Ford Motor Company (NYSE:F) got a lot of people’s attention when it unveiled the battery-electric F-150 Lightning pickup in May. It’s a hugely important product for Ford — and maybe for America, too.In this Motley Fool Live video, recorded on August 5, Industry Focus host Nick Sciple and Motley Fool senior auto specialist John Rosevear look at what Ford said recently about its efforts to get the Lightning into production. And they highlight the effect the company’s new pickup could have not just on Ford’s bottom line but on President Joe Biden’s effort to make electric vehicles (EVs) mainstream.
A transcript is below the video.
Nick Sciple: You mentioned, John, the F-150 Lightning, how this can be a really important product for Ford, maybe an important product for the image of electric vehicles in the US. What are we seeing as far as updates on the Lightning and Ford’s EV plans?
John Rosevear: Well, Ford said a couple of weeks ago that they are scaling up their ability to build electric vehicles generally because the demand has actually taken them a bit by surprise, first for the Mach-E which they launched, the Mustang Mach-E, the electric crossover that they launched at the beginning of the year, and also they now have I think 120,000, 125,000 pre-orders for the F-150 Lightning. This is just putting a deposit, the deposit is refundable, but still it’s a strong indication of interest. What they found with the Mach-E was a lot of these $100 reservations converted and became sales, and so they are taking the conversion rate which was very high and looking at the F-150 and trying to scale early production. They’re saying, “We’re going to need more batteries. We’re going to need more motors, this and that,” and so they’re pushing out to their suppliers to make sure they have that in place and ramping up their production capability and ramping up their volume expectations, assuming we get past chip shortage for this thing when it launches in the first half of next year.
Nick Sciple: You mentioned F-150 Lighting 120,000 reservations, that’s really significant. Why is this product you mentioned more broadly something that you think is important for EVs in general, or could be?
John Rosevear: Because it’s an F-150. Ford has serious pickups, the best selling vehicles in America. They are driven in red states, they’re driven in blue states. Americans are ornery people and we disagree on many things, but we like pickup trucks. [laughs] Certainly, an awful lot of people do, and this is the pickup truck, the most visible pickup truck. Ford is bringing it in at a reasonable price. They are targeting commercial fleet customers who will see a real return on their investment or total cost of ownership that is considerably to their advantage versus maintaining an internal combustion fleet. Ford is making this case strongly to their fleet customers, I think in part, because they weren’t sure how retail demand was going to go. [laughs] They put a lot of effort in selling these to fleets certainly to get the scale early on if retail demand was a little slow to arrive, but I think they’ve been pleasantly surprised by the retail demand. They say a whole lot of these people are new to Ford, first time Ford customers who are making reservations for their iconic F-150 pickup, and it’s a good truck. The capabilities and so forth that they’ve shown so far are genuinely impressive. It is an F-150. We know that Ford will beat the heck out of it before they ship it so that they know it’s tough, so that they know they can stand behind it. It’s a product you can buy with some trust. If you’ve had F-150s and Ford says, “Okay, here’s the electric F-150. It went through our same durability cycle that all our F-150s go through. We’ve tested it. We’ll stand behind it with the full warranty, you know what you’re getting,” I think a lot of people are really liking that. As I said, that’s across America. That’s not just Teslas for elite tech people or whatever. This is the every man product, the every woman product. They do sell a fair number of them to women, I was actually surprised by that, [laughs] I learned that a few years ago. It’s a thing that reaches into all parts of the United States, including parts of the United States where we might expect if Tesla was really out in front of this and so forth, a little bit of a backlash against Mr. Rocket Ship or whatever. I think the F-150 is a key product to help move Americans to electric vehicles. Again, by prioritizing commercial deliveries early on and commercial sales early on, what you’ll see is a lot of people driving them at work, and they come on and say, “Man, that’s a nice truck. I’m going to get one.” They tell their friends. So you get a lot of word of mouth and second-order effects off that. It’s why I think it’s such a pivotal product. To a lesser extent, also the electric Transit van, which is coming this fall. That’s another thing. They’ll drive it at work and go, “These Ford electrics are actually pretty solid. They’re really rugged, we’ve been driving it six months, we banged on it, hasn’t any problems, and it’s nice to drive. Maybe I want to have an electric, or a General Motors electric, or a Tesla, or whatever,” this spreads the adoption. It spreads the word. As people who have driven electric vehicles, we know that they are fun, and even the mundane ones are fun. But most people still have not driven electric vehicles. When you have them at work, when you’re selling into commercial fleets in big volumes, you get more people behind the wheel of one, and they say, “Well, I like this. I can live with this.” It’s an important thing.
Nick Sciple: Yeah. Just in a sentence, basically bridging that gap from the white collar driver to that blue collar driver, the everyman regular line workers.
John Rosevear: Sure. The coastal driver to the heart of America driver, however you want to put it. The blue state driver to the red state driver, whatever you want to say, yes, it is. It’s a product that can do that.
Nick Sciple: Cool. Any last thoughts here on Ford, John, before we move onto GM?
John Rosevear: One thing to note is that a lot of Ford’s profit came from its financial services arm. What’s going on there is that as new cars have become harder to buy, used car prices have soared. We know that. We know that’s a big component of when people say, oh, consumer price index is up in the United States, inflation is going on. We know a lot of that is cars, new and used light vehicles. What Ford Credit is finding is that the vehicles they get back off lease are selling for very very very good prices at auctions. They had a record quarter for credits, for its financial services arm, that drove a lot of Ford’s profit when we might have expected a loss in the second quarter.
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