Ford’s Billion-Dollar Investment in Electric Vehicles Is Paving the Way
American auto giant Ford has invested billions of dollars in electric vehicle production, setting the standard for other car manufacturers. How can Ford’s investment in EVs pave the way for future electric expansion? What obstacles have companies faced with their new EVs?
Here’s what’s next for EV production in 2023 and beyond.
Ford’s Recent Investments in EVs
Ford’s leap of faith into widespread EV production turned a corner in September 2021 with a $7 billion investment in two mega manufacturing plants in Kentucky and Tennessee. These plants remain under construction and will start producing batteries and trucks in 2025.
2022 has also been a busy year for Ford. In June, the company devoted $3.7 billion to building new facilities in Ohio, Michigan and Missouri. Another $1 billion has gone to improving Ford workplaces by adding better lighting and more EV charging stations. Lastly, $525 million is going toward training skilled EV technicians across the country.
However, Ford’s investment in EVs didn’t get off to the best start. The EcoSport, Fusion Energi and Focus Electric did not perform well and have since been discontinued due to underwhelming sales. The manufacturer’s most recent EVs look much more promising.
The Mustang Mach-E first made headlines in 2019 after Ford’s initial announcement about the new vehicle. It was part of an initial $11 billion investment that marked the automaker’s first real attempt to ramp up EV production. The Mach-E became available to the public in 2021 and has since earned a place among the top SUVs available.
The F-150 Lightning is another recent success for Ford’s EV line. The F Series of pickup trucks is the most successful vehicle in the company’s long history, so the Lightning’s success is a big deal. The E-Transit is the forgotten third member of Ford’s recently released EVs, quietly making an impact in Europe as a new commercial vehicle.
Ford’s EV expansion culminated in March 2022 when it split all its electric efforts into a new division called Model E. According to CEO Jim Farley, this adjustment is the key part of a global plan to invest $50 billion in EV technologies and make 2 million sales by 2026.
Raising the Standard for EV Production
Ford differs from other EV manufacturers like Tesla and Rivian, which sell their products directly to consumers. Ford still sells its vehicles through third-party franchised car dealerships, which has required the company to be more persuasive. In September 2022, it asked nearly 3,000 dealerships to invest more than $1 million each in initiatives to sell all-electric vehicles.
This request is one of many efforts to elevate sales, cut distribution costs and raise the standards for EV production. The company seems highly motivated to match Tesla in EV production, as Farley stated they have been “studying Tesla for the last several years.”
These are the five standards Ford wants its representatives to prioritize:
- Nonnegotiable pricing
- Employee training
- Improved vehicle purchasing
- Heightened ownership experience
Another part of the $1 million investment is a certification program. If a dealership passes the program, it would earn EV-certified status and get more vehicles to sell. Ford is the first manufacturer to bet on the dealerships, putting more responsibility in the hands of average American workers.
Influencing Other Manufacturers
Although Ford’s investment in EVs has been ambitious, it has not required dealerships to sell all-electric for the time being. The company acknowledges that the technology has too many uncertainties to force dealers to make an irrevocable commitment.
However, the same cannot be said for other American auto manufacturers. In what some believe is a bold attempt to one-up Ford, rival General Motors has given dealerships no say in the matter. It has even attempted to buy out Buick and Cadillac dealers that have refused to commit to all-electric sales.
Other big-name automakers that manufacture and sell in the U.S. have also doubled down on their EV investments. Toyota, Honda, Volvo and many others have announced new electric vehicles in recent months shortly after Ford and General Motors upped the ante.
This unprecedented move is a sign that the sense of urgency around widespread EV adoption is growing. Ford wants to match Tesla, General Motors wants to match Ford and everyone else wants to match them. Everybody wants to be the top dog in the budding American EV market. As a result, companies are putting more pressure on each other to ramp up production.
Government Getting More Involved
Ford’s investment in EVs closely correlates with government efforts to ramp up EV production. Only 4% of North American vehicles are electric as of September 2022. That number must increase dramatically if American manufacturers want to reach their sales targets.
To help domestic EV manufacturing efforts, the Biden-Harris administration announced a $2.8 billion donation to expand lithium-ion battery facilities for 20 companies in 12 states. Ford’s new battery manufacturing plants in Tennessee and Kentucky won’t be finished in time to take advantage of these donations, but it’s still a positive step for America’s EV production.
The White House also renewed the $7,500 tax credit on EV purchases for citizens through 2030, which will significantly help Ford and others meet their goals. Sometimes a little incentive is all people need to buy into a new idea or technology.
EV Sales Growing Fast
Thanks to the efforts from Ford, General Motors and other American automakers, EV sales are picking up steam fast. The U.S. had more than 200,000 sales in 2022’s third quarter, which is a new record. Registrations have spiked by 60%, as well. California, Florida, Texas, Washington and New York lead the way so far.
Ford’s sales have jumped by 90% year over year, while other manufacturers like Hyundai and Kia have seen sales increases of more than 800%. If this pace continues, market analysts believe EVs will make up 50% of all vehicles sold as early as 2030.
High battery prices and the lack of a charging infrastructure are the main factors holding EV sales back. Ford’s investments in EVs can play a huge role in solving both problems. Domestic battery prices will continue to decline once new battery plants from Ford and other companies become fully operational later in the decade.
The heightened dealership standards will also ensure sellers and buyers take better care of their EVs, increasing their long-term value. The initiatives to install more charging stations at Ford facilities will also help communities build viable charging infrastructure.
Ford Leads American Automotive Companies Again
If history has taught us anything, it’s that Ford’s ambitious business decisions tend to pay off. Ford’s investment in EVs is the latest example. The company was the leader of the first automotive revolution during its infancy, and it looks like it has also taken the lead in the American EV revolution.