Rating: High school and post-secondary
Summary: Markham interviews Sam Abuelsamid, automotive engineer and EV analyst for Guidehouse Insights, about the Wednesday, May 19 launch of Ford’s Lightning F-150, the electric pickup truck that will revolutionize the auto industry.
This interview has been lightly edited for clarity.
Markham Hislop: Ford introduced its electric F-150 pickup truck yesterday. It’s called the Lightning and it is not just a pretty zoomy pickup truck. It is really a game changer for the industry and for the internal combustion engine (ICE). So I’m going to talk to Sam Abuelsamid, who is a EV analyst and automotive engineer with a Guidehouse Insights about that.
Lay out the my thesis of my argument and we’ll have you respond to that.
The Lightning is cheaper or the same cost, uh, sticker price as the internal combustion engine F-150, that means the cost per kilometer. The levelized cost of driving is much lower and there’s a whole bunch of additional value provided by the Lightning. For instance, it has dual motors, so it’s always four wheel drive and it can power your house for three days if you have a power outage like they did in Texas in February.
Add that all up and the value proposition for the electric pickup truck now is much better in my opinion, than the internal combustion engine truck. It’s kind of a body blow to the, ICE vehicles. What’s your take on that?
Sam Abuelsamid: I’m not sure if I would go quite that far as far as body blows just yet.
But Ford has priced this truck very aggressively, much, much more aggressively than I had anticipated. What’s not at all clear at this point is, you know, when they’re selling, especially the base truck at $40,000, you know, whether they’re actually making any money on them on it. The F-Series trucks are Ford’s cash cow. That’s where most of their profits come from.
The F-Series trucks means $42 billion a year in revenue to Ford, which is about twice the revenue of McDonald’s. But what we don’t know is whether they’re actually making money at that price point.
So they certainly the base trucks, which are targeted at commercial customers, they are putting those right in the same price point as the gas engine equivalents. Granted you can get a version of the F-150 that is cheaper than this, you know, with rear wheel drive and with a regular cab. And they’re still not offering that version yet with the electric truck.
But for similar equipment, you’re paying about the same price or a little bit less for the, the electric version. And then for the consumer versions, the more premium versions like the Lariat and the Platinum, those prices can actually go a little bit above where the gas versions are today,
Markham: I’ll grant you all of those points, of course, but we weren’t expecting to have this conversation until 2025 or 2028, and here we are having it in 2021. And I think that shows the, that the landscape has essentially changed.
I mean, GM is bringing out its electric Silverado pickup next year. They’re going to be under pressure to compete with Ford. It seems like Ford has really changed the competitive landscape, at least in pickup trucks, uh, and at least in north America.
Sam: One thing that is absolutely clear is that Ford has decided that they’re not willing to cede the electric truck market to any competitor, particularly to any startups.
One of the challenges that they’re facing right now that they haven’t really faced in the past is having other companies, new companies, coming into the truck market with electric trucks. Companies like Revian and Lordstown Motors, Tesla, of course, and potentially others that want to get a piece of that truck pie. And Ford has decided that we’re not going to give up our market share.
They were saying that they have 43% of the commercial vehicle market for trucks and vans. And they don’t want to give that up because that’s a very lucrative business for Ford. The Lightning, I think, is going to be a great choice and probably a better choice for a lot of customers, if not most customers, then the gas engine versions. But there are still some applications where the electric version is still going to be challenged.
Towing, for example. While the Lightning can tow 10,000 pounds, it’s gonna lose about half its range. So a 300-mile range F-150 is only going to get about 150 to 160 miles when it’s towing a heavy trailer. And charging when you’ve got a trailer hooked up to your truck is still quite a challenge.
So for at least for a while, yet until we get even longer range versions, um, there are going to be some applications where the ICE is still going to be very competitive and, and perhaps a better choice for some customers,
Markham: You and I have had many conversations over the last three or four years, Sam, about the evolution of the electric vehicle and the role that dropping battery prices combined with rising energy density is playing in this process. And I think back to the interviews that we’ve done in 2021, how this conversation is materially different than those conversations.
We’re now talking about a different scenario where the EV is suddenly being seen as the more competitive vehicle. And in a competitive industry like automotive that changes everything it seems. What’s your take?
Sam: I would definitely agree that Ford has definitely decided that this is a market that they want and they’ve decided that this truck is going to be priced competitively with its gas engine counterparts. That’s something we haven’t really seen before.
I think the closest we’ve seen to this is the Tesla cyber truck, which has the same base price of $40,000. Although for that price point with the cyber truck, you only get rear wheel drive. It doesn’t have as much power as the F-150 does. And it’s not really a truck that is going to appeal to a lot of current truck buyers because of its peculiar shape. Especially for commercial users, it’s not going to be suitable for them.
This is the first one that’s really gone aggressively after an existing market with something that’s very competitively priced. And I think that’s an excellent sign for the future.
Markham: Now, I mentioned what GM is going to be doing with its electric Silverado next year, but what does a Fiat-Chrysler do with the Dodge Ram and what do Toyota and Nissan do? Those are big pickup truck manufacturers. How much pressure does it put on other manufacturers of pickup trucks?
Sam: I would say that first Stellantis in particular with the Ram brand, they’re going to be the ones who under the most pressure. They’ve done very well in recent years with the latest generation of the Ram 1500 and with the medium and heavy duty versions.
In recent comments, Carlos Tavares, the CEO of Stellantis, has indicated that the company is going to go much more aggressively towards electrification over the next few years. During their annual general meeting a couple of weeks ago, he said that by 2025, 96% of all the Stellantis models sold in north America would have plugin variants, either plug-in hybrid or battery electric.
My guess is that what we’ll see probably first from Ram and probably fairly quickly is a plug-in hybrid because they already have a plug-in hybrid powertrain that they’ve developed. That’s going in the new Wrangler four by four. It’s going to be in the new Grand Cherokee wagon year this year, and they can easily drop that into the Ram. We’ll probably see a battery electric version of the Ram 1500, probably in the 2023 to 2024 timeframe, if not sooner.
Toyota is still kind of iffy. They they’ve recently said that they’re going to launch seven new EVs, but we don’t know which ones fi, though they do have a new Tundra coming. It’s going to be introduced in the next few weeks, but whether that has an electric battery electric version, I don’t know. I think in Toyota’s case, they’re more likely to go with just a hybrid for the time being on the Tundra.
And then Nissan. The Titan sells in such low volumes – they only sell about 20,000 units a year – that my guess is that as the current generation of the Titan nears the end of its life cycle it may not even get replaced.
Markham: Let’s talk about the kissing cousin to the pick up truck, which is SUV’s. Many of them are built on a truck chassis. What’s the implication for SUV’s of the Lightning announcement?
Sam: For the largest SUVs like the Ford Expedition and Lincoln Navigator, GM’s Tahoe, Sierra, and Yukon we will probably see battery electric versions of those coming that are derived from the same platforms as the pickup trucks. They, they share a lot of their underpinnings. They’re not exactly the same, but they share a lot of the underpinnings with the pickup trucks.
Once they’ve developed an electric pickup truck, it becomes a lot easier to migrate that same propulsion system over into the SUVs. And I would be surprised if we see electric versions of at least some of those models.
In the case of Ford, I would guess that the Navigator, the full-size SUV, may be the first one to go electric followed by the Expedition. And then the Escalade will probably be the first one for GM followed by the Tahoe and Yukon.
Markham: Final question and that’s about subsidies from governments in Canada and the US. Some of them are quite generous. The one I’m most familiar with is Quebec, which has up to $8,000. When you combine that with the up to $5,000 from the Canadian government, you could get $13,000 off one of these trucks.
And that’s got to also be a fair incentive for ICE pickup truck owners to shift over to electric?
It, it certainly is especially where the incentives are still available in the case of Ford [in the United States]. They’re still eligible. They haven’t hit the 200,000 sales threshold. They probably won’t until close to the end of this year, maybe the early part of 2022, depending on how many other plugins they managed to sell. When the F-150 Lightning launches, at least for probably the first six to nine months, it will be available with a $7,500 federal tax credit in the US. Then there are some states that also offer tax breaks.
Right now in Congress, there is discussion going on over, um, the infrastructure bill and the proposal was put forward by the Biden administration that would expand the incentives for buying EVs. And in fact, fundamentally change it from a tax credit, which you claim on your following year’s tax return, to a point of sale rebate, which would be much more convenient for a lot of customers.
If that passes, that could well be in place by the time the Lightning becomes available around this time next year.
Markham: It seems to me that the Biden Administration’s focus on building out the North American EV industry, and also cutting GHG emissions from transportation sector combined with this new announcement now where Ford has got a really competitive electric truck, all of that kind of creates a perfect storm of good news for Ford.
Sam: It certainly does for Ford and for GM as well. Assuming that Stillantis comes forward with a plug-in version of the Ram, I think there’ll be in, in a good position as well.
Ford and GM in particular, because they have so many commercial customers that use these trucks. Those customers will find a lot of appeal in these vehicles because as you mentioned earlier, it significantly reduces the operating costs. You have reduced service costs, certainly a lot significantly reduced fuel costs by going to electric.
That’s the market that Ford is going to be targeting very aggressively with the Lightning is, is those commercial customers.