The automotive industry is undergoing a rapid evolution, and companies like Ford Motor Company (NYSE: F) are being forced to adapt quickly to stay competitive. Just six years ago, former Ford CEO Jim Hackett announced that Ford would cease all passenger car production in North America, with the exception of the Mustang. At that time, it made sense for Ford to focus on SUVs and trucks, which were the main profit drivers, and leave the low-margin passenger car business to competitors.
However, fast forward to today, and the landscape has changed dramatically. The rise of electric vehicles (EVs) has completely flipped the script, opening the door for the potential revival of models like the Fiesta, Focus, and Puma. The fundamentals of operating in the EV industry have shifted, challenging traditional notions of profitability in the automotive sector.
Historically, larger vehicles like Ford’s F-150 and SUVs have been the main profit drivers for the company due to their higher margins. However, with EVs, the opposite is true. Larger vehicles require larger batteries, which can significantly increase the cost of production. Ford’s CEO, Jim Farley, has highlighted that batteries for massive EVs could cost as much as $50,000, making it challenging to offer these vehicles at an affordable price point.
In order to appeal to mainstream consumers and hit the target price range of $25,000 to $30,000 for EVs, Ford is shifting its focus towards smaller vehicles with less expensive batteries. This strategy aligns with consumer preferences, as data shows that consumers are not willing to pay a premium for larger batteries in EVs. This shift in strategy has paved the way for the potential return of popular models like the Fiesta and Focus, which were instrumental in Ford’s expansion in Europe.
To support its foray into affordable EV development, Ford established a „skunkworks“ team comprised of over 300 members, including experts from Tesla, Rivian, Apple, and Formula 1. This team has been working on a new platform that could produce successors to the Fiesta and Focus, as well as a replacement for the Puma crossover. The success of models like the Chevrolet Bolt EV and Tesla’s Model 3 and Model Y has demonstrated the market potential for smaller, more affordable EVs.
The potential revival of the Fiesta and Focus could be a game-changer for Ford, positioning the company to compete effectively in the evolving EV market. With a projected launch date of 2026, these models could help Ford regain its footing in the EV space and fend off competition from other automakers. As the industry gears up for a wave of more affordable EV options in the coming years, Ford’s strategic shift towards smaller, more affordable models could be the key to its future success.
In conclusion, the automotive industry is undergoing a significant transformation, driven by the rise of electric vehicles. Ford’s decision to potentially revive high-volume models like the Fiesta and Focus reflects its commitment to adapting to changing market dynamics. By focusing on smaller, more affordable EVs, Ford is positioning itself for success in a rapidly evolving industry. Stay tuned; Ford’s future in the EV market could be brighter than ever.