Ford expects profits from new EVs

Source: By David Ferris, E&E News reporter • Posted: Monday, November 2, 2020

An electric version of Ford Motor Co.’s bestselling commercial van to be unveiled next week will be sold widely and is meant to be a moneymaker, according to the company’s new CEO.

The news is a further sign that traditional U.S. automakers are shifting their expectations for electric vehicles. Previous EVs have been money-losers meant to comply with regulations. But new electric models are moving front and center, getting the best new features and attached to automakers’ most popular lines (Energywire, Oct. 6).

At the same time, Ford is struggling to meet strict carbon emissions targets in Europe.

Ford said on Thursday that it will pool its vehicles with Volvo Group to avoid fines from European regulators. Volvo is sitting pretty because its plug-in hybrids are selling well, while Ford’s plug-in, the Kuga, was recalled because of reports of battery fires. Ford reported losing $400 million in the third quarter because of issues with the Kuga.

Ford’s evolution came amid other EV developments. Electrification will be part of a new blue-ribbon transportation panel created by industry and policy heavyweights. The Commission on the Future of Mobility was launched on Friday to “propose a fundamentally new vision for transportation policy for people and goods.”

The panel, which will examine the overlapping trends of shared, autonomous, electric and connected vehicles around the globe, includes Jim Hackett, who just retired as CEO of Ford; Frederick Smith, CEO of FedEx Corp.; Steve Mollenkopf, CEO of Qualcomm Inc.; and Jason Grumet, president of the Bipartisan Policy Center.

Also Friday, Fisker Inc., the California startup looking to compete with Tesla Inc. with an electric luxury sedan, went public on the New York Stock Exchange. It accomplished the move via a reverse merger with a holding company and generated about $1 billion for the company. Fisker aims to have its first vehicle, the Ocean, in showrooms by the end of 2022.

Word of Ford’s new electrification push came from Jim Farley, 58, a Ford veteran who took the reins from Hackett in October. He held his first call with investors on Wednesday to discuss Ford’s third-quarter performance.

He announced better-than-expected profit margins as auto sales have bounced back from the trough of pandemic lockdowns. Much of the conversation was about new electric cars.

Farley praised the driving experience of the new Mustang Mach-E, the first electric and the first sport utility model for the classic nameplate. A Ford financial filing said production started last week and that the first deliveries will arrive to U.S. and European customers “in the coming weeks.”

But most of his electric focus was on less sexy commercial vans and trucks. Their big, energy-rich batteries create advantages that can be rolled into premium models, and enable new services for which Ford can charge fees.

For example, Farley enthused about the new electric Ford Transit, which will be unveiled on Nov. 12.

The Transit and its smaller sibling, the Transit Connect, are little known to most car buyers but are bestsellers to businesses and governments in both North America and Europe. They are used for everything from airport shuttles to plumbing service vehicles to floral delivery vans.

“Ford is extremely strong in commercial fleets,” said Michelle Krebs, senior director of automotive relations at Cox Automotive. That extends to the little Transit Connect. She added, “No one has anything like it.”

Ford also sells the F-150, for decades the bestselling vehicle in the United States, to commercial customers like construction companies. The electric versions of both the F-150 and the Transit are due in 2022.

Farley said Ford’s commercial vehicles will have “a suite of software services that drive loyalty and generate reoccurring annuity-like revenue streams.”

While offering few specifics, he discussed what those services might include, such as EV charging. “We have a whole service business, and that service business is charging,” he said. He also talked about offering more repair services. “That’s our double transformation,” he added. “One is to transform a automotive operations; the other one is in a way to kind of disrupt ourselves.”

Turning those services into profit comes from vehicle telematics, the data generated by vehicles that flow back to Ford’s computer servers.

It is “onboard data to send back to the fleet — when it needs to be serviced, navigation for where it’s at, how it’s driven,” said Stephanie Brinley, an automotive analyst for IHS Markit Ltd. “If you can use that to manage maintenance, if you can keep drivers on track, there’s all sorts of ways to use that information.”

Another chance to turn an electric truck or van into dollars, Farley said, hinges on using the huge battery to charge other devices. More high-end models of new hybrid F-150s, due late this year, include plug points in the truck bed.

“When we started to look at in commercial terms offering bidirectional charging, bringing charging to the job site and electricity job site, we started to realize that there’s a lot more revenue opportunity,” Farley said.

The presence of the Mach-E and Transit vehicles, among others, will “expand very quickly,” Farley said.

Those vehicles will also get the best bells and whistles. On Friday, Ford said that the Mach-E and F-150 would be the first two vehicles to get Ford’s new self-driving feature. Called Active Drive Assist, it allows for hands-free driving on 100,000 miles of U.S. highways.

Ford expects to sell more than 100,000 vehicles with the new features in the first year.