Detroit automakers such as Ford Motor Company (F +0.33%) and General Motors are well-known for manufacturing large SUVs and trucks -- it's long been their bread and butter. But nobody's quite sure how that historic success will translate into their electric-vehicle (EV) segments. That could be a huge problem for Ford and GM to solve if they're going to reap the rewards of larger vehicles as the industry transitions to EVs.
Even young EV automaker Rivian (RIVN +3.22%) is outselling the F-150 Lightning with its R1T. Is Ford's all-new F-150 Lightning Flash the answer to topping Rivian and improving its overall EV sales? Let's dig in.
Rivian rivalry
It's fair to expect that Rivian coming into the EV space as a start-up automaker and outselling Ford's F-150 Lightning with its R1T would ruffle some feathers. So far, that's been the case.
While Rivian doesn't break down its deliveries between the R1T (a truck) and R1S (an SUV), we know that only recently has production of the R1S outpaced the R1T. Deliveries are likely close to splitting between the two. But even if we play it safe and say Rivian's truck deliveries accounted for 40% of year-to-date deliveries, through the third quarter, that figure sits at about 14,460 trucks -- which still outpaces the Ford Lightning's year-to-date sales of 12,260 through the third quarter.
Sure, the difference in sales won't move the needle in terms of bottom-line Ford profits. But the simple fact that a brand-new automaker can come into an EV truck segment and sell well puts Ford's long-standing reputation for truck dominance in an interesting position. That's a big deal when you consider that trucks and large SUVs have combined to become Detroit automakers' pillar of profits; they're much more profitable than smaller vehicles.
It's also a big deal when you consider that existing customers of the various truck segments are usually highly loyal, and that it's pretty expensive to steal consumers from other brands. If that holds true for customers in the EV segments, Rivian is already getting its foot in the door in ways other automakers have failed to do in their gasoline-powered truck segments for decades.
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Key Data Points
Put simply: If Rivian's R1T outselling the F-150 Lightning doesn't raise investors' eyebrows, it should. So what's Ford's response?
Experience talks
Not only does Ford have over a century of designing and manufacturing trucks, but Detroit automakers have also dominated the U.S. truck market for decades. With that experience, investors should take note when Ford suggests introducing the Lightning Flash in a "sweet spot," for consumers desiring premium modern features at the right price point.
Image source: Ford Motor Company.
In terms of pricing, the Flash slots right in the middle of Ford Lightning's trims. Those go from Pro at just under $50,000, to the XLT at nearly $58,000 and the Flash at just under $70,000, right in line with the R1T -- before the Lariat and Platinum at over $77,000 and $89,000, respectively.
Better yet, for consumers, and likely investors, is that the Flash will be eligible for the EV tax credit of $7,500. Ford's Mustang Mach-E is only eligible for half that tax credit since the sourcing of its battery does not currently comply with requirements for the tax credit under the revised Inflation Reduction Act, and the Platinum doesn't qualify for any.
Essentially, Ford is trying to gain sales volume by hitting multiple price points that Rivian can't yet match. Ford is also planning on ramping up production, as you can see in the graphic below:
Image source: Ford Motor Company presentation.
The bottom line
Ford's larger EV problem right now is that the business unit is currently wildly unprofitable. Through increased production, reduced overhead, and cost-cutting, Ford is planning for its EV units to become profitable by 2026.
But long-term, it's more important than many investors realize for the Detroit automaker to clone its success in gasoline-powered trucks to the EV truck segment. Ford's F-Series has been the best-selling truck for 46 consecutive years, and if the Flash can help overtake that title in the EV space, it'll be an important victory early in this evolving industry story.
