Ford Motors plans to slash $14 billion in costs over the next five years, Chief Executive Officer Jim Hackett told investors on Tuesday, adding that the No. 2 U.S. automaker would shift capital investment away from sedans and internal combustion engines to develop more trucks and electric and hybrid cars.
By 2022, Ford plans to cut spending on future internal combustion engines by a third, or about $500 million, putting that money instead into expanded electric and hybrid vehicle development, on top of $4.5 billion previously announced. Ford had already promised 13 new electric or hybrid vehicles within the next five years.
Right, this looks good on paper (or on photons if you prefer), but it is a bit misleading and somewhat contradictory. Moving 1/3 of your spending from ICE to EV is nice, but you are still investing a lot of money in polluting vehicles (and I doubt they will be discontinuing their pickups and SUVs anytime soon. But hey, I’ll take what I can get). But, I am puzzled about how you can develop “13 new electric or hybrid vehicles within the next five years” and cut $14 billion in costs. Designing and building new vehicles takes a LOT of money. Perhaps he thinks he can just take gasoline cars and stick electric motors in them. If so, he will soon learn that it’s a bit more complicated. Sure, you can do that, but you wind up with a car with lackluster range and performance (like the Ford Focus EV).
Also, are these cars for the U.S. market, or the Chinese market? He doesn’t specify.
He did have two ways of saving money that made sense.
One way to cut costs will be to offer fewer variations of Ford’s models, Hackett said. The slow-selling Ford Fusion midsize sedan can now be ordered in 35,000 combinations of features, colors and powertrain options. The future model will come in just 96 combinations, meaning fewer parts to design, produce and store in inventory, Ford showed in a presentation.
He said Ford also will cut the time it takes to engineer a new car by 20 percent, and invest in “factories of the future” that will occupy less space and use more robots.
Golly, he sounds just like Elon Musk.