Ford Motor (NYSE: F) spending $11 billion on 16 Electric Vehicles

Ford Motor (NYSE: F) will spend $11 billion to manufacture 16 fully electric vehicles by 2022.

Therefore, Ford more than doubled its $4.5 billion 2015 investment in electrification, The Verge concludes. Ford can easily afford the electric push because it had $36.746 billion in cash and short-term investments on 30 June 2018.

The first all-electric Ford is a sports car; or performance SUV, called the Mach 1. Notably, Ford plans rollout the Mach 1 next year. The Verge describes the Mach 1 as “a Mustang-style crossover” and “the flagship of Ford’s electric fleet.”

The Mach 1 is apparently the first product created by Team Edison, a Ford think tank for the study of electrification. Sensibly, current plans call for electric versions of historic Ford vehicles such as the Mustang, the Transit van, and the F-1 pickup truck.

The Mach 1 is a great idea because it will introduce electrics to many people skeptical of them. Ford’s innovative approach; inspired by Elon Musk, is to build a car rather than a green box.

For instance, the Mach 1 could be used in TV commercials or placed in action movies. The obvious idea is to convince people that electric cars are sexy. Ford spokesman Duane “the Rock” Johnson is a readymade star for an electric vehicle (EV) publicity blitz.

Ford Motor (NYSE: F) is hedging its bet on Electric Vehicles

Like Volkswagen AG (OTC: VLKAY); and Toyota Motor (NYSE: TM), Ford Motor (NYSE: F) is hedging its bet on electric.

For example, Ford unveiled several impressive gasoline-powered vehicles at the Detroit Auto Show. Those models included the Mustang Bullitt (inspired by the 1968 Steve McQueen car chase movie), a 2019 Ranger, and the Edge ST.

In addition, Toyota is still investing heavily in hydrogen-fuel cell technology despite an electric push. For example, Toyota is marketing the fuel-cell powered Mirai sedan and testing two hydrogen-powered semi tractors at the Port of Los Angeles.

Will Dealers Scuttle Ford Motor (NYSE: F) electrification plans?

Ford’s next big challenge will be to convince its dealers to go electric. Inherently conservative auto dealers have been hesitant to embrace electrics.

”Dealerships and sales personnel pose a significant barrier for [EV] uptake,” a study in the Journal Nature claims. Significantly, Danish researchers discovered that salespeople throughout Scandinavia are doing a horrible job pushing electric vehicles.

For example, salespeople ignored or dismissed EVs 77% of the time, Quartz reports. To make matters worse, when salespeople discussed electrics they tried to steer people away from them.

Dealers are leery of electrics because they require less maintenance than traditional cars. For instance, electric vehicles have fewer moving parts and require no oil changes. Since maintenance is one of a dealership’s most profitable sidelines that could cut into revenues.

Celebrating the 50th anniversary of iconic movie “Bullitt” and its fan-favorite San Francisco car chase, Ford introduces the new cool and powerful 2019 Mustang Bullitt.

A related problem is that electric cars could last longer leading to fewer commissions for auto salespeople. To explain, the auto dealer’s business model is to expect you to come back every two to five years for a new car. If the auto lifespan doubles, salespeople receive half the commissions.

How to Get Dealers to Sell Electric Cars

However, there is an easy way for Ford (F) to get dealers to push electric cars. Pay salespeople a big bonus or commission every time they sell one.

For instance, pay a salesperson $5,000 in cash every time he or she sells an electric. Under those circumstances, salespeople will discourage gas and diesel and diesel and push electrics.

Making electrics that look like regular cars is another great way to sneak the technology into dealerships. Perhaps salespeople will be more likely to push a familiar-looking vehicle.

Ford’s dealer dilemma exemplifies the biggest challenge for electric vehicles. The change is getting average people in the real world to buy EVS. Ford will solve that problem because it has been selling cars to real people for over a century.

 

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