Before I jump in I want to give credit where credit is due. My comments are inspired by a fine article written by Seth Weintraub (1). He gives and a very good review of the Mach-E’s background and Sunday’s reveal. It’s worth the read.
If imitation is the highest form of flattery, then Ford has taken it to a whole new level. The Ford Mach-E interior looks so much like a Tesla Model 3, it’s scary. Perhaps the “Mandela effect” is real. Maybe there are alternate universes.
But seriously, looking at the Mach-E, there is no room for doubt that this Tesla-inspired vehicle is going after the same market segment as the Model Y and Model 3. Some may be tempted to designate the Mach-e with the media-created moniker “Tesla Killer.” I believe that we are beyond such a thing. If legacy automakers truly wanted to kill Tesla they should have acted decisively before the launch of the Model 3. At this point, the truth is it’s more about keeping Ford relevant in the coming EV onslaught. Mach-E and its future siblings are not Tesla killers, but rather possibly Ford saviors.
Ford CEO Jim Hackett states that the Mach-E will “make a contribution” out the gate. That’s executive speak for, it’s not going to kill them. It is not going to be sold at a loss. It may actually make them money. Or, in other words, each unit sold will have a contributing profit margin. This is hugely significant. John McElroy of Autoline Daily has noted that, for various reasons, electrification seems inevitable, but he has posed the question quite a few times, “can anyone make any money at it?” If Mr. Hackett is correct, then the resounding answer to that question is now, YES.
Mach-E Stealing Market Share?
The Mach-E appears to be one of the first true Tesla competitors. It has a price/range value in a sweet-spot similar to that of Model 3 and Model Y. The Mach-E’s 250+ mile range for under $50,000 should be appealing to a large number of people. So, could Mach-e “steal” the market from Tesla? The short answer is, yes, sort of.
As I explained in my article where I did a deep dive into the EV market, there is A LOT of that market segment to go around. There may be upwards of 9 million potential EV buyers in the US alone who would happily buy such an EV when they are ready to replace their current vehicle. That is way more demand than Tesla can satisfy on its own. Of course, that is supposing that around 10% of those 9 million people will be looking to replace their vehicles each year. So, for those of us who are eager to see the EV revolution move forward, Ford’s entrance is very welcome. I along with Elon welcome the Mach-E.
Will Mach-E Succeed?
While the Mach-E is one of the first true Tesla competitors and it is aimed at a market sweet-spot, that does not guarantee its success. Hopefully, Mr. Hackett is correct and the Mach-E will pull its weight. I think a lot of that will ride on how the vehicle is featured (or not) in showroom floors and if Ford sales personnel are sufficiently incentivized to herd the vehicle. If it is poorly represented in the dealerships, Ford may discover that it’s betting on the wrong pony. It could spell the beginning of the end of Ford. While Ford has deep pockets, I’ve read that they also have deep holes in those pockets (debt). We do wish them all the best and hope that this vehicle marks the issuing in of a new era in the EV revolution.
The EV future, Ford, et al
I’m going to say it again and I’ll keep saying it. Right now, Ford has opted to begin pursuing the pure BEV market. My present thought is that this is a wise move. Looking at current market adoption levels and attitudes toward EVs, Ford is wisely going after the readily available low hanging fruit. This is a natural choice. However, over the next few years, this segment may begin to get rather crowded, especially if Ford succeeds. Others will want to jump in and get their piece of the pie. If this happens, it will become needful for automakers to begin offering lower-cost EV variants in order to keep EV adoption moving forward, variants that are more affordable but still have great range.
I firmly believe that when that day comes RExEVs could then come into their own. RExEVs can require only one-fourth of the battery resources and still offer 400+ miles of range. Now, keep in mind that I’m talking about a future, possibly, something two or three years down the road. I believe we will need to have over 5% EV adoption before general attitudes toward EVs are positive enough to successfully pursue the broader market. That means one in every 20 vehicles are electric. That will mean that as you drive down the freeway you should see one electric vehicle for every 20 vehicles you pass or see on the road with you. We have a ways to go to get there. Hopefully Ford, VW, and others, in time, will help make that so.
A Word (or two) About Tax Incentives
Mr. Hackett states that when subtracting the US federal tax incentives the Mach-E will come in around the mid $30,000s. This could shift the balance in Ford’s favor a little and persuade some buyers to go with a Ford EV over a Tesla, for the time being. If, however, Ford does prove successful, as they could, those incentives will begin to fade out within just a couple years. Given the size of the market segment, this is probably not a big present threat to Tesla. (Nor, for reasons I can explain, will it be a future threat. But that’s a topic for another article). I imagine that now Tesla, GM, and Nissan would not cry crocodile tears if the federal tax incentive went away altogether. However, if it incentivizes Ford and others to get on the track, then fine, it is serving its purpose.
I should like to point out that the tax incentives are great for all you who make $70,000+ a year and have to pay taxes. But, for those of us who make a bit less, the tax incentives do us no good. I haven’t paid federal income tax in years. I have three reasons I don’t pay income tax. Their names are Kait, Jon, and Emi. For a large portion of the population, the EV tax credit is meaningless. What really will matter will be more affordable EVs. Something that I think we can have hope for in the future, especially if RExEVs are employed.
On a side note or tangent, I remember hearing some Tesla bears crying out negative things about Tesla being supported by “government money.” I doubt we’ll hear even one peep from the same detractors about Ford receiving those same tax credit “government dollars”.
So that’s it, my two cents on the Ford Mach-E. I hope Ford succeeds. I do hope that Ford features the vehicle as prominently in their showrooms as they have on their website. If they do, they will be throwing plenty of weight into the EV movement which will be good for all of us. Some have pontificated that 2020 will be a big year for the EV revolution. So many new models are coming to market. The EV buzz is going to grow. We can hope this is so and that in the US we get to 5% market adoption as quickly as possible.