The Surprising Reasons Ford Will Be Successful In A World of Electric Vehicles

If you pay attention to the business press, or Rivian and Tesla fan-boys (and I own a Tesla… my second Tesla actually), you will hear that Ford, General Motors and all the other “legacy” car builders are doomed.  They give Tesla unlimited credit for executing to perfection their vision while at the same time giving Ford and GM nearly zero credit for actual production.

As a recent example of this irrational exuberance is Rivian’s stock market debut.  A company with a few hundred thousand orders, that has delivered just a few dozen vehicles is now valued at more than Ford, GM and everyone else other than Tesla and Toyota.

What Rivian Has Going For it

Rivian has a lot going for it:

1. 100,000 unit order from Amazon for delivery trucks
   • at an undisclosed but no doubt very low profit margin
2. Very deep pockets to execute their grand plans
3. Great looking pickup trucks, with great reviews in a market that wants pickup trucks

They could be another Tesla story and early investors could be rewarded big.  The problem is that Rivian in 2021 and 2022 is not “early” to invest.  A safe-ish but still early time to invest in Rivian was 2019 and guess who did: Ford and Amazon.

Whats Wrong With Ford?

This gets to the point of why Ford is far less likely to fail in the next 20 years than it was just a few years ago.  Conventional wisdom is that Ford, GM and other so called legacy car makers suffer from the too’s:

1. Too late
2. Too slow
3. Too stupid

Elon Musk has earned his arrogance but that does not mean that everyone else is doomed.

Why Ford Will Be Successful With EV’s

Here are two things you might already be aware of that indicate Ford is on the right track:

1. Blue Oval City
2. Trucks

Here is the 2 minute version of a 40 minute presentation on Fords mind bogglingly large 6 square mile Blue Oval City EV complex:

Consumers and companies love pickup trucks and trucks are highly profitable.  Ford has the best selling truck brand on the planet and pre-orders with deposits, for its F150 Electric EV, have topped 150,000 units already.

Here are a few items you might not be aware of:

1. Fords Mach-E fully electric SUV is sold out everywhere and is outselling Tesla in notable EV markets like Norway.
2. Morgan Stanley reported in March of 2021 that the “Mach-E accounted for nearly 100% of the [Tesla] share loss,” 
3. Ford will sell 58,000 Mach-E’s in 2021

This is all before the F150 Lightening hits the road in 2022.  Remember that Ford sold a massive 790,000 F-150’s in 2020.  They should be able to convert half of those to EV truck sales within 5 or 6 years, that is about 400,000 units per year… of just electric F-150’s.

Even if you think Ford’s massive investments in the electric vehicle development and production is not enough to save it, and we think it is, there are some parts of Ford you might not be aware of.

Ford Investments in Other EV & AV Companies

Ford is not a small company and they have many quiet investments.  Remember that little company with an insanely high stock valuation, named Rivian.  Guess who owns 12% of it… you guessed it Ford.  That means 11% of Fords current market valuation is actually accountable to Rivian.

Then there is the fact that Ford does not just own a big chunk of Rivian, they have a technology transfer deal to make both of them successful.  Ford will help Rivian with patents and manufacturing while Rivian helps Ford with their EV patents and tech.  That means products like the F150 and future Fords are likely to be quite innovative and capture consumers.

Ford also has the best selling commercial truck fleet in the world and you may not be aware that they have not only started delivering test models of their E-Transit line but they also have a Ford Pro fleet-management product which will make them big money:

…Ford’s “growing capabilities and appeal” will generate $45 billion in Ford Pro revenue from hardware and adjacent and new services by 2025, up from $27 billion in 2019. Source: Forbes Sept 2021

Then there is Fords 40% ownership stake of Argo AI.  VW paid $2.6 billion for another 40% of Argo, just a few months after Ford paid $1 billion and if you think those two 100 year old  companies are stupid, your likely a blind Tesla fan-boy.  Argo will be going public shortly with an expected valuation of USD $7.5 billion, tripling Ford’s investment to about $3 billion.

Again, the value to Ford is not just the financial investment, it is the technology transfer.

Ford Production Innovation

Ford decided to build a green-field electric vehicle manufacturing facility like Blue Oval City because they needed to invent the production line… again.  Ford will eliminate many of the robotics used in traditional auto manufacturing by turning on the electric drive system of their next gen EV’s and having them drive themselves down the line to different stations.

How Big Is The Global EV Auto Market?

Fanboys and green activists will argue that the market is ready now.  After all, they say, just look at the roughly 1.5 million units Tesla has on back-order today.  Well, the news flash to those is that the global market for vehicles is about 80 million units.  So lets include all other EV manufactures and blindly overstate that roughly 4 million EV units could be sold today.  That is great but it is just 5% of the market.

Heavy expansion of your already successful presence in a growth business is a good thing and that is where Ford is today.  If Ford only made EV’s today the market for EV’s would be perhaps double its size and that means Ford would be bankrupt.

Will Ford Successfully Transition To Electric & Autonomous Vehicles?

Betting against Ford in 2017 likely made sense.  Ford was letting Tesla, the Chinese and other startups eat their lunch back then.  Five years is a very long time in high tech and that is where the automotive sector is going.

Elon Musk and Tesla have brilliantly managed and marketed the worlds best vehicles.  Note that I did not say the worlds best EV’s… today Tesla is the best… period.

Cars Are Not Politicians

Unfortunately the Rivian and Tesla fan-boys have taken a page from American politicians and decided that the only way they can be right is to claim everyone else is wrong.  But, unlike American politics, there are not just two choices.  Today there are a dozen choices and by 2024 there will be 60+ choices in electric vehicles from real manufacturers with proven track records.

Ford does not have to get 80% market share, or even be bigger than Tesla to succeed.  Ford just needs to keep making the products that sell today while carefully working on the electric vehicles of tomorrow… when that market is ready.

5 Points To Survive & Thrive In The Future of EVs

The future of mobility is a very complex game but it can be distilled to some key elements:

1. Have successful consumer brands, like Mustang, F150 and Bronco that can transition nervous consumers into EV fans
2. Have insanely successful commercial brands like Ford Transit vans that fleet’s will eagerly embrace as EV’s which can be expanded into bring billions of profitable service / data sales
3. Build the worlds largest automotive manufacturing complex and call it Blue Oval City
4. Invest early in the names of the future, like Argo AI and Rivian
5. Keep advancing your tech with innovations like electric vehicles moving themselves down the factory production line

Mission accomplished?  Hardly, but betting that Ford will fail today is about as silly as Rivian’s $140 billion market cap.

Auto Makers November 2021 Market Cap & 2020 Sales Volumes