It costs more to build an electric car than a conventional car with the same features and materiasl. Not only that, passenger cars are rapidly losing market share to SUVs, crossovers, and light pickup trucks. Rather than beat its head against a wall trying to sell hybrid, plug-in hybrid, or fully battery-electric sedans, Ford has a better idea. It will electrify is best-selling, highest-profit models instead.
Last week at its annual Investors Day, Ford told its shareholders what its plans for the electric vehicle future will be. CEO Mark Fields said, “We want to become a top player in electrified solutions, and I call it moving from a compliance mindset to one of leading where we can win, such as with our commercial vehicles.” The translation? Ford will put its efforts into making electrified powertrains for the vehicles it sells the most of, namely SUVs and light-duty trucks.
Ford’s product chief, Raj Nair, then took to the podium to say,
“The view is by 2030, we will reach a tipping point where the number of electrified product offerings will be greater than the internal combustion engine. Ford is choosing to invest today to be prepared for this eventual outcome.
“Let me elaborate on how we’re building on our early efforts, to lay the foundation for long term success once we reach this tipping point. There are really four key elements to our strategy. The first one Mark touched on, playing to our strength — electing to compete in areas where we know where we have a dominant position in the marketplace. Commercial vehicles, trucks, utilities, and performance: These are sectors where we have iconic nameplate brands, tremendous favorable opinion, and more pricing power.
“It’s also going to allow our product development and marketing teams to take a different approach, in terms of how we go to market and start to showcase the full benefits of electrification beyond just fuel efficiency.
“Trucks, commercial vehicles, sport-utilities, and performance vehicles are all parts of the market where Ford has a strong position, and where it currently generates big profit margins. Those are the segments where Ford will focus its electrification efforts, on the theory that those customers are most likely to buy into Ford’s innovations — and are most willing to pay for them.”
In other words, rather than building an electric sedan just to satisfy regulatory requirements, Ford is planning to bring electric drivetrains to market in ways that will make customers feel they add significant value. That may mean a plug-in hybrid F150 that can use the instant torque of an electric motor to get heavy loads moving from rest. It could also mean SUVs with an electric motor at each wheel to give superb road holding in slippery conditions.
It also could mean a plug-in hybrid Mustang that runs on electric batteries in normal driving but can rely on a powerful V8 engine when the driver whistles down to the engine room for maximum power. Or imagine commercial delivery vans that operate quietly and cleanly on battery power. They might never need fuel, only a nightly recharge.
Will Ford’s plan give it the flexibility to electrify its fleet without suffering economic losses? It’s a novel strategy and one that just might work. Check back in 2030 to see how this all turns out.
Source: The Motley Fool | Image by Ford