Published on November 18, 2019 |
by Frugal Moogal
18. November 2019 by Frugal Moogal
No, it is not a typo. When I saw the reveal last night, I was curious about how the Mustang Mach-E will be placed in the Ford lineup, and after a while looking into it, I think this new pony is an incredible business risk for Ford.
If you regularly read my articles, this may seem strange, because it seems to be the opposite of my analysis that the market has embraced electric cars, but it really isn't. I don't think the Mustang Mach-E is a potential "Ford Killer" because it's not good enough, but because I wonder exactly how ready Ford is to make this shift.
Before moving on, it struck me yesterday that Ford is going to make this change somehow. After my end, the process of Ford announcing its almost non-existent electric car line up to me in recent months was followed by Ford rolling out what I think is the most impressive non-Tesla electric car the market has seen so far. Mustang Mach-E looks like a unique electric car.
And that's the difficulty. There seems to be this belief among many equity analysts that electric vehicles are a specific "segment" of the market. You go as a look at getting a gasoline SUV or an electric car, and these two things do not go over. This, perhaps more than anything else, is what makes me feel that traditional stock analysts really have no understanding of today's market trends.
I went electric when I found out the cost, maintenance and time savings of a used Nissan Leaf. I fell in love with the instant torque and silence of the driveline. My family bought a Tesla Model 3 as our second car because it, although more expensive *, benefited from all the benefits of electric propulsion with a long-haul travel network. (* As a complete page aside, I have argued here that, based on the way I calculate things, getting a Tesla Model 3 saves money. I still think so, and will at some point write an article about why. )  These two cars replaced gasoline cars. Since I bought Leaf, talking about it with others has resulted in no less than five people I know bought used leaves in the last two years. Each and every one of them reports that they absolutely love the car, and each of them states that they will never buy another petrol car because of all the other benefits.
Why am I talking about this with regard to Mustang Mach-E? Because this is the first time an old car manufacturer introduced and pushed a large electric vehicle like this.
If, while reading this, you think: "Wait – you just mentioned the blade and you're over the Bolt." I disagree. I love our blade. I've tested a Bolt and other than the dealer knows me that it would be a bad decision to get one because, & # 39; you can't go any way with an electric car & # 39; (yes, seriously), it seemed like a nice car too. But, Leaf and Bolt remind me extremely similar gas cars made by the same manufacturers – the $ 15,650 Versa Note hatchback and the $ 13,220 Spark respectively – except that both are less than half the cost of the electric version.
Mustang Mach -E is not at all That's equivalent to the size of the Ford Escape, which starts at $ 24,885, almost twice the price of the petrol cars I noticed above. The entry level Mustang Mach-E, including $ 7,500 tax credit, starts at $ 36,395. $ 510 is still great, let's compare it m ed the other two cars I have mentioned. Leaf, with full tax credit, is $ 6,840 more expensive than its gas particle – and frankly should be more competitive with that. The Bolt is $ 21,525 more than Spark.
Leaf and Bolt, especially in America, have not been big sellers for their brands. The Leaf I think is harmed by limited used car costs, subpar range and impressive battery technology; The bolt because it is simply too expensive.
The Mustang Mach-E looks like it could be a huge seller for Ford, comparable to one of Ford's best-selling models, and doesn't have an insane price difference. And unlike Nissan and Chevy, who barely advertise the electric offer, it looks like Ford is seriously looking at this one, which started with this ad showing me regularly on Facebook a couple of weeks ago:
Editor's note: I'm going to add a note that I think closes Frugal's argument – wrapping it up into some points that I think are just a little stressed. LEAF and Bolt are much better than the comparable petrol models he mentions, and they come with top features for a Nissan or Chevy. However, you will never guess from the outside and there is almost no way for a normal consumer to learn these things. Dealers don't intend to take it up while someone looks at gasoline models, the ads are sparse, and the vehicles are not calling for attention.
However, the Ford Mustang Mach-E is impressively and instantly thrown into another category – even before you see it. Ford gave the company its prestigious, iconic Mustang branding, and also through a "Mach-E" brand that sounds exciting and special. This is a Mustang, but no ordinary Mustang! Furthermore, Ford took some serious risk of making a Mustang which is a crossover, but it is obvious why – people want crossovers. This is a positive thing. Ford says, we are the same great Ford, but we are ready for the 2020s with a electric crossover that is sporty, high-tech and the company's future. This inspires, excites and Frugal, and I clearly believe it will attract customers far more than Bolt or LEAF did for Chevy and Nissan. Ford basically puts everything it has into this electric offering, and it shows. This forces and guarantees a higher price tag. I think it is somewhat obvious to a normal consumer that the Mustang Mach-E has a higher price than the Ford Escape because it is a much better vehicle. Anyway, back to Frugal …
We've gone over 750 words now ( minus the editor's note ), and I seem to be extremely positive about the Mustang Mach-E. And to be clear, I am – unless Tesla surprises me and plans to start CYBRTRCK production next year, I expect the Mustang Mach-E to be the most important new electric vehicle in 2020, even surpassing the Tesla Model Y  And therein lies the problem. As consumers begin to see advertisements like this, it starts to make them question their current purchases, and whether those purchases are outdated sooner than later. The effect is often called the Osborne effect thanks to the history of Osborne Computer Corporation, which started advertising a new computer that it produced in 1983 months before it was launched. The dealers claimed that they had canceled their orders for the existing product in droves, leaving the company many tons of unsold stock and leading it to declare bankruptcy in 1983.
This is where it is getting interesting for Ford. Not only is the Mustang Mach-E an impressive car, it has a ton of features clearly inspired by Tesla, including a multi-controller phone app, passive phone listing, and airy software updates to enhance User Experience. These sell points from Mustang Mach-E, and everyone I know who has seen them on a Tesla tells about them.
problem? Nothing else that Ford has includes these features. Maybe you're not ready to spend more money on getting a Mustang Mach-E, but it's pretty clear that "Ford electric vehicles are coming", so maybe it's worth waiting a few months or an extra year to see what else they come out with. The strong rumor is the electric F-150, which Ford has also more or less begun to announce, will debut as a 2021 model … which is more interesting when you look at the Mustang Mach-E on the Ford side and realize that it is listed as a 2021 model.
Debuting both these cars at the same time as a hard pivot to electric is a fascinating strategy, and frankly, the only way I expect legacy auto to be able to make the transition, but it's full of risk, and I see a greater risk for Ford.
On paper, it looks like the Mustang Mach-E and Tesla Model Y will be extremely similar. The standard range of the Mustang Mach-E is expected to be 230 miles, the same as Tesla expects for the Model Y Standard Range. The Mustang Mach-E, four-wheel-drive extended range, is expected to reach 270 miles, very comparable to the Model Y Long Range's 280 miles.
However, the difference is how they do it. The Mustang Mach-E in the standard range has a 75.7 kWh battery, which is as much as 25.7 kWh larger than a Tesla Model Y Standard Range. The extended range Mach-E takes 23.8 kWh extra battery to go as far as it will go.
Although we depart from recent reports from Volkswagen that it is buying batteries under $ 100 per kWh, we are looking at an additional cost in the thousands of dollars for the batteries. To begin with, I found it difficult to understand how Ford would make the difference in money, before realizing that the Mustang Mach-E Premium is still a standard car for $ 50,600. Expanding your range will be an additional $ 5,000, which means a long-range Mustang Mach-E will cost $ 55,600 compared to Tesla's $ 48,000 for the Model Y Long Range. After the tax incentive, prices will be almost the same.
This is where I suppose Tesla still has a pretty massive advantage. Tesla can use ~ 25% less battery capacity to get the vehicles running at the same distance. Add that Tesla sells its vehicles directly to customers, avoiding the dealership model that Ford is forced to use and shaving for an estimated $ 2,367 more. (If you're wondering where I drew this figure, I found this fascinating Quora post a while ago and bookmark it – look for David's second answer.)
Combined, I expect Ford to pay at least $ 5,000 more than Tesla for every Mustang Mach-E it sells. Based on Chevy's continued statements about how it doesn't make any money on the Bolten, it makes me wonder if there is any room for profit in Ford's model.
If it is not, or if it is, but it is not If the Mustang Mach-E and the advertising around it leads to a fall in sales of other Ford vehicles, Ford could be in serious trouble. In September, Ford's credit rating was downgraded by Moody's to garbage status. It is worth noting here that Tesla's credit rating of Moody's is actually worse than Ford's, but I view Ford's debt as a bigger problem.
Ford has around $ 100 billion in debt globally. A considerable amount of this debt is tied up in combustion vehicle assets. If the Mustang Mach-E kicks off the electric revolution, Ford may face the real prospect that these assets would essentially be stranded, which in turn makes it much more difficult to service the company's debt.
This is the difficulty some old car manufacturers face in this transition. Their value is largely based on perceived value of assets that may not have any value, and that is why I have felt that Leaf and Bolt were purposely made not to be overly attractive. The problem is that Tesla continues to make cars that are compelling compared to all other cars in their price range, regardless of the propulsion method, and then double down by creating and updating the most advanced technology package in the industry.
Model 3 captured over 1% of the US auto market share by itself. If Model Y sells twice as much as Model 3 does, it's likely that Tesla could hold 3% of the market with just two models, and that's without advertising.
It looks like Ford is the first big old car manufacturer to understand what this might mean for the company, and the Mustang Mach-E looks like a unique vehicle that can really compete with Tesla's offerings . If Ford continues to push electric cars in commercials like the one above, and if Ford goes ahead with an electric Ford F-150 for model year 2021, we could very quickly see a growing awareness of the arrival of electric vehicles worldwide.
What does this mean for the rest of the automotive industry? And what does that mean for Ford? Can Ford survive this shift with current debt levels and product layouts? The automotive industry is becoming incredibly interesting.
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