Ford Hits the Brakes on Electric F-150 Production
A Shift in Strategy
In a surprise move, Ford Motor has announced a seven-week production halt for its all-electric F-150 Lightning, starting mid-November and lasting until early next year. This decision comes as the automaker seeks to address bloated inventories and stem losses on the pickup trucks.
Adjusting for Optimal Mix
Ford’s Rouge Electric Vehicle Center in suburban Detroit will be affected, with roughly 730 hourly workers facing temporary layoffs. However, not all workers will be laid off for the entire duration of the downtime. According to Ford, “We continue to adjust production for an optimal mix of sales growth and profitability.”
Electric Vehicle Sales Slowing
The production slowdown is attributed to slower-than-expected sales of all-electric vehicles, hindered by higher costs and consumer hesitation. Despite an 86% increase in F-150 Lightning sales this year, Ford is still losing money on the vehicle and has been subsidizing sales.
Subsidizing Sales
Ford has been offering dealers up to $1,500 for each 2024 F-150 Lightning ordered from one of its new regional electric vehicle distribution centers. This move has raised eyebrows, as the company’s Model e EV operations are expected to lose around $5 billion this year.
A New Direction
Ford executives have vowed to make their next-generation EVs more cost-effective, stating that they won’t launch a product unless it can be profitable within a year. This shift in strategy marks a departure from the company’s initial enthusiasm for the F-150 Lightning, which was once touted as having the same significance as the Model T.
Inventory Management
Ford’s overall days’ supply of new vehicles stands at 112 days, with the F-150 (including electric and traditional models) at 100 days. The Mustang Mach-E crossover and E-Transit van have even higher inventory levels, at 128 days and 112 days, respectively. Ford aims to maintain a target range of 50-60 days of supply.
A Course Correction
The production slowdown signals a course correction for Ford, as it navigates the challenges of electric vehicle adoption and adjusts its strategy to prioritize profitability.
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