At a conference hosted by Bank of America this week, Jim Baumbick, the head of product development for Ford, said the company plans “dramatic reductions” in the complexity of its product lineup starting in the 2024 model year. At the same time, Ford plans to develop more variations of certain model lines, such as the Bronco SUV, because they offer 30% or greater profit margins compared to the base model, Baumbick said, according to Reuters.
He added, “On Bronco, we are never going to let our foot off the pedal.” The Bronco has been a runaway sales success that is challenging the Jeep Wrangler in the market for off-road capable vehicles — a market segment that Jeep has had pretty much to itself for decades.
The company is also “rushing to add capacity” to build more Maverick compact pickup trucks, Baumbick said. Maverick sales have also been far beyond all expectations. For decades, the conventional wisdom among American pickup truck manufacturers is that no one wants a pickup that isn’t 20 feet long, 7 feet tall, and able to carry 3000 pounds while towing a 15,000 pound trailer. Much to the surprise of Ford, customers are ordering many more of the hybrid version of the Maverick than expected, once again confounding the product planners who want to build only vehicles with the highest profit margins, the expectations of customers be damned.
After the company announced it had lost several billion dollars in the last fiscal year — primarily because of its initial investments in electric vehicles — CEO Jim Farley said the company’s product lineup and vehicle architectures are too complex and too costly. He added that Ford is planning to trim billions of dollars from its operating costs in order to respond to the concerns of investors.
Conquering complexity is close to a religion at Tesla, which says using high pressure casting machines to make components for its electric cars can slash hours off the time it takes to manufacture an automobile and permits factories to use 40% fewer robots, which means factory floor space can be used more efficiently.
Ford & EV Tax Credit Rules
On April 18, new rules for what vehicles qualify for the federal EV tax credits provided by the Inflation Reduction Act will to into effect (until that date, battery material and component sourcing restrictions do not apply). Based on guidance received from the IRS, Ford issued a press release on April 5 that said all three of its currently available popular electric vehicles as well as its plug-in hybrids are eligible for Inflation Reduction Act federal tax credits in 2023.
“Customers made Ford the No. 2 electric vehicle brand in the U.S. last year, and as we scale our production to build more EVs for more customers, we believe this new incentive eligibility will help even more Americans join the EV revolution,” said Marin Gjaja, chief customer officer, for Model e, the EV division of Ford Motor Company. All conventional cars are now grouped under the heading of Ford Blue and all commercial vehicles are now combined under the Ford Pro banner.
Here is the list of the EVs the company makes and what each model is eligible for in EV tax credits after April 18.
- Ford F-150 Lightning: $7,500 credit
- Ford Mustang Mach-E: $3,750 credit
- Ford E-Transit: $3,750 credit
- Ford Escape Plug-In Hybrid: $3,750 credit
- Lincoln Corsair Grand Touring: $3,750 credit
- Lincoln Aviator Grand Touring: $7,500 credit
The press release adds, “All of these consumer incentives require the vehicle MSRP be at or below $80,000, and that the purchaser must meet certain income limits. Every one of these vehicles is assembled in North America, which is another requirement for the consumer tax incentive.”
Ford E-Courier Introduced
Ford Pro currently has the E-Transit electric delivery van in production at its factory in Kansas City (the USPS has ordered 9,250 of them). But the company has no smaller electrified commercial vehicle available to customers in North America. In fact, Ford announced recently it will stop producing the Transit Connect by the end of this year.
While the market for a compact work vehicle may be small in North America, demand for vehicles that are smaller than the Transit van is strong in Europe and other markets. In an April 6 press release, Ford Pro announced the arrival of the E-Transit Courier, an electric commercial vehicle that is larger than the Transit Connect, but smaller than the E-Transit. Ford has recently announced a new electric Explorer for European customers.
The company says the E‑Transit Courier is fully integrated with Ford Pro’s platform of software and connected services to further drive efficient operation, including end-to-end charging solutions and management tools from Ford Pro Software. It has been completely redesigned around a larger, more flexible cargo area that delivers 25% more load volume than the outgoing model, plus enhanced capability including increased payload and space for two Euro pallets.
“E-Transit Courier moves its segment up a level with uncompromised EV performance, higher load capacity and fully connected support including end-to-end charging solutions, Ford Pro E‑Telematics and uptime-boosting FORDLiive,” said Hans Schep, general manager at Ford Pro Europe. “Ford Pro’s long-standing market leadership gives us unrivalled insight into customers’ needs and means we can help them get big productivity from their compact vans with more connectivity and capability than ever before.”
The new battery-electric van will enter production next year, while models powered by gasoline and diesel engines will be available by the end of this year. The E-Courier comes with a 100 kW electric motor and is optimized for overnight charging at home for drivers who take their vehicles home with them at the end of the work day.
The E-Courier can be equipped with adaptive cruise control with lane centering, blind spot detection with cross traffic alert, intersection assist, and reverse brake assist. Every E-Transit Courier features a built-in modem as standard, which allows uninterrupted connectivity with the Ford Pro ecosystem and wireless software updates that can evolve the vehicle’s capability over time without requiring a dealer visit.
Ford Pro Service expects non-scheduled maintenance costs for the E-Transit Courier to be at least 35% lower than on diesel-powered models. All models of the new Transit Courier, including the battery-electric version, will be built in Craiova, Romania, by Ford Otosan, which manufactures the Transit Custom and E-Transit. Ford Otosan is Europe’s largest producer of commercial vehicles, with annual production set to exceed 900,000 units by 2025.
None of this news from Ford is as exciting as a major announcement from Tesla, but it does show that Ford is looking ahead and planning to remain relevant in the brave new world of electric vehicles. Its emphasis on battery-electric commercial vehicles may not be S3XY, but will be essential to getting carbon emissions from internal combustion engines under control.
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