Ford CEO: Electric Vehicle Demand Will Transform Industry

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Jim Farley, CEO of Ford Motor Company, stands next to the company's new Ford F-150 Lightning on Wednesday, May 19, 2021, in Dearborn, Michigan.  identical to the very popular gasoline truck.  The new truck called the F-150 Lightning can go up to 300 miles per charge, with a starting price of just under $ 40,000.  (AP Photo / Carlos Osorio)

Jim Farley, CEO of Ford Motor Company, stands next to the company’s new Ford F-150 Lightning on Wednesday, May 19, 2021, in Dearborn, Michigan. identical to the very popular gasoline truck. The new truck called the F-150 Lightning can go up to 300 miles per charge, with a starting price of just under $ 40,000. (AP Photo / Carlos Osorio)

AP

A new electric version of Ford’s hugely popular F-150 pickup truck may just be the catalyst accelerating America’s transition from gasoline to battery-powered vehicles.

Jim Farley, the company’s new CEO, calls the introduction of an electric version of the nation’s best-selling vehicle as a watershed moment for Ford as well as the auto industry. The new truck, called the F-150 Lightning and slated to hit showrooms next spring, will be able to travel up to 480 kilometers per battery charge and tow up to 10,000 pounds (4,500 kilograms).

Still, Ford’s commitment to the EV F-150 is hardly without risk. The company has spent millions to develop the truck at a time when sales of electric vehicles remain minuscule – just 2% of the US auto market. Many truck owners will be reluctant to give up gasoline engines. And it’s possible that at least in the early months and perhaps years of production, automakers will run out of EV batteries and the rare precious metals needed to make them.

The Associated Press recently spoke to Farley about sales of electric vehicles and a global chip shortage that has hampered auto production. The interview has been edited for clarity and length.

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Q: Why is the Lightning so important to Ford and why are you offering an electric version before other models?

A: We start with our icons because we know the customers best and we can surprise them with the best execution. But the real key is the scale. We sell 1.1 million units (Series F) per year. So these customers really trust us. If there’s one company that’s going to take them into an electric future, it’s Ford.

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Q: You are at a base price of around $ 40,000. With a federal tax credit of $ 7,500, will you be even cheaper than a gasoline F-150?

A: It’s going to be pretty close. It depends on the specifications. The vehicle is faster than a Raptor (high performance gasoline version F-150). It’ll power your home for three days or one hell of a hatchback. We have the latest indoor technology, live updates. You could say this is going to give the product of internal combustion quite a blow.

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Q: How long do you think it will take before the majority of the vehicles you sell are battery electric?

A: Much will depend on government support, building infrastructure (charging stations), as well as purchasing support. We still have a $ 7,500 advantage at Ford. So it depends on what’s going on with government policy and whether that tips the scales for many clients. This is the case in Europe. China is moving fast. We’re totally exhausted with the Mach E (electric SUV). On the west coast, this has already changed rapidly. It will be a matter of time before it crosses the country.

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Q: You said the global semiconductor shortage will halve your normal production in the second quarter. Do you think this shortage ends this year?

A: These components make up a high percentage of our building materials these days, and we can’t really continue to run a just-in-time inventory on components like this. It really is a game changer in the way we look at our supply chain. We are seeing positive indications from chip producers. The big change is the return to service of the Renesas plant (a chip factory in Japan that was damaged by fire). As this installation reaches 100%, we will feel a lot more confident. So we are not there. I’m not going to give any predictions on what the second half will look like.

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Q: Does that 50% production loss for the second quarter change?

A: Certainly in the second half we see a lot less impact. We lost about 200,000 production units in the first quarter. The second trimester will be the most difficult. We see, cautiously, a few hundred thousand units of risk in the second half of the year.

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Q: You mentioned that you can buy chips directly from factories and store them. Will this change the way Ford buys essential parts?

A: I really think so. It is a truly significant event. It’s not really black swan events, Renesas is, but it’s really more of a sort of dealing with the realities of a different supply chain focused on electronic components. Silicon is an important part of every vehicle. I think everything is on the table. We’ve also learned that you need to flexibly design these components. You may need to have a design on the shelf in case something is skimpy.

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Q: Did you say you could go from a huge inventory on dealer lots to a factory order business model?

A: Most of our customers shop online now. We are simply developing our e-commerce platform. There are a few pieces that are now starting to come together. The first is a reservation system, so people are more likely to order what they want rather than going to the dealership and ordering out of inventory. We have to make it easier. We did it. The next thing is our delivery order needs to improve. The next thing is very large scale remote collection and delivery.

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Q: Dealers say people would take four weeks from ordering to delivery. Is it realistic?

A: That’s pretty much what we see in Europe. About 50% of our retail customers in Europe order their cars. It’s somewhere between four and six weeks. It all depends on the popularity of the model. There is a big advantage for us in terms of costs and marketing. But on the F-150, with millions and millions of combinations, we have to drastically reduce the complexity to get there.

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Q: Do I have to pay more for my F-150 because of this?

A: The whole system will be much lighter and the company will not have to advertise publicly. There are a lot of efficiencies that customers really don’t enjoy today. There will be lower costs, which we will pass on to customers. Usually it won’t be a big change for customers. I just think they’ll save a lot of time.

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Q: Ford is considering building its own electric vehicle batteries. Do you see these factories as union factories and will they pay as much as the jobs in the Ford powertrain factories?

A: Michigan is a good example, where we make the F-150. It’s a UAW factory. Another is VanDyke (in Sterling Heights, Michigan). They make engines for the electric F-150. Jobs change. We believe that by working with the government and our partners in the UAW, we can secure American jobs as we transition to electric mobility. It is essential for our country. This is essential for Ford. One of the real game-changing factors in this area is cell (battery) production. By supplying ourselves with cells, and not just motors, power electronics, things like that, we have the opportunity to create more jobs. And although vehicles are 30% more efficient to manufacture, by sourcing batteries we can offset that risk.

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