Understanding Ford's Approach to Electric Vehicles

Ford has not abandoned the electric vehicle (EV) market due to financial losses. The company is actively producing and selling their three North American EV models and two additional models in Europe, with more models entering the production pipeline. This strategy is rooted in a long-term market analysis that indicates a shift towards electric vehicles is in the best interest of the company. Ford is developing entire new platforms dedicated to EVs, which inherently incur losses during the initial years of development but are projected to offer long-term benefits.

Why Are Traditional Car Makers Investing in Electric Vehicles?

Legacy car manufacturers, including Ford, have invested billions in future-oriented technologies. While the short-term financial impact is negative, these companies are betting on securing a substantial market share in the future. Currently, there is a significant shift in consumer behavior towards electric vehicles, driven by environmental concerns and government incentives.

The Current Market Dynamics

Despite the consumer inclination towards electric vehicles, there is a noticeable feedback loop in the market. In the UK, for example, a large proportion of the fleet cars purchased in 2020 and 2021 are now being sold in the used market. The demand for these used electric vehicles is low, leading to prices dropping significantly below their expected residual values. Coupled with higher-than-expected maintenance costs and:

Increased incentives in 2020 Pessimistic residual value estimates Higher maintenance costs

These factors have collectively pushed the total cost of ownership (TCO) of electric vehicles above that of diesel and hybrid vehicles. As a result, fleet buyers are now opting for traditional internal combustion engine (ICE) vehicles.

Impact on Ford's Strategy

Due to the fleet sales making up 60% of new car sales in the UK, Ford must prioritize their profitable models. If not, they risk being left out of the game, hence the push for Mustang and Capri. The failure in naming their electric SUVs after iconic models like the 65 Mustang and the Capri has damaged their brand trust. However, Ford is committed to continuing their EV efforts, as it is a necessary part of their long-term vision.

Comparing Electric Vehicles to Traditional Models

While Ford has made some missteps in naming, they continue to offer alternatives that align with their core values. For example, the re-imagined Mustang and Capri would be more appropriate names for their new electric models. Consider the following examples:

A homogenized RS 3.1 model with a balanced crankshaft and nitrided heads, gas flowed heads, and triple Weber carburetors, which would be a symbol of Essex > A 1967 Mustang Fastback 289 manual model, which represents the raw power and performance of the original.

These models align with Ford's iconic heritage while also representing a forward-looking vision for the future of electric vehicles.