Escalating the pickup wars with a lower-weight, higher-cost play on the F-150

Ford's huge bet on aluminum

Escalating the pickup wars with a lower-weight, higher-cost play on the F-150

Ford’s 2015 F-150 is likely to deliver much better fuel economy than the 2014 model, and rivals are weighing options to compete.
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DETROIT -- Alan Mulally took one of the biggest business risks in history in 2006 by mortgaging $23.6 billion in Ford Motor Co. assets to avert bankruptcy. Now he's taking another big chance by raising the cost of his top-selling and most profitable vehicle, the F-150, by swapping aluminum for less expensive steel.

Analysts say substituting aluminum for steel costs an estimated $2 per pound of weight saved. Ford has said the 2015 F-150 will be up to 700 pounds lighter, but Ford hasn't said how much of the weight loss is the result of aluminum usage.

Ford has not set prices for the 2015 F-150. But Doug Scott, Ford's truck marketing manager, said last week that the company plans to price the truck roughly the same as the current F-150, from $24,500 to $55,000.

The industry, especially major truck competitors General Motors and Chrysler, is watching the project intently as Ford moves toward production in the fourth quarter.

Ford hasn't listed fuel economy numbers, but several media reports have said the new pickup could hit 30 mpg highway.

The aluminum-body pickup is the latest phase of Ford's strategy to meet future CAFE standards. Ford committed billions to the EcoBoost family of engines, an investment that already has paid off.

The 3.5-liter EcoBoost V-6 has exceeded Ford's estimates and is the largest-selling engine in the F-150 lineup, with a take rate of about 40 percent.

Ford currently charges a premium of $2,095 for a truck with an EcoBoost V-6 rather than the 3.7-liter base V-6.

But Ford's willingness to use a costly material like aluminum is striking because carmakers usually try to cut costs when they renew big programs, one consultant says.

"If a product planner or designer on a typical program suggested a $100 increase on a high-volume program, they'd be at risk of being fired," said Eric Noble, president of The CarLab in Orange Calif., an industry consulting firm specializing in product planning. "Here's Ford adding at least $1,000, and no one got fired. In fact, they trotted it out on a stage."

Noble says his $1,000 figure is just a rough guess, based on an estimate that aluminum costs about three times as much as steel. Aluminum sheet is roughly $2.20 per pound, compared to 75 cents for steel.

Ford has said the 2015 F-150 will weigh up to 700 pounds less than the current model. So Ford is using a material that is far more expensive per pound, but the impact is reduced because there are far fewer pounds in the final product.

A 2014 F-150 SuperCrew with rear-wheel drive weighs 5,296 pounds, meaning Ford would lose about 13 percent of the weight if it takes 700 pounds out of the 2015 model.

Richard Schultz, president of Ducker Worldwide, which analyzes materials usage and cost, said Ford may be able to recover some of its costs because the new lighter truck will be able to use lighter and less expensive components in some cases, depending on the model.

"They'll get credit by buying cheaper parts because they took the weight out," he said. "They don't have to have the same size springs and control arms. You're hauling around less truck."

He said the cost of finished parts would be more important than the bill of materials in determining cost.

Mulally does not see the aluminum F-150 is as a gamble at all. He says he knows aluminum well from 43 years in the aircraft and automotive industries.

"Pound for pound, aluminum is stronger and tougher than steel. We have the best alloys we've ever had," he said during an interview at the Detroit auto show.

Mulally said aluminum would appear in other volume vehicles: "This is the material of choice going forward."

Cutting weight on the F-150 means Ford can use smaller engines, such as the new 2.7-liter EcoBoost Ford announced last week. That will power a nimbler, more capable truck that can haul bigger loads and tow more, Mulally said.

Many observers, including some of Ford's competitors, came away from the Detroit show convinced the F-150 is a game changer.

GM global product chief Mark Reuss acknowledged "concern" about how the F-150 could change the competitive dynamics in GM's most important segment.

"But am I scared? That's a different word," he said.

GM's main bulwark against the competitive threat of a full-sized aluminum truck is the mid-sized GMC Canyon, which it unveiled for last week's show, and its platform mate, the Chevy Colorado. GM says some pickup buyers don't want the large footprint of a full-sized truck and can do without the extra towing and payload capacity.

"It's our answer, and it's hard to copy," Reuss said.

GM hasn't given projected mpg ratings or capacity specs for the trucks, which will be launched this fall. The crew cab Colorado is 900 to 1,200 pounds lighter than today's full-sized pickups.

GM also is vowing to make swift enhancements to its redesigned full-sized Chevy Silverado and GMC Sierra, launched last year. The pickups already are more than 200 pounds lighter than the current F-150, Reuss notes. And he has hinted that a host of fuel-saving technologies are on the table for the trucks, including transmissions with more gears and perhaps a diesel engine.

GM is also working with aluminum. GM executives have touted a proprietary technique that can spot weld aluminum panels together without the need for rivets, saving weight.

"We know how to do aluminum really well," Reuss said.

Bob Lee, Chrysler Group's head of engine, powertrain and electrified propulsion, termed the 2015 F-150 "an interesting step in this evolution" toward the 2025 CAFE rules. Lee said Ford's efforts to shed weight from its signature vehicle is a harbinger of things to come.

"I think when we look back, in retrospect, this will be a very noticeable step," Lee said, also mentioning Chrysler's introduction of a diesel-powered light duty. "But by the time we get to 2025, I think you're going to see a lot of these things all coming together."

Mike Jackson, CEO of AutoNation, the country's largest dealer group, applauded Ford: "Technically, producing this vehicle out of aluminum in the volume that it needs to be and to hit the cost part is a huge challenge Ford Motor Co. has taken on.

"I salute them. It's a gutsy call. I'm confident ultimately they will succeed, because they have no choice. But the journey to get from where they are to producing this thing in the volume that they need is going to be quite a story."

Larry P. Vellequette contributed to this report.

You can reach Bradford Wernle at bwernle@crain.com.


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