is separated into three segments: producer, Dealer, and consumer. For consumers to buy a Ford product they must visit an authorized dealership. Unlike newer companies such as Tesla, Ford still has traditional showrooms and dealers where customers can inspect and test drive certain vehicles before purchasing them. Ford has an estimated 90 plants and facilities worldwide. Out of these 90 plants, 65 of these plants are manufacturers that produces certain parts for particular vehicle models. There are currently eight plants in the United States that are used for assembling most Ford vehicles, the rest of the plants are in Mexico.

Ford has recognized that there is a high demand for Electric Vehicles. In September of 2021, Ford announced that they will now be bringing two new campuses to Tennessee and Kentucky that will produce the next generations of electric F-Series and the batteries to power future electric Ford vehicles. Ford will invest $11.4 billion dollars in these two mega sites. This infrastructure investment will allow Ford to vertically integrate itself with its battery supplier. Vertical integration will allow Ford to save a significant amount of cost in areas such as production, quality control, and transportation. The partnering of Ford and SK innovation will allow Electric models to be assembled on-site with minimal lead times on battery components. With the reduction of lead times, Ford will be able to have a quicker turnaround rate on these vehicles that are highly in demand.

Ford's EV sector will follow the same distribution channel that ford has practiced with recent models. Ford currently uses an exclusive distribution model for its sales. An exclusive distribution model allows Ford to use only one distribution outlet in the area to distribute a product. This maintains efficient inventory levels at their dealerships by only supplying them with cars that are in demand in that geographic region. Controlling the distribution output allows Ford to analytically forecast sales based on geographic areas. Forecasting sales creates high efficiency in manufacturing and transportation. The results of efficient forecasting allow the company to distribute vehicles from locations that have the lowest transportation cost. This increases the company’s profit for every product sold.

Ford has grown into an international product that can be bought in various countries. To fulfill its dealerships that are categorized as its retailers, Ford uses an indirect distribution channel with its authorized dealerships. Dealerships are used as intermediaries for the company Ford. This distribution channel allows Ford to sell to privately owned dealerships where their product is sold to the public.

Ford has many years of following its exclusive distribution model to dealerships. Dealerships allow customers to review and test their cars before purchasing. Ford has followed this distribution model for its EV models as well. Many people are skeptical when it comes to electric vehicles and dealerships are a tactic used to supply and sell these vehicles. Dealerships have been the traditional distribution channel for car sales for Ford. As of November 2021, there were 3,006 authorized Ford dealerships in the United States.

Unfortunately for Ford, dealerships are on the decline. Shopping behaviors have shifted when it comes to car buying. Dealership distribution channels for EV have had low success due to consumers wanting to shop via the internet. For Ford, this will impact its distribution model drastically. Currently, people can order electric vehicles online, but they must be at an authorized dealership. As other competitors in the EV industry such as Tesla now deliver vehicles to customers’ homes, Ford will only ship to authorized dealerships. This constraint holds back Ford's ability to compete with other electric vehicle companies that offer these types of distribution channels.

The recommendation to the OEM manufacturers would be that they should start adapting new modern techniques that some of the newer startup vehicle manufacturers are utilizing. The use of technology streamlines the entire car buying experience and reduce costs while increasing customer satisfaction. Creating mobile applications that customers can utilize to complete those long application forms right from a mobile device. More of the OEM manufacturer should start allowing customers to customize vehicles online and allowing them to pick them up at a dealership or having them delivered to their home at no additional costs. If manufactures created a fixed price with the dealers, then customers wouldn’t get blind sided with extra cost. Listening to customers’ needs and being able to adapt to the changes without long delays.

For what we would call the specialty manufacturers there not a lot of recommendations they should continue to push the envelope with new and innovative ideas. One key recommendation would be to bring costs down to more competitive prices. The EV market is more of a luxury market because the price points set them out of the normal consumers price range. If they brough pricing close enough to compete with their gasoline counter parts there would be a broader demand.