Ford President and CEO Jim Farley said action is being taken on making customers wait for new vehicles or pay unreasonable markups, which he doesn’t like. It’s a gouger’s paradise, as Ford’s earnings report shows demand far outstrips supply for a number of hot products, including the 2022 Ford Maverick compact pickup, the 2022 Mustang Mach-E electric crossover, and the 2023 Ford F-150 Lightning electric full-size pickup truck.
Penalizing Price Gougers
Roughly 10 percent of dealers have reportedly taken advantage of increasingly long wait times for popular Ford models by trying to charge above MSRP and “gouge” customers. Ford CEO Jim Farley knows who they are, and they will feel Ford’s wrath in their future vehicle allocation deals with the automaker, which was made clear on Thursday’s fourth-quarter 2021 earnings call. Farley also hinted at a new go-to-market strategy and customer experience for those who buy EVs that may be in development, which could try to circumvent gouging dealers.
Dealers have so much control over vehicle prices right now because demand is through the roof and into the clouds, so people will pay more for the car they can find. Ford was the No. 2 seller of electric vehicles in the U.S. in 2021, behind juggernaut Tesla, but ahead of General Motors. GM’s EV sales were hit after production of its Chevrolet Bolt and Chevy Bolt EUV paused in the summer because of a battery fire recall, which was amended with a software upgrade.
It helped Ford bump into GM’s spot behind Tesla in the ranking on the back of strong sales, and the automaker is committed to a 40 percent product mix of EVs across its lineup by 2030 to sustain its spot.
Ford Mustang Mach-E, F-150 Lightning, E-Transit Big Sellers
Ford already has a combination of orders and reservations for about 275,000 Ford Mustang Mach-Es, Lightnings, and E-Transit commercial vehicles. Farley said the automaker underestimated demand for its new electric vehicles and is now doubling capacity to produce at least 600,000 EVs globally by 2023.
Mach-E output has increased three times in 2021 and more battery supply sources are being secured. The anticipated result: Ford will build 100,000 of its in-demand EVs this year, Farley told investors, expecting a production ramp-up to build more than 200,000 EVs per year by 2023.
Meeting 2023 Ford F-150 Lightning Demand
The 2023 Ford F-150 Lightning EV will be assembled at the Rouge Electric Vehicle Center in Dearborn, Michigan beginning this spring, within the larger complex of the conventional F-150 production at the Ford Rouge Center.
The new Electric Vehicle Center had physical restraints holding up production; Ford’s rapidly shifting production demands has meant “knocking down walls where the mortar is still wet,” Farley said. The end result is ultimately double production output.
Next year, the plant will move 150,000 Ford F-150 Lightning EVs—quite the hike from the original plan to build just 40,000 a year. There are already plans for even more capacity with a second-generation Ford F-150 EV pickup. Ford plans to break ground on a new plant in Stanton, Tennessee soon, for assembly of a second-generation electric F-Series pickup already in development, to be produced in even larger volumes beginning 2025.
A Lot of Ford Batteries
Ford is spending $11.4 billion with SK Innovation to build three battery cell plants in Tennessee and Kentucky that will combine to supply 1 million electrified vehicles a year, with Farley reassuring investors there is no concern over battery supply.
Reorganization Rumors
Ford is spending $30 billion on EVs through 2025 and could accelerate spending by as much as $20 billion over the next five to 10 years to convert more plants to make EVs, Bloomberg reports. Farley would not comment on the press reports, including reorganization and potential spinoffs of lower-volume EVs.
Farley committed much of the Ford earnings call highlighting how the internal combustion engine (ICE) business is different from the growing EV business, with different products, processes, materials, suppliers, engineering, and talent. EV efforts are being spearheaded by Doug Field, the former head of Apple’s car project who also worked at Tesla, where he engineered the Model 3.
Going forward, Ford will continue to invest in ICE models but manage this side of the business differently with a focus on reducing costs and running with less inventory and more productivity, said Ford Chief Financial Officer John Lawler. This could be one cause of rumors of future reorganization, to better realign the company’s structure towards its new product mix.
A Growing Heavyweight in the BEV Ballgame
BEVs are a whole new ballgame. The vehicles are simpler on paper, but Ford’s engineers continue to reduce complexity and achieve scale to keep costs down. There is a learning curve, and it requires a culture change of engineering at Ford, Farley admitted.
A team dedicated to lowering material costs for EVs found a way to save $1,000 on every Mach-E last month, according to the CEO. Learnings like these will be applied to the Lightning and subsequent future EVs to also help lower costs for Ford, and prices for the customer.
Wall Street has been appreciating the realization of Ford’s new vision in recent months. Stocks have increased and market value topped $100 billion in January. Ford reported a net income of $12.3 billion on $37.7 billion in revenue for the fourth-quarter of 2021. That contributed to a net income of $17.9 billion for the full year on $136.3 billion in revenue. The revenue is expected to grow this year; Ford expects adjusted income to increase 15-25 percent in 2022.
Ford’s 12 percent stake in Rivian brought a gain of about $8.2 billion in the fourth quarter—a nice return on its $800 million investment. The investment in Rivian was valued at $10.6 billion at the end of 2021 but was down to $6.6 billion this week.
Keyword: Ford Punishing Dealers Caught Price-Gouging Popular EVs