Ford Motor Co. (NYSE: F) is among the world’s kings of gasoline-powered cars and light vehicles. If it sticks to that, it could make billions of dollars a year. In the United States, less than 10% of new car sales are electric vehicles (EVs). There is absolutely no reason to think that it will move sharply higher soon.
There is no reason to think EV sales will be 50% of the U.S. total. This may also be true in some of the largest markets in Europe. There is no evidence to believe that drivers will rush to EVs in Brazil. Ford may not do well in Japan, but there is no evidence that EVs will be a huge part of the market there either. Gasoline-powered cars will have a large share of the market in Japan for years, if not decades. Japan is the fourth-largest car market in the world.
Ford’s place in the U.S. market includes some sectors that will be profitable for years and perhaps decades. At the top of the list is its F-series pickups. The F-150 has been the best-selling vehicle in the U.S. for decades. Its primary competitors are the Chevy Silverado and Ram. Each of these is among the ten best-selling vehicles in America. That is a significant vote for gasoline-powered vehicles.
Ford has a large market share in most of the SUV and light truck segments. Its Bronco Sport sales are up 14% in the first seven months to 83,376. Bronco sales are up 45% to 85,861. Escape sales are 10% higher to 93,805, while Ranger sales are higher by 89% to 38,951. And Maverick sales have increased by 9% to 98,078.
Ford has already wasted billions of dollars on EVs and has little to show for it. Mustang Mach-E sales are up 1% in the first seven months to 27,093. Sales of the F-150 Lightning, which was supposed to propel Ford into the U.S. EV business, are down 14% to 15,860. This is a rounding error to Ford’s total seven-month total sales of 1,302,699, which is up 7% from the same period of last year.
Ford’s New Plan
Ford has a new plan to restart its EV business with a new assembly line process, which will launch with an EV pickup in 2027. Its success will be based largely on a vehicle price of $30,000. Ford has had trouble pricing its EVs since the first Lightning rolled off the assembly line. By 2027, Tesla will probably have one or two new models on the road. Among the legacy car companies, the EV figure will be in the dozens. Ford will have re-entered the market too late.
CEO Jim Farley said that with the new, radical change in Ford’s plans, “There are no guarantees.”
Ford assumes that eventually Chinese EVs will make their way into the U.S. market. For that to work, the federal government would have to lift high tariffs. Even if inexpensive, high-quality Chinese EVs are sold in America, there is still no reason to believe that there will be a sudden shift from gasoline-powered cars to EVs.
Who Buys EVs?
A large percentage of the U.S. population says they will never buy an EV. Eventually, the number of charging stations in America will be sufficient so that people will not worry about their availability. In due course, most EVs will have a range of over 250 miles on a single charge. None of this means there will be a massive rush for people to turn in their combustion-engine cars for EVs.
Among the arguments that people will eventually move to EVs quickly is that they will save money on “fuel.” Gasoline prices are $3 per gallon of regular. That may rise eventually, but for the time being, the world is awash in oil.
Another reason people were supposed to buy EVs was a tax credit. In less than two months, that incentive will be gone.
If Ford remains a gasoline-powered car company, it will shrink over time. However, now, and over some long part of the future, Ford’s profits will be well above what they are today. Ford is taking a long shot with EVs and has nothing to show but billions of dollars in losses. There is no reason to believe that will change.
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