With Its 2015 F-150, Ford Reminds the Industry How to Push the Limits

Ford's just-unveiled 2015 F-150 represents a new era of big investments in a rapidly changing, hyper-competitive, auto industry.

Jan 13, 2014 at 5:15PM

In an environment of intense global competition among auto manufacturers, it's time to push the limits -- and Ford (NYSE:F) is leading the way. The new 2015 F-150 that Ford unveiled today shows just how far the company is willing to go to set new standards.


2015 Ford F-150. Source: Ford Motor Company.

Ford's aluminum bet
"We will all remember this day," Ford chief operating officer Mark Fields told his colleagues the day Ford locked in aluminum contracts, according to The Wall Street Journal.

Taking cues from Tesla's Model S, the Jaguar lineup, and the Audi A8, Ford moved to an aluminum-alloy body built on an all-new, high-strength-steel frame. Up to 700 pounds less weight, the new material required significant investment for the company to adopt the military-grade, aluminum alloy in production.

Any significant change to the production process of the Ford F-150 is a major change for the company. The F-150, which is part of Ford's F-Series truck lineup, has been America's best-selling truck for 37 consecutive years, and its best-selling vehicle for 32 years. Even more, the F-series trucks account for an estimated 40% of Ford's global profit, according to estimates from Goldman Sachs

With F-150 pricing beginning at just $24,000, a move to a more expensive metal for the body is impressive. The Model S, with pricing that begins just under $70,000, is the lowest-priced aluminum vehicle in the U.S., according to the WSJ. An inside source told the Journal that the move to aluminum meant a massive multibillion-dollar investment. Unsurprisingly, Ford lowered its profit guidance for 2014 in December and cited heavy investments on product spending as one of the driving factors.

Changing industry dynamics
Ford's big bet on an aluminum body comes as a response to a U.S. government directive for an average of 54.5 miles per gallon among all automakers' full ranges of U.S. vehicles by 2025. The lighter body allows the new F-150 to sport a smaller 2.7-liter V-6 EcoBoost engine as one of the four engine options for customers. The new engine combined with the lighter body will help the company achieve fuel efficiency leadership among full-sized pickups, Ford global chief of product development Raj Nair hopes.

General Motors is taking a different route to improving fuel efficiency in 2014, returning to midsize pickup truck offerings for its 2015 models. The move will place the new 2015 GMC Canyon as direct competition to Toyota's popular Tacoma.

Beyond the government's requirement for improved fuel efficiency, customers are also showing greater interest. Ford says about 40% of F-150 buyers are now choosing the more efficient V6 engine over the traditional V8.

What's next?
Ford's multibillion-dollar bet on new production technologies and processes shows just how important fuel efficiency is to Ford today. Further, it's likely the beginning of similar big bets among global auto manufacturers. While there are major upfront costs to changes like this, investors should look forward to what is likely to be an era of bigger bets and a faster pace of innovation that will separate the winners from the losers.

There's no time for auto manufacturers to languish in technologies of the past, and Ford's big bet shows that it's willing to get its hands dirty in order to continue to set the standard among full-sized trucks.

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Fool contributor Daniel Sparks owns shares of Tesla Motors. The Motley Fool recommends Ford, General Motors, Goldman Sachs, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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