Ford punishes dealers for price gouging.

Ford punishes dealers for price gouging.

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Ford President and CEO Jim Farley said he didn’t like the move to make customers wait for a new car or pay unreasonable premiums. Ford’s earnings report showed demand for many of its hot products, including the 2022 Ford Maverick compact pickup, 2022 Mustang Mach-E electric crossover and 2023 Ford F-150 Lightning electric full-size pickup, far outstripped supply.

About 10 percent of dealers are reportedly taking advantage of increasing wait times for Ford’s popular models in an attempt to charge above MSRP and “fraud” customers. Ford CEO Jim Farley knows who they are, and they’ll feel Ford’s wrath in a future auto-allocation deal with the automaker, clearly stated at the meeting on Thursday’s fourth-quarter 2021 earnings call.

Farley also hinted at a new go-to-market strategy and customer experience for those buying Electric Vehicles that may be in development and may be trying to bypass dealerships.

Dealers now have a lot of control over car prices, as demand goes through the roof, so people pay more for the cars they can find. Ford is the second-largest seller of electric vehicles in the U.S. in 2021, behind giant Tesla but ahead of General Motors. General Motor’s electric vehicle sales have suffered after production of the Chevrolet Bolt and Chevrolet Bolt Electric Utility Vehicle stopped in the summer as a software upgrade changed battery fire recalls.

After it helped Ford push General Motors closer to Tesla on the back of strong sales, the automaker has committed to a 40 percent electric vehicle mix across its lineup by 2030 to maintain its position.

Ford already has about 275,000 combined orders and reservations for the Ford Mustang Mach-E, Lightning and E-Transit utility vehicles. Farley said the automaker has underestimated demand for its new electric vehicles and is now doubling production capacity to produce at least 600,000 electric vehicles globally by 2023.

By 2021, the Mach-E has tripled its power and more battery power will be guaranteed.

Expected results: Ford will produce 100,000 electric vehicles in high demand this year, Farley told investors, and expects to ramp up production to more than 200,000 electric vehicles a year by 2023.

Assembly of the 2023 Ford F-150 Lightning Electric Vehicle will begin this spring at the Rouge Electric Vehicle Centre in Dearborn, Michigan, which is located within the larger legacy F-150 production facility at Ford Rouge Centre.

Physical constraints at the new Electric Vehicle centre have brought production to a halt; Ford’s rapidly changing production needs meant “breaking down walls where the mortar is still wet,” Farley said. The end result ends up being double the output.

Next year, the plant will produce 150,000 Ford F-150 Lightning electric vehicles — a sharp departure from the original plan of only 40,000 a year. There are already plans to increase the capacity of the second-generation Ford F-150 Electric Vehicle pickup. Ford plans to soon break ground on a new plant in Stanton, Tennessee, to assemble a second-generation F-Series electric pickup already in development, with larger-volume production expected by 2025.

Ford will spend $11.4 billion with S.K. Innovation to build three battery plants in Tennessee and Kentucky that will deliver 1 million electric vehicles a year, and Farley assured investors there are no battery supply issues.

Farley answered most of Ford’s earnings calls, highlighting how the internal combustion engine business differs from the growing electric vehicle business, including different products, processes, materials, suppliers, engineering and talent. The Electric Vehicle project is being spearheaded by Doug Field, a former Apple Car project leader who also worked at Tesla, where he designed the Model 3.

Going forward, Ford will continue to invest in Internal Combustion Engine models, but will manage this aspect of the business differently, with a focus on lowering costs and producing more with less inventory and higher costs, Chief Financial Officer John Lawler said. This could be a reason for rumours of a future restructuring to better align the company’s structure with the new product mix.

Battery Electric Vehicle is a brand new ball game. These vehicles are simpler on paper, but Ford engineers continue to reduce complexity and achieve scale to keep costs down. There was a learning curve, Farley acknowledged, and it required a shift in Ford’s engineering culture.

Last month, a team working to reduce material costs for electric vehicles found a way to save $1,000 per Mach-E, according to the CEO. Such insights will be applied to Lightning and subsequent future electric vehicles to help reduce costs for Ford and prices for customers.

Over the past few months, Wall Street has welcomed the realization of Ford’s new vision. Shares rose, with a market cap of more than $100 billion in January. Ford reported fourth-quarter 2021 sales of $37.7 billion and a net profit of $12.3 billion. This resulted in full-year net income of $17.9 billion and sales of $136.3 billion. Sales are expected to rise this year; Ford expects adjusted earnings to rise 15% to 25% in 2022.

Ford Rivian Stake

Ford’s 12% stake in Rivian returned about $8.2 billion in profit in the fourth quarter — a decent return on its $800 million investment. Investments in Rivian were valued at $10.6 billion at the end of 2021, but have fallen to $6.6 billion this week.

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Ford punishes dealers for price gouging.
Please Subscribe to Electric Vehicle News Bitesize Podcast and YouTube shows.