- Ford is introducing a new F-150 pickup truck Thursday night.
- The automaker needs its highly profitable flagship product to drive a global restructuring plan and pay off debt related to the coronavirus pandemic.
- Full-size pickups accounted for 37% of the automaker's 2.4 million vehicles sold last year in the U.S.
The importance of a new F-150 pickup to Ford Motor has never been greater.
The automaker needs its highly profitable flagship product to drive a global restructuring plan and pay off debt related to the coronavirus pandemic. It also needs to convince Wall Street that the company can retain its decades-long leadership position in the segment as new and traditional competitors begin to offer all-electric pickups.
Ford's response to these rivals includes trucks with traditional internal combustion engines as well as new hybrid and all-electric versions. It's also adding significantly more technology to the truck, which has been America's best-selling vehicle for 38 consecutive years and the country's top-selling truck for more than 40 years.
"We've stayed No. 1 for 43 years now. We're very focused on raising that bar again and letting the competition follow," Kumar Galhotra, Ford president of The Americas, told CNBC. "It is obviously a very important launch."
Ford is scheduled to unveil the traditional and hybrid versions of the 2021 F-150 on Thursday night. The all-electric version is expected sometime in the next two years — in line or slightly later than new electric pickups from General Motors, Tesla and start-up manufacturer Rivian.
The importance of Ford's full-size pickups, which include the F-150 and larger trucks, can't be overstated. The trucks accounted for 37% of the automaker's 2.4 million vehicles sold last year in the U.S. — 10 percentage points more than in 2010.
"So much of Ford's performance and livelihood is resting on this vehicle" said Jessica Caldwell, executive director of industry analysis at Edmunds. "The F-150 is Ford's cash cow."
The F-150 is a key part of the automaker's plans to profitably grow the commercial side of Ford's business to aid an $11 billion restructuring and pay off more than $20 billion in new debt due to the coronavirus.
The nearly 900,000 F-Series pickups Ford sold last year in the U.S. generated about $42 billion in revenue, according to a study Ford commissioned from the Boston Consulting Group. Ford's automotive revenue was $143.6 billion in 2019.
Wall Street remains skeptical of the company's turnaround. It has been particularly critical of Ford CEO and President Jim Hackett. Since Hackett started leading the automaker in May 2017, the stock's price has nearly been cut in half and its credit rating has been downgraded to "junk."
Ford shares, which have a market value of $24.5 billion, closed Tuesday at $6.15, down 2.1%. Shares are down 33.9% since the beginning of the year.
Ford must add enough new technology to the pickup without alienating its traditional truck buyers, who are among the most loyal and passionate consumers in the automotive industry. It's something Ford is aware of and has accomplished with the new F-150, according to Ford's Galhotra.
That includes offering over-the-air, or remote, updates as well as an integrated power generator. The onboard generator, he said, will be able to power up tools and other equipment.
The entire truck, according to Galhotra, is "designed around those kinds of ideas" that will enable better performance and more convenience for customers.
Galhotra said Ford hired anthropologists to assist in understanding how truck owners use their vehicles and how to make the best improvements. That includes Ford's decision to offer hybrid and all-electric versions of the truck.
"The segment size is so large," Galhotra said. "The types of customers have very, very different needs."
Galhotra declined to comment on expected sales for the hybrid model, which he said could provide incremental growth by attracting new customers to the pickup segment. Pickups with traditional gas and diesel engines are expected to remain the majority of sales for the foreseeable future, he said.
The F-150 also will be the first with Ford's new electrical architecture, or brains, of the vehicle. The equipment is a key enabler for advanced driver-assist systems such as Ford's "Active Drive Assist," an advanced system comparable to Tesla's Autopilot.
"It's really about technology and productivity," Ford Chief Operating Officer Jim Farley told investors about the F-150 during a Deutsche Bank conference earlier this month.
Despite hype for all-electric pickups, the vehicles are expected to remain a small minority of sales. That is, once they go on sale. All-electric pickups from GM, Tesla, Rivian and others such as Nikola and Lordstown Motors aren't expected to go into production until at least next year.
For the time being, Ford is expected to focus on the non-EV version of its prized pickup, which has come under assault from newer models from GM and Fiat Chrysler in recent years.
"For awhile it was hard to conquest truck buyers, but we're seeing more of that happen. We're just seeing the loyalty numbers go down," Edmunds' Caldwell said. "The market share numbers show how competitive this segment has been."
Fiat Chrysler's Ram brand has done an impressive job in gaining market share since 2015, which was when Ford last introduced a new F-150. Market share of the Ram 1500 has grown from less than 20% in 2015 to 25.1% in 2019, according to Edmunds. The greatest growth occurred after the company unveiled a new version of the pickup in 2018 that was well-received, including a larger, more comfortable interior.
The launch of the newest Ram 1500, Caldwell said, was successful in gaining owners from other brands, particularly because of the company's focus on the vehicle's interior.
The importance of the F-150 also is critical due to the coronavirus pandemic. Sales of pickups have not declined as much as other segments this year. In fact, automakers, including Ford, have prioritized the production of pickups due to low inventories following plant shutdowns from March to mid-May due to Covid-19.
"The F-150 is really important to Ford, particularly now with the pandemic," Caldwell said. "Pickup truck sales have done fairly well over the past three months."
Ford is well aware that there's no room for error in the launch of the new F-150. Farley made it clear to investors earlier this month that missteps that plagued the redesigned Ford Explorer last year will not be repeated.
"The setup for the F-150 is really different than Explorer," he said, adding the two plants that produce Ford's trucks in Michigan and Missouri don't have to be completely rebuilt with the new models.