Ford EV Truck | Image courtesy of Teslarati

Ford Motor, the American car manufacturer whose sales surged by 41% in the first quarter of 2023 to 10,886 units is ready to embark on yet another expedition aimed to take on rivals like Elon Musk’s Tesla.

Unveiled during the company’s investor meeting on Monday, the ambitious plan will see Ford try to reduce costs, which stand at $7 billion in a bid to regain investor trust on Wall Street.

Ford Eyes Next-Generation EV Architecture

Ford faces two uphill tasks: To increase the production of its electric vehicles and to cut costs that have been gobbling up its revenues.

On Monday’s capital market’s day, Ford flaunted oodles of battery material developments, including recently signed contracts that will see the 120-year-old vehicle manufacturer double down its position in the EV industry.

If all goes to plan, Ford will be the first to introduce into the market the world’s first electric three-row sport utility vehicle (SUV) boasting 350 miles or approximately 563 kilometers of range.

The SUV, expected to debut in 2025 is inspired by Ford’s own Expedition SUV.

2023 Ford Expedition | Image courtesy of Car and Driver

Although the investor presentation day focused on reassuring the world that Ford is still a force to be reckoned with in the automotive industry, the company seized the moment and paraded major supply deals centered around the powerful lithium battery.

According to a report by Counterpoint on EV sales in the US, Tesla dominated sales in the region with a 54.5% increase year-over-year in 2022. The platform’s Global Passenger Electric Vehicle Model Sales Tracker revealed that Tesla boasts a 50% market share, leaving other EV manufacturers with only 49.5%.

“Tesla is dominating the US EV market while other automotive giants like Ford, General Motors, Stellantis, Volkswagen, and Hyundai are struggling to provide strong competition,” Research Analyst Abhik Mukherjee said in a written statement to Counterpoint on the dynamics of the EV market in April.

However, if Ford sticks to the plan unveiled on Monday to manufacture 2 million EVs by 2026, Tesla should be worried.

“You’re not going to believe us until we start delivering it,” Ford CFO John Lawler said at the investor day presentation on Monday. “Because we’ve told you this before. That’s the truth. We have and we haven’t delivered. So, we have to prove it. We can talk about it, but we have to prove it.”

Ford’s 3-Row SUV Coming in 2025

Ford announced its next-gen SUV which may hit the market in 2025. Although specific details about the electric powertrain vehicle remained scant, experts at The Verge believe the SUV may not stray much from the electric Ford Explorer sold only in Europe.

Ford currently manufactures other EVs like the F-150 Lightning, the Mustang Mach-E, and the E-Transit van.

In addition to these EVs Ford is working on another electric truck known only by its codename T3. In what seemed like a warning to other EV manufacturers in the US, Ford’s CEO Jim Farley hinted at yet another “third-generation” EV expected to boost the company’s presence in the industry.

The next-gen SUV could be powered by batteries built on direct lithium extraction (DLE) technology. According to a study conducted by Goldman Sachs on Global Metals & Mining, DLE possesses the immense potential to revolutionize the EV market.

“Our analysis suggests that DLE will widen, rather than steepen, the lithium brine cost curve with an average project likely sitting in the second or third cost quartile,” the report added. “With resulting additional lithium supply we also see risk that DLE implementation could extend the size and duration of lithium market surpluses/reduce deficits.”

Some of the battery supply deals unveiled on Monday are the 100,000 metric tons of lithium hydroxide from Albemarle Corp whose stock trades under the ticker ALB.N together with Nemaska Lithium for the next five and seven years, respectively.

Lithium hydroxide is a key ingredient used in the cathode of lithium-ion batteries preferred due to its properties like higher energy density, which allows EV manufacturers to compact cells in small storage compartments.

Doubts Linger on Wall Street

Ford gave a show of its might on Monday with ambitious targets, but as per the report by Reuters, Wall Street doubts if legacy automakers like itself can compete with the likes of Tesla in the EV realm.

According to Ford, the company has the ability to increase the production of EVs to 600,000 by the end of this year.

The prominent American car manufacturer confirmed the annual projection of an adjusted income of $9 billion to $11 billion before interest and taxes, along with nearly $6 billion in adjusted free cash flow.

Despite these projections, the automaker maintains that its electric vehicle division will likely face a $3 billion loss for the year.

Ford also highlighted that the forthcoming electric truck model will boast a 30% reduction in labor and overhead expenses when compared to the existing gas-powered truck.

Ford has a chance to stay relevant in the modern automotive industry as it doubles down on its EV efforts armed with several battery deals.

However, competition from Tesla, Lucid Motors, and Volkswagen, which has signed a massive contract with Gotion for its newly unveiled 1,000 km range battery, is bound to increase, possibly slowing down Ford’s growth prospects.

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