A long-running General Motors (GM) ad campaign boasted that its Chevrolet lineup was the “Heartbeat of America.”
But it was Ford Motor Co. (F) that brought mass production to the auto industry — and made it possible for workers to buy the very cars they were building.
It was Ford that:
- Put America on wheels with the venerable and easy-to-maintain Model T, a car affectionately known as the “Tin Lizzie.”
- Created the first mass-market V-8, an engine so powerful that “Bonnie and Clyde” gangster Clyde Barrow told CEO Henry Ford in a testimonial letter that “even if my business hasn’t been strictly legal it don’t hurt anything to tell you what a fine car you got in the V-8.”
- Kicked Enzo Ferrari’s butt and stole Italy’s racing crown by building a race car model that finished 1-2-3 in the great Le Mans endurance race in 1966, a victory chronicled in the hit flick “Ford v Ferrari.”
- Supercharged the “muscle car era” with the sleek-and-sporty Ford Mustang.
- Grabbed the top spot in the pickup market back in 1976 (and kept it ever since).
- Planted a flag in the electric vehicle (EV) revolution, building on its century of success with internal-combustion vehicles, thanks to its Ford F-150 Lightning pickup and Ford Mustang Mach-E SUV.
Ford built itself into an American icon — not just in cars and trucks, but in the fabric of daily American life.
But very few companies that dominate in one era “cross the chasm” and remain relevant to the next generation of customers.
Over the last 12 months, the Ford stock price is down 10%. And over the last five years with a strong overall market bull run baked into some of that time, Ford shares have barely managed to break even.
Ford hasn’t been shy about its issues with costs, manufacturing, and productivity. But it claims to have plans to reclaim its leadership position.
The company that Henry built is targeting the EV market.
But you’re about to learn why victory in that race faces very long odds of success…
Conflicting Priorities Equals Bad Results
Last August, Ford announced it was laying off 3,000 workers as part of a cost-saving measure.
But the company also wants to increase productivity and the quality of its products, as CEO Jim Farley estimates there is a 25% to 30% inefficiency for every dollar it spends.
Not to mention the fact that the company issued the most safety recalls of any automaker in 2022.
That has surely played a part in Ford’s Purchase Intent mentions falling off a cliff, currently registering 20% lower quarter-over-quarter and losing 29% year-over-year.
Here’s where the biggest problem is created for Ford looking ahead…
Trying to save money while also improving efficiencies and quality is normally an unwinnable battle; you’ll often need money to make improvements but will have even fewer resources to make that happen if you are firing employees.
While letting employees go may reduce costs, having a smaller roster makes it more challenging to implement improvements.
You generally can hire more people to increase production or let people go to save money.
But doing both creates conflicting priorities, which isn’t a good sign for a company looking to improve its reputation, quality, or to increase productivity like Ford needs to.
Ford was able to beat earnings estimates in its last report but it still needs to prove itself. We’ve yet to see that its plans in improving quality, increasing productivity, and cutting costs can all work alongside themselves.
And there’s an even bigger challenge: Ford seems to be squandering its early “wins” in the EV market.
Take the F-150 Lightning EV pickup.
Chip shortages during the pandemic put the squeeze on Lightning production. Then came the recalls, which have shown up in the numbers.
Consumer Happiness on the EV pickup is down 15% on a year-over-year basis. And demand is down a calamitous 52%.
When we see such a drastic drop-off, chances of recovery are slim to none.
The Bottom Line
GM’s mantra was “Heartbeat of America.” And Ford’s was “We bring you better ideas.”
The company that brought you the Model T and that made Clyde Barrow faster could use some of those better ideas now.
There isn’t a magic wand you can wave to make your operations more productive – or to catch up to the real EV leader.
Ford has a long way to go to build back up its reputation because of all its safety issues.
Don’t expect a share-price rebound anytime soon.
And look for “part two” of our EV market coverage to hit your inbox tomorrow, where we’ll bring you fresh insights on the reigning champ, Tesla (TSLA).
Until next time,
Andy Swan
Co-Founder