2019 Ford F-150 Limited pickup
Mack Hogan | CNBC
The importance of a new F-150 truck to Ford Motor has never been greater.
The automaker needs its highly profitable flagship product to drive a global restructuring plan and pay off debt related to the coronavirus pandemic. It also needs to convince Wall Street that the company can maintain its leadership position for decades in the segment as new and traditional competitors start offering all-electric trucks.
Ford’s response to these rivals includes trucks with traditional internal combustion engines, as well as new hybrid and all-electric versions. It is also adding significantly more technology to the truck, which has been the best-selling vehicle in the United States for 38 consecutive years and the best-selling truck in the country for more than 40 years.
“We have held the number 1 spot for 43 years. We are very focused on raising that level again and letting the competition continue,” Kumar Galhotra, Ford of the Americas president, told CNBC. “Obviously it’s a very important launch.”
Ford plans to unveil the traditional and hybrid versions of the 2021 F-150 on Thursday night. The all-electric version is expected sometime in the next two years, online or a little later than the new electric pickups from General Motors, Tesla, and startup maker Rivian.
The importance of Ford’s full-size trucks, which include the F-150 and larger trucks, cannot be overstated. Trucks accounted for 37% of the automaker’s 2.4 million vehicles sold last year in the US. USA, 10 percentage points more than in 2010.
“Much of Ford’s performance and livelihood is built on this vehicle,” said Jessica Caldwell, executive director of industry analysis at Edmunds. “The F-150 is Ford’s cash cow.”
The F-150 is a key part of the automaker’s plans to profitably grow the commercial side of Ford’s business to aid in a $ 11 billion restructuring and pay more than $ 20 billion in new debt due to the coronavirus pandemic.
The nearly 900,000 Ford F-Series trucks it sold last year in the United States generated about $ 42 billion in revenue, according to a study Ford commissioned from the Boston Consulting Group. Ford’s automotive revenue was $ 143.6 billion in 2019.
Wall Street remains skeptical about the company’s change. He has been particularly critical of Ford CEO and President Jim Hackett. Since Hackett began leading the automaker in May 2017, the stock price has nearly halved and his credit rating has been reduced to “junk.”
Ford shares, which have a market value of $ 24.5 billion, closed at $ 6.15 on Tuesday, down 2.1%. Shares have fallen 33.9% since the beginning of the year.
Ford must add enough new technology to the truck without alienating its traditional truck buyers, who are among the most loyal and passionate consumers in the auto industry. It’s something Ford knows and has accomplished with the new F-150, according to Galhotra.
That includes offering over-the-air or remote upgrades, as well as an integrated power generator. The on-board generator, he said, will be able to power tools and other equipment.
The entire truck, according to Galhotra, is “designed around those kinds of ideas” that will enable better performance and more comfort for customers.
Ford, Galhotra said, hired trained anthropologists to help the company understand how truck owners use their vehicles and how to make the best improvements. That includes Ford’s decision to offer hybrid, all-electric versions of the truck.
“The size of the segment is very large,” said Galhotra. “The types of clients have very, very different needs.”
Galhotra declined to comment on expected sales for the hybrid model, which he said could provide incremental growth by attracting new customers to the collection segment. Trucks with traditional gas and diesel engines are expected to remain the majority of sales for the foreseeable future, he said.
The F-150 will also be the first with Ford’s new electrical architecture, or brain, of the vehicle. The equipment is a key enabler for advanced driver assistance systems such as Ford’s “Active Drive Assist”, an advanced driver assistance system comparable to the Tesla autopilot.
“It really is about technology and productivity,” Ford Chief Operating Officer Jim Farley told investors about the F-150 during a Deutsche Bank conference earlier this month.
Despite the enthusiasm for all-electric trucks, the vehicles are expected to remain a small minority of sales. That is, once they go on sale. Fully electric trucks from GM, Tesla, Rivian and others like Nikola and Lordstown Motors are not expected to go into production until at least next year.
At the moment, Ford is expected to focus on the non-EV version of its prized truck, which has been under attack by newer GM and Fiat Chrysler models in recent years.
“For a time it was difficult to win over truck buyers, but we are seeing more things happening. We are just seeing loyalty numbers decrease,” said Caldwell of Edmunds. “The market share numbers show how competitive this segment has been.”
Fiat Chrysler’s Ram brand has done an impressive job gaining market share since 2015, which was when Ford last introduced a new F-150. The Ram 1500’s market share has grown from less than 20% in 2015 to 25.1% in 2019, according to estimates by automotive research firm Edmunds. The biggest growth came after the company unveiled a new version of the truck in 2018 that was well received, including a larger, more comfortable interior.
2019 Ford F-150 Limited pickup
Mack Hogan | CNBC
The launch of the newest Ram 1500, Caldwell said, was successful in winning owners of other brands, particularly due to the company’s focus on the vehicle’s interior.
The importance of the F-150 is also critical due to the coronavirus pandemic. Truck sales have not declined as much as other segments this year. In fact, automakers, including Ford, have prioritized truck production due to low inventories after the plants closed in March-mid-May due to Covid-19.
“The F-150 is really important to Ford, particularly now with the pandemic,” said Caldwell. “Truck sales have worked quite well in the past 3 months.”
Ford is aware that there is no margin for error in launching the new F-150. Farley made it clear to investors earlier this month that the missteps that plagued the redesigned Ford Explorer last year will not be repeated.
“The configuration of the F-150 is really different from that of the Explorer,” he said, adding that the two plants that make Ford trucks in Michigan and Missouri do not have to be completely rebuilt with the new models.