Ford Motor Company is doubling down on electric vehicles. This week, the company announced that it will launch a new affordable EV, a four-door pickup. The new vehicle will have passenger space similar to a Toyota RAV4 and will feature both a truck bed and a front trunk (“frunk”). Ford will market the electric small-sized pickup truck at a starting price of $30,000. Ford says that the $30,000 model will not be a cut-rate vehicle.
Ford is gambling big with the launch of this new EV. The company has already lost billions of dollars manufacturing EVs. In 2024, Ford lost $5 billion in its EV operations. This year, anticipated losses will reach $5.5 billion. Moreover, Ford is being hit hard by the tariff policies of President Donald Trump. This year, Trump’s tariffs will hit Ford’s bottom line with a cost of $2 billion or more.
Another hurdle for Ford to overcome is that the discounts and tax breaks to purchase EVs introduced by the prior administration end on September 30. The new EV will require a capital investment of more than $2 billion. In addition, as part of this vehicle launch, Ford is investing $3 billion in a new battery manufacturing plant. Ford’s balance sheet will be tested. The company says that the introduction of this new EV will be as revolutionary as the launch of the car that put Ford Motor Company on the map, the Ford Model T.
Ford is changing the manufacturing process for this light pickup truck. Rather than the traditional assembly line where a vehicle moves in a straight line through the plant, this new vehicle will be assembled in three steps. Ford compares the process to making an artificial Christmas tree. Two branches will be brought together with the trunk of the tree. The backend will be assembled separately from the front. Once the back and front are assembled, these two production lines will join the assembly line where the middle of the vehicle will be integrated with the front and rear.
Ford says the assembly process will be completed with a time savings of 40% and a throughput productivity improvement of 15%. There will be 20% fewer parts with the new manufacturing process. And the new vehicle will see a 4,000-foot reduction in wiring. Importantly, the new production process will be less labor-intensive.
Ford is also introducing a new battery for the EV. This is important because the battery is the most expensive part of an electric vehicle. Ford will use lithium-iron batteries. These batteries will be cheaper and safer than the nickel cobalt manganese cells previously used. The new battery will be cobalt and nickel-free. This, too, will produce cost savings.
Ford says it will bring the new EV to market in 2027. Unfortunately, Ford has a reputation for being late with new models.
This new vehicle launch raises several questions. Is the market for a new, lower-cost EV sufficiently large for Ford to earn its cost of capital on the model? Margins are low in the car industry. Will the new vehicle have a sufficient range to satisfy drivers who worry about running out of battery charge? And can Ford overcome the problem of long charging times? Currently, it takes just a few minutes to fill up a traditional internal combustion engine vehicle with gasoline. Charging an EV can take 30 or more minutes. And, of course, will the new EV be competitive against the new lower-cost Model Y from Tesla?
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Ford is making a big bet. If it works, perhaps Ford’s stock can begin to produce the returns necessary for investors to purchase it.
But Ford’s stock has delivered subpar returns for more than two decades. The investment community should rightly be skeptical about the hype surrounding this new vehicle launch.
James Rogan is a former U.S. foreign service officer who has worked in finance and law for 30 years. He writes a daily note on the markets, politics, and society. He can be followed on X and reached at [email protected].