Ford has announced today an update to its electrification plan with a new goal of 40% of its sales being all-electric by 2030.
While we like the acceleration, we think the automaker, like many others, is going to have to revise the goal soon.
Today at the Capital Markets Day, Ford held a presentation called ‘Delivering Ford+,’ during which they highlighted a new strategy centered around electric vehicles, a new dedicated commercial business, and connected services.
CEO Jim Farley commented during the presentation:
“I’m excited about what Ford+ means for our customers, who will get new and better experiences by pairing our iconic, world-class vehicles with connected technology that constantly gets better over time. We will deliver lower costs, stronger loyalty and greater returns across all our customers. This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T, and we’re grabbing it with both hands.”
At Electrek, the focus on electrification was what caught our interest.
Ford announced a new goal of 40% of global sales being electric by 2030 and more investment in batteries:
- Accelerating investments and increasing planned total spending on electrification, including battery development, to more than $30 billion by 2025 – while deriving efficiencies from Ford’s flexible EV architecture and modular technologies.
- Anticipating 40% of Ford’s global vehicle volume to be fully electric by 2030, including from:
- Mustang Mach-E, which is bringing new customers to Ford – 70% of buyers, to date
- The F-150 Lightning, an all-electric version of the world’s most popular pickup truck, which has amassed 70,000 customer reservations since it was unveiled one week ago, and
- E-Transit commercial vans, which will be on the road later this year.
- Investing in battery technology and equipping Ford to design, engineer and manufacture its own batteries, with key developments including:
- Creating Ford Ion Park, a global center of battery excellence comprising more than 150 experts in battery chemistries, testing, manufacturing and value-chain management who will boost battery range and lower costs to customers and Ford
- Vertically integrating battery technology with an extensive range of EV batteries – IonBoost lithium ion; IonBoost Pro lithium iron phosphate for commercial vehicles; and long-range, low-cost solid-state batteries based on Ford’s own engineering and know-how from Solid Power, in which the company holds an equity stake, and
- Forming a joint venture, BlueOvalSK, with SK Innovation to manufacture battery cells and arrays at two plants in the U.S. for future Ford and Lincoln vehicles.
I appreciate the new commitment to electrification from Ford, but I am underwhelmed by the target of 40% all-electric by the end of the decade.
Understandably, Ford makes a lot of vehicles, and it’s probably impossible for them to foresee switching entirely to battery-electric within the next 10 years without slowing its growth or even reducing its current capacity.
However, I don’t think it’s going to be up to them.
I think we are on the verge of a massive shift in consumer perception toward electric vehicles.
In order for Ford to even achieve 40%, it would have to deliver some impressive electric vehicles, and with battery costs falling and charging time improving, those electric vehicles will be far better than any gas-powered vehicles they can produce.
This will happen for virtually all automakers serious about electrification.
This shift in the vehicle market will create a shift in consumer demand for electric vehicles as gas-powered cars will be broadly regarded as old technology, much like what the smartphone did to the flip-phone over a relatively short period of time.
The resale value of gas-powered cars will plummet, and everyone will want their next car to be electric.
Personally, I expect this shift to happen between 2024-2026.
Obviously, the auto industry won’t be ready for these shifts with automakers like Ford targeting 40% of sales to be electric by 2030.
That’s understandable, but the automakers that are able to secure the most battery cell supply and that have converted the most production capacity to electric vehicles by then are going to be the ones who fair better in the market transition.
While it’s not clear to them yet, I’d expect Ford to update that goal in the next few years and accelerate those investments in battery supply and electric vehicle production capacity.
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