Ford’s (NYSE:F) foray in greener vehicles is nothing new. The company tried to take a mixed approach with hybrid cars. That had limited success because consumers no longer want cars. Full EVs might take 2-3% of the total automotive market share at best. That narrative changes by 2020, as EVs become mainstream.
Ford’s base business performance is mixed. The company targets business growth, free cash flow, stronger ROIC, and higher EBIT and EBIT margin. Costs in EV will not come cheap as Ford embraces the positive buzz for its Mustang Mach-E. It plans to invest at least $11 billion in EVs by 2022. Ford will leverage its investments in EV through alliances. Mahindra, Rivian, and VW are the main partners. This will lower development costs for the battery and manufacturing.
Ford forecasts strong growth for BEVs and unprecedented design and marketing activity to harness that market. By 2025, the majority of the demand will come from China (4.2 million BEV sales), compared with 1.5 million in the U.S.
Criticism on Mustang Mach-E Name
Critics said Ford should not use the Mustang name on an EV SUV. Though the Mustang Mach-E borrows visual cues from the gas-powered Mustang, it is a purely new line. Besides, a name is just for marketing. Pricing, design, and positive buzz will drive Mach-E sales higher.
Disclosure: Author owns shares of Ford.