Ford Motor Co. unveiled its 2022 Ford F-150 Lightning electric pickup truck last week, signaling its intent to begin the transition of its lineup to electric vehicles.
Here’s are eight takeaways from Wall Street investment analyst Adam Jonas of Morgan Stanley Research. His comments, made in a research report for investors, have been edited for clarity and brevity.
LOWER PRICED THAN EXPECTED
The entry-level commercial version starts at $39,974 (before tax and before incentives) which, while materially higher than the entry-level internal combustion engine, or ICE pickup, we believe may be amongst the very lowest priced battery-electric, or BEV offerings on the market in the commercial/pickup truck segment. The higher spec XLT model starts at $52,974 which again is competitively priced.
COMING SOONER THAN EXPECTED
Ford targets deliveries by ‘spring 2022’ which is at least 6 months earlier than we had anticipated. While initial volumes may be low over the first 12 months (low tens of thousands of units), we feel it’s important for Ford to have an offering in the market for competitive/engineering/brand/quality purposes.
LESS RADICAL THAN EXPECTED
While there may be some room for debate around this, the F-150 lightning borrows a lot from the design and basic body architecture of the current F150. This is not a full clean-sheet bottom-up BEV pickup truck that other auto OEM (automakers) may be introducing to the market. There may be both advantages and disadvantages to this approach. For certain, we expect Ford will eventually introduce fully clean-sheet commercial/pickup truck offerings over the medium to long term. However, the priority to have a fast time to market, lower execution risk and a lower break-even (given projected volumes) appeared to drive this decision. That said, we believe the price and some of the exclusive features make the trade-off worth it, for now. Range and performance (towing, payload, acceleration) appear competitive.
END OF F-SERIES ICE POWERTRAINS?
In our view, one of the biggest blind spots in the automotive investment community isn’t the potential for legacy OEMS to benefit from BEV adoption… but the risks inherent in the de-adoption of ICE. This issue is bigger than any one OEM. But from the perspective of the Ford F-150 lightning, it seems Ford is executing a balanced approach that includes a bold offering in terms of price and time to market can give Ford a path to explore the electric truck market without pulling the rug out from under the ICE trucks.
CROWED BEV PICKUP SPACE
Why would you buy a Lordstown Endurance? At this price, capability and targeted end market, we believe the F-150 Lightning presents a major competitive threat to Lordstown (Motors, an electric truck startup.) According to Lordstown’s investor deck, the initial cost of the Endurance is $52,500 which is well above the starting price of the Lightning ($39,974) and in line with the Lighting XLT. However, in our opinion, when you add in the proven breadth of Ford’s extensive commercial/dealer network (including service, parts, etc.) and more proven technology Ford’s announcement presents yet another strong commercial headwind (to Lordstown.)
SECURING BATTERY SUPPLY
Ford’s memorandum of understanding to establish a battery joint venture with SK Innovation is critical to ensure Ford can control its own destiny and deliver sufficient quantities of BEV products. While many more supply arrangements must be struck to supply the up to 240 GWh of demand for battery cells for Ford products it predicts by 2030, we believe investors should feel some relief that Ford is on the right track.
The F-150 Lightning offers “Intelligent Backup Power.” Ford is teaming up with Sunrun for the installation of an 80-amp “Ford Charge Station Pro and home integration system,” which gives the Lightning the ability to supply 9.6 kW of power output. Depending on power rationing, it could power a home for several days during an outage. While we would expect such features to eventually become standard for most BEVs, it seems Ford may have a jump on the competition and a powerful marketing tool, especially in certain regions where their strong commercial presence overlaps with energy needs (ie. Texas, etc.)