September 24, 2022 8:30 am
Ford CEO Jim Farley cannot count. His company is short on the supply of the blue oval badges that are put on Ford vehicles to show that they are Fords. It adds to the string of problems which include third quarter expenses that will be $1 billion above expectations, and the debacle of price increases for the new Ford F-150 Lightning pickup EV and extremely popular Mustang Mach-E. Additionally, an analysis shows Ford product quality has become a large and hard to remedy problem.
Ford Executive Chairman, whose family controls Ford, recently told The New York Times that the company’s future is tied to the F-150 Lightning launch. “If this launch doesn’t go well, we can tarnish the entire franchise,” he commented. Mr. Ford spoke too soon. Ford’s franchise challenge today is whether it can build cars on time, and price them at a level that will stimulate sufficient demand to keep revenue rising. The hurdles to success are rising.
To make the Ford logo badge worse, according to The Wall Street Journal, the issue may have curtailed the supply of F-150 pickup, the company’s largest selling vehicle by far. Margins on the truck are so high that these problems will undermine Ford’s profits.
The logo problem comes quickly on the heels of Ford’s announcement that its expenses will be about $1 billion above expectation in the current quarter. One result of this trouble is that between 40,000 and 45,000 vehicles which need parts are sitting on Ford’s lots. Ford management will throw new people at the problem. This is meant to solve Ford’s supply chain challenges. Ford did not give an explanation about why the problem, and solutions, were not addressed much earlier. Ford has been, after all, in the car business since 1903.
Barely a month ago, Ford announced it would raise the price of the F-150 Lightning. The increase will be between $6,000 and $8,500, due to the fact that battery costs have soared. Once again, it is hard to understand why Ford could not detect this problem much earlier. Ford has sold over six million F-150s in the last decade. There is no target market for a new vehicle that is even close to this size. The price increase will cut demand among these owners. Ford will also increase the price of the Mustang Mach-E by over $8,000. This, as well, may erode demand needed for success in a competitive part of the EV market.
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Ironically, the most recent announcement from Ford’s PR department is that the facility that will handle EV batteries and EV truck production will be called BlueOval City. Until Ford has enough blue oval badges, it may want to change the facility’s name.