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Ford's Small EV Move Could Pay Off Big

Source The Motley Fool

Here's what we know, or mostly know for sure: At some point, electric vehicle (EV) sales in the U.S. market will gain serious momentum. So far, sales have chugged along more slowly than anticipated. Overseas regions such as China generate more than half of new vehicle sales via EVs, while the U.S. generates about 8% of new vehicle sales via EVs. But Ford Motor Company (NYSE: F) is tackling one of the challenges preventing more widespread adoption in the U.S., and it could pay off big.

For free!

"There's no bigger obstacle than charging," said Ford CEO Jim Farley in an interview with Reuters.

It's true -- range anxiety, as well as high prices and quality, remain the major hold-ups to more widespread EV adoption in the U.S. market. But Ford is taking a new approach to help battle range anxiety by launching its new "Ford Power Promise" program.

The program is simple: Educate people about EV charging and how convenient it is to charge at home. Ford is offering all new Ford EV buyers a free home EV charger, with standard installation costs covered. Customers who purchase a Ford EV during the fourth quarter and already have a home charger, or who live in apartments, will be eligible to receive $2,000 cash from dealers.

It's a small move that could lure people who are on the fence regarding an EV purchase. It's also a move that surveys show is a smart one. According to a 2024 survey, Ford found that 89% of shoppers are more likely to purchase if they have home charging. An even steeper 92% of owners find that charging at home is as easy as charging mobile phones.

That's not all Ford is doing, however. It's also offering a little relief and security when it comes to the very expensive battery component. Ford is offering an eight-year, 100,000-mile battery warranty to help alleviate concerns over battery health and life.

Change of pace

The strategy to help boost EV sales with the program comes at a time when Ford could use a change of pace in the EV world. Ford sold roughly 44,000 vehicles in the first half of 2024. That's a 72% gain over the prior year's first half, which was enough to make it the second-largest EV seller in the U.S. market. It still massively trailed Tesla's top spot, with 831,000 deliveries during that time.

Speaking of Tesla, however, Ford became the first major automaker to partner with Tesla on its nationwide network of superchargers in May 2023, and Ford vehicles will be equipped with compatible charging ports starting in 2025.

What it all means

Ford's Model e division, responsible for its EVs, is expected to lose up to $5.5 billion in 2024 alone. Ford has pulled back on roughly $12 billion in EV investments and projects. It even canceled a highly anticipated electric SUV in August to help offset EV losses, even as the move cost it roughly $1.9 billion in the near term.

While Ford is busy trying to offset heavy EV losses, this is one of the first strategies we've seen that actually pushes the vehicles toward consumers. That small move could pay off big if Ford can educate people on the convenience of charging at home.

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