Electrical car demand will rework business – KIRO 7 Information Seattle

DEARBORN, me. – (AP) – A new electric version of Ford’s hugely popular F-150 pickup truck could be the catalyst accelerating America’s transition from gasoline to battery-powered vehicles.

Jim Farley, the company’s new CEO, said the introduction of an electric version of the country’s best-selling vehicle was a turning point for Ford and the auto industry. Called the F-150 Lightning, the new truck, which will be available in the showrooms by next spring, can travel up to 300 miles on a charge and haul up to 10,000 pounds.

Still, Ford’s commitment to the EV F-150 is hardly without risk. The company spent millions developing the truck at a time when electric vehicle sales remain tiny – only 2% of the U.S. auto market. Many truck owners will be reluctant to switch from gasoline engines. And there is a clear possibility that automakers will run out of EV batteries and the scarce precious metals from which they are made, for at least the first few months and perhaps years of production.

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

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Q: Why is the lightning so important to Ford and why do you offer an electric version before other models?

A: We start with our symbols because we know the customers best and can surprise them with the best execution. But the real key is the scale. We sell 1.1 million units (F series) annually. So these customers really trust us. If there is one company that will lead them into an electric future, it is Ford.

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Q: They have a base price of approximately $ 40,000. With a $ 7,500 tax credit, can you get even cheaper than a gas-powered F-150?

A: It’s going to be pretty tight. It depends on the specifications. The vehicle is faster than a Raptor (F-150 high-performance gas version). It will power your home for three days or a tailgate. We have the latest interior technology, wireless updates. One could argue that it will give the combustion product a hell of a run.

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

A: Much of this will depend on government support, infrastructure expansion (charging stations), and purchase support. We still have a $ 7,500 advantage at Ford. So it depends on what happens to government policies and if that matters for many customers. It has in Europe. China is moving fast. We are totally sold out with the Mach E (electric SUV). That changed quickly on the west coast. It will be a matter of time before we reach the country.

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Q: You said that the global semiconductor shortage will cut your normal production in half in the second quarter. Do you see that shortage end this year?

A: These components make up a high percentage of our material makeup these days, and we can’t really continue to do just-in-time inventories for such components. It’s a real change in the way we look at our supply chain. We’re seeing some positive signs from chip manufacturers. The big change is that the Renesas facility (a fire-damaged chip factory in Japan) is back online. As this facility increases to 100%, we will feel much more secure. So we’re not through. I’m not going to make any predictions about what the second half will be like.

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Q: Will this 50% production loss change for the second quarter?

A: Certainly we will see a lot less impact in the second half. We had around 200,000 production downtimes in the first quarter. The second quarter will be the most difficult. We conservatively see a few hundred thousand units of risk in the second half.

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

A: I really think so. This is a really significant event. It’s not exactly Black Swan events, Renesas, but it’s more about dealing with the realities of another supply chain that focuses on electronic components. Silicon is a big part of every vehicle. I think it’s all on the table. We have also learned that you have to design flexibly for these components. You may need to have a design on the shelf in case something runs slim.

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Q: You said you could move from having huge inventory on dealer lots to an ex-factory order business model?

A: Most of our customers now shop online. We are currently expanding our e-commerce platform. There are a couple of pieces that are coming together now. The first is a reservation system so that people order what they want rather than going to the dealer and ordering the inventory. We have to make it easier. We did that. Next, our order needs to improve until delivery. The next is large-scale remote pickup and delivery.

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Q: Merchants say it would take customers four weeks from order to delivery. Is this realistic?

A: That is exactly what we are seeing in Europe. Around 50% of our retail customers in Europe order their cars. It’s anywhere between four and six weeks. It all depends on how popular the model is. We have a great advantage on the cost side and in marketing. But with the F-150, with millions and millions of combinations, we have to reduce a lot of complexity to achieve that.

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Q: Would that mean I would have to pay more for my F-150?

A: The whole system will be much leaner and the company will not have to do any public advertising. There are many efficiencies that customers really don’t benefit from today. There are lower costs that we pass on to the customers. It won’t be a big change for customers in general. I just think they’ll save a lot of time.

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Q: Ford has plans to build its own batteries for electric vehicles. Do you see these as union works and will they pay as much as jobs in Ford powertrain plants now?

A: Michigan is a good example of where we make the F-150. This is a UAW system. VanDyke (in Sterling Heights, Michigan) is another. They make motors for the F-150 electric. The jobs are changing. We believe that by working with the government and our UAW partners, we can secure American jobs when we switch to electric mobility. It is vital to our country. It is important for Ford. One of the real pioneers in this area is (battery) cell production. By sourcing cells, not just motors, power electronics, etc., we have the opportunity to create more jobs. And even though the vehicles are more than 30% more efficient, we can offset this risk by procuring batteries.