Motley Fool Interview: Ford's Product Chief Explains the Big Plan
Ford Motor Company (NYSE: F) released a lot of details about its product plans for the next two years on Thursday. Among other things, we learned that Ford is planning several all-new SUVs, a new F-150 for 2020, and some surprising gasoline-electric hybrid vehicles.
You can read more about the high points of Ford's plan (and why it matters to investors) here. But if you do, come back here, because there's more to the story. Before Ford's official announcement, I had a chance to walk through the plan with Hau Thai-Tang, Ford's global product-development chief.
Thai-Tang talked in some depth about the thinking behind these new products, how they'll boost Ford's profitability, and how changes that Ford is making behind the scenes will lower the costs of these new products and help Ford bring future products to market more quickly -- all things that should help boost Ford's stock price over time.
Here's a look at what we discussed. Remarks have been lightly edited for length and clarity.
A big update to Ford's aging product portfolio
Hau Thai-Tang: We're going to turn over about 75%, three-quarters of our product portfolio. Over the next 24 months, the average age of our product portfolio will drop down to 3.3 years from 5.7 [years] today. We believe, based on our competitive intelligence, that will make it the freshest in the industry.
In terms of where we're playing, it's -- as you can imagine -- around our areas of strength: pickup trucks, SUVs, performance products, and then a big effort with electrified products.
The other part of this news is how we're bundling a lot of the driver assistance technologies to bring them to market as standard features. We've been calling [the bundle] Ford Co-Pilot360, and that will be deployed probably across our product portfolio starting with the Edge that's coming to market this year.
John Rosevear: That package [Co-Pilot360] will be standard, right?
Thai-Tang: Yes, it will be standard equipment, and then customers will have the option to add on incremental driver-assistance technology beyond that package.
SUVs: Filling in the gaps
Thai-Tang: In terms of the SUV plays, we've been really successful of late with the two bookends of the marketplace. We're coming out [now] with a small compact SUV, the EcoSport, and then the recent Expedition launch has been really well received.
Now we're going to go after the heart of the SUV market. Escape and Explorer, which make up 70% of our SUV [sales] volumes, will be all-new. They're both coming off of new platforms, so we're really excited about the new products there.
In addition, we're going to introduce two all-new incremental SUVs that are targeted toward off-road customers. Bronco is one of them, and then there's another one that has been kind of under wraps that we haven't named yet. But it's also going to be an off-road, smaller sports-utility vehicle that will be very capable. I think it will be very well-received in the marketplace.
Rosevear: Can you reveal the timing of the second off-roader?
Thai-Tang: Yes. They're both going to be out over the next 24 months.
High-performance? Think SUVs
Thai-Tang: Then in terms of performance, one of the things that we had previously said is that we're going to bring out 12 new performance models by 2020. We're going to pull the curtains back a little bit on our strategy, which is to take the ST-series lineup and extend it beyond our cars into our utilities.
At NAIAS [the North American International Auto Show, in January 2018] we talked about the Edge ST. Now, with this new Explorer platform. we think we can deliver a fantastic performance-oriented Explorer ST. The Ford Performance team is working on that right now.
Rosevear: And that's on the new vehicle, the new-generation Explorer?
Thai-Tang: That's on the new vehicle.
"All-in" on hybrids
Thai-Tang: In terms of electrification, we're going all-in on hybrids, using that as a way to really signal to the market and to the consumers the value of electrification beyond just fuel efficiency, which is already expected.
So on Mustang, it's going to be a performance play that will leverage the low-end torque for acceleration and zero-to-60 time. On F-150, it's all going to be about productivity and capability: improved towing, low-end torque, as well as the ability to use the batteries as an onboard mobile generator, for our commercial customers.
And then, we talk about the broader execution of our hybrid strategy as a way to really provide the customers with a hedge against a fuel crisis. But also, as a company, looking at -- we don't know how the demand for electrified vehicles will be. So by having a combination of full hybrids, plug-in hybrids, and also full battery-electric vehicles, we're able to go to market with a broad portfolio of solutions that provide us with a little bit of robustness depending on the demand.
There's a little more detail around our first battery-electric vehicle. As we teased at NAIAS, it's going to be a performance SUV that gives you the low end performance and torque that you would expect in a product that's inspired by Mustang. But it will also offer all of the utility and flexibility of a utility vehicle. So we're very excited about that.
Behind the scenes: Streamlining Ford's product-development process
Thai-Tang: The other part of the story is all-around fitness and what we're doing to improve our speed to market, and how we're leveraging the new organization that [CEO] Jim Hackett put in place to increase our competitiveness and lower our costs.
Part of that story is that we're shifting away from the traditional definition of a platform with a "top hat" and talking about flexible architectures. So we're going to go to five [vehicle architectures]: body-on-frame architecture for our trucks and large SUVs; front-wheel drive unitized body; rear-wheel drive unitized body; commercial van unitized body; and then a battery-electric architecture.
This will help us be more efficient in terms of engineering spend and capital spend, which allows us to reinvest into doing more products even faster. That's part of the enabler to get us to what we think will be best of the industry for age of product portfolio.
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John Rosevear owns shares of Ford. The Motley Fool owns shares of and recommends Ford. The Motley Fool has a disclosure policy.