Ford’s cars will be all electric in Europe

In February 2021, several media including BBC reported that Ford Motor Company has announced its passenger vehicle in Europe will be all-electric by 2030. In addition to this, all its cars will be available as electric or hybrid models by the middle of 2026. Other major automotive manufacturers such as Jaguar Land Rover and Bentley also declared the similar intention to stop selling petrol and diesel cars. This is partly because European regulators set the tight rules in relation to emissions, and partly because some countries and cities are planning to ban the sale of new petrol and diesel vehicles.

Who is Ford?

The Ford Motor Company is an American multinational automotive manufacturer and its head office is located in Dearborn, Michigan, a suburb of Detroit. Henry Ford founded the company in 1903. The US automotive giant sells automobiles and commercial vehicles under the Ford brand, and most luxury brand is the Lincoln. Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston Martin of the United Kingdom and a 32% stake in Jiangling Motors, respectively. It also has joint-ventures in Asian countries such as China, Taiwan and Thailand.

Ford is very famous for its methods to manufacture vehicles in a large scale and to manage a big organization by using elaborately engineered manufacturing sequence. “Ford Model T” is one of the symbols to express “Mass production, mass consumption” and both its phenomenal organizational capabilities and well-branded products makes the company to be in S&P 100 and S&P 500.

Based on Ford’s homepage, the company defines its mission as to drive human progress through the freedom of movement.

Glory days never last forever

Even though Ford enjoyed its success in 20th century, glory days never last forever. In fact, Tesla, which was founded in 2003, is the most valuable automotive company and its market capitalization is more than 15 times as large as Ford’s market capitalization as of February 17th, 2021. Why is the big difference between two companies generated? In this article, we discuss mainly two points: Software and Electrification.

First, Software

First, in the 21st century, it is not the age of “mass production, mass consumption.” In the 20th century, not only Ford but also other manufacturers could increase their sales easily. This is because the more they produced, the more consumers bought. Therefore, efficiency and capacity utilization were really important at that time. Of course, they are also important now, but we witness that the source of value is changed. In other words, it becomes from hardware to software. In the 20th century, manufacturers sold their products, and that is it. They sold just their products. However, in the 21st century, some companies are able to earn money by selling services as well as products. Apple’s iPhone and Tesla’s Model Y are good examples. In this sense, there are game changers and Ford has to compete with them.

Second, Electrification

As we see the other article about Bentley’s new strategy, many automotive makers have already decided to produce only electric vehicles. In the 21st century, climate change is one of the most critical issues among human beings so that most stakeholders try to combat this challenge. Climate actions become a certain trend that most organizations should follow so that it becomes risk as well. Therefore, it seems that Ford cannot help but transform a petrol and diesel automotive maker into an electric vehicle maker. In addition to this, Europe imposes a tighter restriction against emissions so that it can be a good opportunity for Ford to proceed with its electrification in Europe faster than in other regions at the same time.