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Autos
It is the last straw. Ford Motor Co. (NYSE: F) announced it would stop production of its electric vehicle (EV) flagship, the F-150 Lightning. The launch has been viewed as the key to Ford’s future. Executive Chair Bill Ford said it is the most important product launch in his tenure at Ford. He even commented that Lightning was the most critical product introduction since the Model T about a century ago. CEO Jim Farley has bungled it. Bill Ford has to fire him to make clear such a critical event has been badly bungled. Ford then has to find a CEO who can execute at a level that will regain the confidence of consumers, investors and employees.
Ford had forecast that it would produce 200,000 Lightning units this year to satisfy demand. The Financial Times described the production interruption as one that could last for weeks. “By the end of next week, we expect to conclude our investigation and apply what we learn to the truck’s battery production process; this could take a few weeks,” a Ford spokesperson commented. (Click here for the 25 biggest product flops of the past 10 years.)
The catastrophe was not the first on Farley’s watch. In the third quarter of last year, Ford’s expenses were $1 billion higher than expected. Ford mispriced the Lightning and the Mustang Mach-E. The Mach-E is another critical model for the company’s EV future. Ford unexpectedly raised prices on both.
Farley has admitted that Ford has far too many engineers. It is a wonder he has not solved that problem. Farley’s biggest mistake was to say Ford’s quality problems would take years to fix. Ford is among the world’s largest and oldest manufacturers. The fact that the issue will not be resolved sooner is staggering.
Ford’s fourth-quarter results and the poor forecast for this year proved that the company’s near-term future will be difficult.
Ford’s Lightning had several advantages as it entered the market. The gas-powered version of the F-150 has been the best-selling vehicle in America for four decades. There must be at least 6 million of them on the road today. The owners of these are a perfect target for the electric version of the pickup.
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Ford also came to market with its electric pickup ahead of Tesla, Chevy and Ram. These advantages cannot be overstated, mainly because of the huge sales of the Chevy Silverado and Ram. Ford’s lead is shrinking.
Bill Ford has shown a willingness to fire CEOs before. Mark Fields and James Hackett had short tenures. The last Ford CEO with a strong track record was Alan Mulally, who held the job from 2006 to 2014. Bill Ford’s judgment since then has been abysmal. Farley’s tenure has been humiliating for Ford’s executive board chair.
Bill Ford has no choice. Farley must go.
Ford has been hit by one more humiliating event, which shows how badly the company has done recently and that this long line of incidents has not ended. Farley has become Ford’s number one liability.
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