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September 06, 2019 04:42 PM

Ford's EV strategy takes shape in search for popularity and profit

Micheal Martinez
Automotive News
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    DETROIT—After years of heavy investment and one forgettable attempt, Ford Motor Co. has yet to deliver a serious battery-electric vehicle.

    That will change in 2020 with the introduction of Ford's first long-range EV, a Mustang-inspired crossover expected to be called Mach E. That will be followed as soon as a year later by a full-electric F-150, with two midsize EV crossovers on tap for late 2022.

    And still two more are expected in the same period.

    Ford may have ceded the early days of the EV craze to the likes of Tesla, Nissan and General Motors, but executives say Ford didn't miss much, considering the low demand and even lower margins today's EVs command. And having that time to see what works and what doesn't, Ford now believes it has solved the problem that has vexed manufacturers for a decade: How to make EVs that are popular and profitable.

    "We're coming in at the right time," Ted Cannis, Ford's global director of electrification, said. "We could do all sorts of different things, but we're going to play to what we're good at: commercial vehicles, vans, pickups, performance vehicles and SUVs. We have loyal customers, we know our base and the margins are better. It's just the right business."

    The key to Ford's strategy is to first electrify some of its most well-known nameplates, so that wary customers aren't scared off by new technology in a vehicle with no history. Ford then plans an extensive marketing campaign that plays up the vehicles' performance attributes, so customers can learn how an EV can be more fun to drive, or more efficient at a work site, than its internal combustion counterpart.

    The market segments being targeted should allow Ford to price the vehicles competitively enough to offset the higher cost of EV development, experts say. That could be a challenge in the years ahead, if Ford inches closer to the threshold at which federal tax credits begin to phase out.

    Ford's early days dabbling with electrification produced forgettable offerings such as the Focus Electric, along with the C-Max and Fusion plug-in hybrids. The Focus EV, which went on sale in 2011 and ultimately offered a range of 100 miles, was the result of an Obama-era government loan given to help create more fuel-efficient vehicles. While Ford and others were limited at the time by high development costs and relatively short battery range, they learned valuable lessons from those early attempts, Cannis said. All of the first wave of plug-in vehicles have been, or will be, discontinued.

    "It is critical to think through the customer first," he said. "It has to be more than a compliance vehicle. It's got to be better."

    On-camera proof

    Ford signaled its EV strategy this year with the release of a video showing an electric F-150 prototype towing 10 double-decker rail cars loaded with 42 F-150s, equal to about 625 tons.

    The stunt was partly a marketing gimmick, but it offered proof that Ford is serious about electric trucks. Tesla CEO Elon Musk has said, without providing evidence, that Tesla's upcoming pickup can tow up to 150 tons. But Ford's was the first demonstration by any auto maker of towing ability.

    "Being green itself, for most of the market, is not a key buying factor," said Sam Abuelsamid, principal research analyst at Navigant Research. "They're looking for other attributes.

    "Ford wants to demonstrate that (even though) it's powered by a battery, it still delivers what an F-150 has always been expected to deliver."

    According to internal Ford metrics, interest in an electric pickup jumped after the video. Cannis said 18 percent of respondents to an internal survey indicated after seeing the video that they would consider buying such a vehicle—up from 10 percent before.

    Turning that interest into sales won't be a huge leap, Cannis added.

    "There are people out there looking for electric vehicles," he said. "Let's say of the 800,000 F series that we sell a year, just 10 percent are interested. That's still 80,000 vehicles. These are huge numbers."

    And the price Ford can charge for its gasoline-powered pickups should allow it to offer an electrified version to its customers without steep discounts, Abuelsamid said.

    "They'll target volume segments where they won't have to subsidize them too much," he said. "They won't go down the Chevy Bolt or Nissan Leaf path."

    'Surprise and shock'

    Ford plans similar performance and capability out of its upcoming Mach E. It chose a Mustang-inspired design path so customers have a sense of what it can do, Cannis said.

    After that, the midsize EV crossovers planned for the 2023 model year should play in high-volume segments. Ford intends to introduce six battery EVs by 2022 in North America, and a total of 16 globally by that time.

    But challenges remain.

    "Nobody has really achieved substantial volumes yet, and they certainly haven't done it profitably," Abuelsamid said. "Tesla has cracked that code in terms of consumer appeal, but they have not yet found a way to make it a sustainable business."

    By contrast, Ford is so confident in its strategy that product boss Hau Thai-Tang this year vowed that its EVs will make money.

    "We're in very good shape," Cannis said. "I think we're going to surprise and shock a lot of people."

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