While the market for electric trucks, or cars for that matter, is still in its infancy, they are expected to explode as environmentally conscious consumers do their part to fight climate change. It doesn't hurt that consumers are in love with their trucks, SUVs, and crossovers, at least in the U.S.
According to J.D. Power, of new vehicles purchased, 71% fall in the truck, SUV, or crossover category, relegating cars to just 30% of the market. It behooves car manufacturers to churn out new trucks, including electric ones, given they typically have higher average selling prices and better margins than passenger vehicles.
Electric trucks aren't going to move the needle much for Ford or its stock in the early days, but the move signals its willingness to innovate and throw down with the likes of Tesla, which has long been the leader in electric vehicles.
The situation may be more precarious for Tesla depending on which camp you fall in. While it holds the leadership position right now, rivals are circling, and it's not just start-ups like Rivian, which Ford is backing. Ford, General Motors (NYSE:GM), and a host of other car manufacturers are eyeing the electric truck market as one of the next bastions of growth.
Ford's Mustang inspiration may resonate with customers
Despite the competition, what makes Ford's all-electric truck stand out is that it has its roots in the iconic Mustang, something scores of consumers are familiar with. It wasn't always supposed to be that way, but Jason Castriota, Ford's global brand director, said in a recent interview that it went back to the drawing board, inspired by the Mustang after consumer feedback on its other iterations of an all-electric car failed to inspire.
"The Mustang nameplate is known around the world and is a really powerful brand," Castriota said in the interview.
Ford had originally focused on a rather bland vehicle just to get it into the market, but in May of 2017, under the charge of new CEO Jim Hackett, Ford began a journey bankrolled by $11.5 billion to come up with "electrified" vehicles.
Tesla too has been pouring money into its electric truck efforts. It's already taking preorders for its Model Y crossover that gives drivers 300 miles on a single charge, has 66 cubic feet of cargo space, and comes in all-wheel drive with a dual motor. The Model Y is expected to begin production at the end of next year in the U.S. and in early 2021 in China and Europe. It will be priced starting at $39,000.
Not to let Ford steal any thunder with the Mustang Mach 3, late last week, Tesla CEO Elon Musk rolled out its all-electric Cybertruck, which looks like a futuristic machine made of stainless steel and boasts the ability to withstand anything thrown at it, including bullets from a 9mm handgun. It does have something that could help the truck take-off: a price tag starting at $39,900.
Ford's new Mustang Mach-E, which it is accepting preorders for as well, gives drivers 300 miles on one charge and a ton of advanced technology in the vehicle. For instance, the vehicle recognizes the driver as soon as he or she gets near it and dynamically adjusts the seats, mirrors, radio, and instrument panel to that driver. The all-electric crossover will also come equipped with its new intelligent, voice-activated SYNC infotainment system. The base model will come with a single motor, similar to what consumers are used to with a Mustang. The mid-level model will have a second, small motor and all-wheel drive, while the high-end model the Mustang Mach-E GT will have a bigger front motor. According to media reports, the electric vehicles are expected to have a horsepower of around 250 and more than 300 pound-feet of torque.
Ford could sell the Mach-3 at a profit
Ford may not be able to sell as many electric crossovers as Tesla thinks it will sell with the Model Y truck, but more importantly, Ford is likely to sell the car for a profit, which isn't something Tesla is able to do consistently. After all, it's keeping the price range in line with the Model Y, with the Mach-E starting at $45,000 and going up to $65,000.
If Ford is able to pull it off and has a hit with the Mustang Mach-E, it would be huge for the vehicle maker's efforts to crack into the electric vehicle market. That could prompt the car manufacturer to "electrify" other older models in the years to come.