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Ford Broadens Electrification Strategy to Reach More Customers, Improve Profitability, Continue to Reduce CO2
Aug 21, 2024 | Dearborn
The plan includes adjusting the company’s North America vehicle roadmap to offer a range of electrification options designed to speed customer adoption – including lower prices and longer ranges. In its fully electric portfolio, Ford will prioritize the introduction of a new digitally advanced commercial van in 2026, followed by two new advanced pickup trucks in 2027 and other future affordable vehicles. Ford also realigned its U.S. battery sourcing plan to reduce costs, maximize capacity utilization, and support current and future electric vehicle production.
“We are committed to innovating in America, creating jobs and delivering incredible new electric and hybrid vehicles that make a real difference in CO2 reduction,” said Ford President and CEO Jim Farley. “We learned a lot as the No. 2 U.S. electric vehicle brand about what customers want and value, and what it takes to match the best in the world with cost-efficient design, and we have built a plan that gives our customers maximum choice and plays to our strengths.”
The electric vehicle market is rapidly evolving as Chinese competitors leverage advantaged cost structures including vertical integration, low-cost engineering, multi-energy advanced battery technology and digital experiences to expand their global market share.
In addition, today’s electric vehicle consumers are more cost-conscious than early adopters, looking to electric vehicles as a practical way to save money on fuel and maintenance, as well as time by charging at home. This, coupled with scores of new electric vehicle choices hitting the market over the next 12 months and rising compliance requirements, has amplified pricing pressures. These dynamics underscore the necessity of a globally competitive cost structure while being selective about customer and product segments to ensure profitable growth and capital efficiency.
“We’re committed to creating long-term value by building a competitive and profitable business,” said John Lawler, Ford vice chair and chief financial officer. “With pricing and margin compression, we’ve made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”
In addition to adjusting the cadence of product launches and realigning battery sourcing, Ford now plans to leverage hybrid technologies for its next three-row SUVs. As a result of this decision, the company will take a special non-cash charge of about $400 million for the write-down of certain product-specific manufacturing assets for the previously planned all-electric three-row SUVs, which Ford will no longer produce. These actions may also result in additional expenses and cash expenditures of up to $1.5 billion and the company will reflect those in the quarter in which they are incurred, as a special item.
Lawler said an important enabler to improve profitability is accelerating the mix of battery production in the U.S. that will qualify for the Advanced Manufacturing Tax Credit. Also, given the propulsion options, and increasing demand for hybrids, Ford’s mix of annual capital expenditures dedicated to pure electric vehicles will decline from about 40% to 30%.
Electric commercial vehicles
The rollout of Ford’s next generation of electric vehicles begins with a commercial van that will be assembled at Ford’s Ohio Assembly Plant starting in 2026.
Ford has a strong commercial electric vehicle presence, led by E-Transit, which is America’s best-selling electric van suitable for businesses of all sizes. Commercial customers are transitioning more quickly to electric vehicles as they value the total cost of ownership and the productivity benefits that electric vehicles can provide. For them, vehicles, software and charging solutions are tools, and they want the best tools for the job and their bottom line, whether it is an E-Transit or an F-150 Lightning Pro.
Low-cost, highly efficient electric vehicle platform
In 2022, Ford established a skunkworks team in California focused on changing the company’s approach to next-generation vehicle development and bending the cost curve on electric vehicles. The team takes a systems-integration approach across design, engineering, supply chain and manufacturing to fundamentally rethink the full vehicle. Managed to reduce cost and complexity, the approach will go deeper into the supply chain and benchmark cost against the best competitors in the world.
“We recruited the most technically skilled and creative professionals from inside and outside Ford to drive a radical change in how we develop an electric vehicle,” Farley said. “The work of this highly talented team has evolved into a critical enabler of our electric vehicle strategy. These electric vehicles will be lower cost, and not compromised in any way.”
The first affordable vehicle off this new platform will be a mid-sized electric pickup launching in 2027 that is expected to cater to customers who want more for their money – more range, more utility, more useability.
With a globally competitive electric vehicle cost structure, the platform is designed with minimal complexity to scale quickly by underpinning multiple vehicle styles – for both retail and commercial customers. It is designed to deliver personalized digital experiences that are expandable, always updating and building on Ford’s best features, like BlueCruise and Ford Pro Telematics. This will increase the installed base for software and services – improving Ford’s mix of sticky, profitable revenue over time.
Next-gen electric truck
Ford’s next-generation electric truck will build on the company’s century-long heritage of truck leadership and the No. 1 best-selling electric truck in the U.S., the F-150 Lightning.
Ford is retiming the launch of its groundbreaking electric truck code-named “Project T3” to the second half of 2027. Taking all the learnings from F-150 Lightning customers, the truck will offer features and experiences never seen on any Ford truck, including upgraded bi-directional charging capability and advanced aerodynamics. The truck will be assembled at BlueOval City’s Tennessee Electric Vehicle Center.
Retiming the launch allows the company to utilize lower-cost battery technology and take advantage of other cost breakthroughs while the market continues to develop.
Broader electrification choices
For some commercial applications and for larger vehicles, the battery cost of a pure electric vehicle remains challenging.
Therefore, Ford will develop a new family of electrified three-row SUVs which will include hybrid technologies that can offer breakthrough efficiency, performance benefits and emissions reductions versus pure gas vehicles and extend the range of the vehicle on road trips relative to pure electric vehicles.
In addition, the next-generation F-Series Super Duty pickup will have a range of propulsion options, building on Ford’s hybrid truck sales leadership with the F-150 and Maverick.
“As the global leader in pickup trucks, we are future-proofing this valuable franchise across all sizes with hybrid, electric and other electrified propulsion options, giving individual customers and businesses choice based on how they use their trucks,” Farley said.
Smart capacity utilization and localization key to achieving cost reductions
Ford realigned battery sourcing to support both electric vehicle and other emerging electrified vehicle applications to unlock cost reductions, improve capital efficiency, and qualify for Inflation Reduction Act production and consumer tax credits.
“An affordable electric vehicle starts with an affordable battery,” Farley said. “If you are not competitive on battery cost, you are not competitive.”
Aug 21, 2024 | Dearborn
- Ford broadens electrification choices for customers and adjusts its rollout of pure electric vehicles to deliver a capital-efficient, profitable electric vehicle business, while continuing to significantly reduce carbon emissions over time
- Ford focuses its next generation of electrified and digitally advanced vehicles where it has competitive advantages – commercial vans, mid-size and large pickup trucks, and long-range SUVs – and will offer a range of electrification options designed to speed customer adoption, including lower prices and longer ranges
- In its fully electric portfolio, Ford plans to introduce an all-new commercial van that will begin production in 2026 in Ohio, closely followed in 2027 by two new pickup trucks – a medium-sized pickup based on the platform designed by Ford’s California skunkworks team and a next-generation truck to be assembled in Tennessee
- Ford’s new affordable electric vehicle platform marks a major step forward in the company’s strategy to bend the cost curve on electric vehicles, allowing the company to introduce multiple vehicle styles for both retail and commercial customers at a faster pace, with more personal digital customization
- Company realigns battery sourcing to be more efficient and contribute to lower overall costs in its electric vehicle portfolio
- Ford will provide an update on electrification, technology, profitability and capital requirements in the first half of 2025
The plan includes adjusting the company’s North America vehicle roadmap to offer a range of electrification options designed to speed customer adoption – including lower prices and longer ranges. In its fully electric portfolio, Ford will prioritize the introduction of a new digitally advanced commercial van in 2026, followed by two new advanced pickup trucks in 2027 and other future affordable vehicles. Ford also realigned its U.S. battery sourcing plan to reduce costs, maximize capacity utilization, and support current and future electric vehicle production.
“We are committed to innovating in America, creating jobs and delivering incredible new electric and hybrid vehicles that make a real difference in CO2 reduction,” said Ford President and CEO Jim Farley. “We learned a lot as the No. 2 U.S. electric vehicle brand about what customers want and value, and what it takes to match the best in the world with cost-efficient design, and we have built a plan that gives our customers maximum choice and plays to our strengths.”
The electric vehicle market is rapidly evolving as Chinese competitors leverage advantaged cost structures including vertical integration, low-cost engineering, multi-energy advanced battery technology and digital experiences to expand their global market share.
In addition, today’s electric vehicle consumers are more cost-conscious than early adopters, looking to electric vehicles as a practical way to save money on fuel and maintenance, as well as time by charging at home. This, coupled with scores of new electric vehicle choices hitting the market over the next 12 months and rising compliance requirements, has amplified pricing pressures. These dynamics underscore the necessity of a globally competitive cost structure while being selective about customer and product segments to ensure profitable growth and capital efficiency.
“We’re committed to creating long-term value by building a competitive and profitable business,” said John Lawler, Ford vice chair and chief financial officer. “With pricing and margin compression, we’ve made the decision to adjust our product and technology roadmap and industrial footprint to meet our goal of reaching positive EBIT within the first 12 months of launch for all new models.”
In addition to adjusting the cadence of product launches and realigning battery sourcing, Ford now plans to leverage hybrid technologies for its next three-row SUVs. As a result of this decision, the company will take a special non-cash charge of about $400 million for the write-down of certain product-specific manufacturing assets for the previously planned all-electric three-row SUVs, which Ford will no longer produce. These actions may also result in additional expenses and cash expenditures of up to $1.5 billion and the company will reflect those in the quarter in which they are incurred, as a special item.
Lawler said an important enabler to improve profitability is accelerating the mix of battery production in the U.S. that will qualify for the Advanced Manufacturing Tax Credit. Also, given the propulsion options, and increasing demand for hybrids, Ford’s mix of annual capital expenditures dedicated to pure electric vehicles will decline from about 40% to 30%.
Electric commercial vehicles
The rollout of Ford’s next generation of electric vehicles begins with a commercial van that will be assembled at Ford’s Ohio Assembly Plant starting in 2026.
Ford has a strong commercial electric vehicle presence, led by E-Transit, which is America’s best-selling electric van suitable for businesses of all sizes. Commercial customers are transitioning more quickly to electric vehicles as they value the total cost of ownership and the productivity benefits that electric vehicles can provide. For them, vehicles, software and charging solutions are tools, and they want the best tools for the job and their bottom line, whether it is an E-Transit or an F-150 Lightning Pro.
Low-cost, highly efficient electric vehicle platform
In 2022, Ford established a skunkworks team in California focused on changing the company’s approach to next-generation vehicle development and bending the cost curve on electric vehicles. The team takes a systems-integration approach across design, engineering, supply chain and manufacturing to fundamentally rethink the full vehicle. Managed to reduce cost and complexity, the approach will go deeper into the supply chain and benchmark cost against the best competitors in the world.
“We recruited the most technically skilled and creative professionals from inside and outside Ford to drive a radical change in how we develop an electric vehicle,” Farley said. “The work of this highly talented team has evolved into a critical enabler of our electric vehicle strategy. These electric vehicles will be lower cost, and not compromised in any way.”
The first affordable vehicle off this new platform will be a mid-sized electric pickup launching in 2027 that is expected to cater to customers who want more for their money – more range, more utility, more useability.
With a globally competitive electric vehicle cost structure, the platform is designed with minimal complexity to scale quickly by underpinning multiple vehicle styles – for both retail and commercial customers. It is designed to deliver personalized digital experiences that are expandable, always updating and building on Ford’s best features, like BlueCruise and Ford Pro Telematics. This will increase the installed base for software and services – improving Ford’s mix of sticky, profitable revenue over time.
Next-gen electric truck
Ford’s next-generation electric truck will build on the company’s century-long heritage of truck leadership and the No. 1 best-selling electric truck in the U.S., the F-150 Lightning.
Ford is retiming the launch of its groundbreaking electric truck code-named “Project T3” to the second half of 2027. Taking all the learnings from F-150 Lightning customers, the truck will offer features and experiences never seen on any Ford truck, including upgraded bi-directional charging capability and advanced aerodynamics. The truck will be assembled at BlueOval City’s Tennessee Electric Vehicle Center.
Retiming the launch allows the company to utilize lower-cost battery technology and take advantage of other cost breakthroughs while the market continues to develop.
Broader electrification choices
For some commercial applications and for larger vehicles, the battery cost of a pure electric vehicle remains challenging.
Therefore, Ford will develop a new family of electrified three-row SUVs which will include hybrid technologies that can offer breakthrough efficiency, performance benefits and emissions reductions versus pure gas vehicles and extend the range of the vehicle on road trips relative to pure electric vehicles.
In addition, the next-generation F-Series Super Duty pickup will have a range of propulsion options, building on Ford’s hybrid truck sales leadership with the F-150 and Maverick.
“As the global leader in pickup trucks, we are future-proofing this valuable franchise across all sizes with hybrid, electric and other electrified propulsion options, giving individual customers and businesses choice based on how they use their trucks,” Farley said.
Smart capacity utilization and localization key to achieving cost reductions
Ford realigned battery sourcing to support both electric vehicle and other emerging electrified vehicle applications to unlock cost reductions, improve capital efficiency, and qualify for Inflation Reduction Act production and consumer tax credits.
“An affordable electric vehicle starts with an affordable battery,” Farley said. “If you are not competitive on battery cost, you are not competitive.”
- Ford and LG Energy Solutions are targeting to move some Mustang Mach-E battery production from Poland to Holland, Michigan, in 2025 to qualify for Inflation Reduction Act benefits.
- The BlueOval SK joint venture’s Kentucky 1 plant will manufacture cells for the current E-Transit with enhanced range and F-150 Lightning beginning mid-2025, delivering significant cost improvements coming online earlier than planned.
- BlueOval SK at BlueOval City in Tennessee will produce cells starting in late 2025 for Ford’s new electric commercial van to be built at Ford’s Ohio Assembly Plant. Those same cells will be sourced to later power the next-generation electric truck to be assembled at BlueOval City and future emerging technology electrified vehicles. This common cell strategy gives Ford significant sourcing flexibility for manufacturing across multiple segments and electrified platforms as the market continues to evolve.
- Lithium iron phosphate (LFP) battery production is on track to begin in 2026 at BlueOval Battery Park Michigan – America’s first automaker-backed LFP battery plant – qualifying for Inflation Reduction Act benefits and giving Ford one of the lowest-cost battery cells in North America.
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