Investors might be a little concerned at how Ford is spending its money.
Ford dropped billions of dollars redesigning the aluminum-bodied 2015 F-150. Then it spent at least a billion more perfecting a high-speed aluminum riveting and bonding production system, and retooling its plants.
Ford has said, and continues to say, that fuel economy is the No. 1 unmet need of its truck buyers.
Despite the hefty investments to transform the 2015 F-150, the pickup’s fuel economy barely budged, we learned last week, even though the new truck is up to 700 pounds lighter than the old one.
GM, on the other hand, has developed a low-cost aluminum welding system that joins sheets of aluminum together on the same production equipment already in use in its plants. GM’s cost to switch to aluminum compared with Ford’s: pennies on the dollar. And this technology is here now.
GM has been quietly rolling out the new system, installing welded aluminum parts now on the Corvette, Cadillacs, trucks and SUVs.
Mark Reuss, GM’s product development chief, says the company can reduce weight and meet its fuel economy obligations without having to follow Ford and build entire vehicle bodies out of aluminum, which is more expensive than steel.
And in the fuel economy race, Chrysler zipped by both GM and Ford by simply installing a diesel engine in its Ram pickup. Ram owns the fuel economy crown at 28 mpg highway and likely will for at least another year.
So, Ford investors might be wondering what’s going on over in Dearborn.
I’ll tell you: Ford is doing something rare in this industry by planning for about 15 years down the road. Ford’s senior leadership is getting the company poised to remove strict fuel-economy standards from its list of things to worry about. There will be short-term financial pain now as Ford’s costs to build the F-150 rise and profits shrink.
But we in the media, and those ever-expectant analysts in the financial community, are often guilty of not seeing the whole, long-term picture. We have a short attention span, and we want instant results now. Because the new F-150 failed to claim segment leadership in fuel economy, you might think Ford failed to deliver the goods. It didn’t.
Let’s look at this from a long-range viewpoint: It took major guts to transform the industry’s top-selling vehicle from steel to aluminum. Ford could have played it safe and stuck with steel, and no one would have noticed. It would have been business as usual.
Ford certainly has the resources -- and the hardware -- to undertake a fuel-economy moon shot and roll out the F-150 with an eight- or nine-speed automatic transmission and a diesel engine and at least 30 mpg. Ford makes a powerful 4.4-liter turbo diesel V-8 in Mexico for Land Rover. A smaller version of that engine could have -- and still might -- have gone into F-150.
And, like Chrysler, Ford could have licensed a transmission with more than six speeds from German supplier ZF.
Here are two reasons why that didn’t happen: First, it would have presented Ford with a daunting engineering challenge to build the new F-150 with all-new powertrains. Ford kept the same six-speed transmission as last year and rolled out one new engine, the 2.7-liter V-6. The rest of the F-150’s powertrains are lightly modified versions of last year’s components.
Second, it would have caused major sticker shock among F-150 customers. Many well-equipped models of the new F-150 are now close to $40,000. You can spend over $50,000 and close to $60,000 for the top-of-line loaded King Ranch and Platinum models.
Ford has to take it slow, acclimate customers to higher prices, allow dealers time to learn how to repair aluminum and make sure all the new electronic technology in the truck performs flawlessly.
Going slow with the powertrain technology that would have vaulted the F-150 past the Ram was the right thing to do. In about a year, a new 10-speed automatic transmission that Ford is co-developing with GM will be available. And, because of the high-volume parts shared with GM, Ford will have an advantage over Chrysler on costs.
As for a diesel engine, Ford is right to wait on that as well. European and U.S. emissions standards are going to become more closely aligned in 2016, forcing diesels sold in Europe to adopt much of the same emissions equipment as diesels sold here. That will drive down component costs for such things as the selective catalytic reduction system that injects urea into the exhaust to reduce oxides of nitrogen, or NOx.
The fuel economy race -- like that of quality -- is never ending. Sure, the 2015 F-150’s EPA ratings disappointed a lot of people, and Ford tried to slip the bad news under the door on a Friday before a holiday -- in a pretty cheesy move.
But don’t bet against Ford. The F-150 pays the bills at the company.
