Ford’s Been Working To Ramp Up Mustang Mach-E Production For Months

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Steve Hanley wrote a great article earlier today about Ford’s electric vehicle success, Ford’s initial electric vehicle caution, and the problems that have ensued from that combo. I wanted to jump into this topic as well, due to something I learned several months ago as well as ongoing curiosity about Ford and enthusiasm for its EV development.

I happen to have lived for 11 years in a Polish city where all of the Ford Mustang Mach-E’s batteries are being produced. My wife is Polish and we still have strong roots, connections, and lives there — despite living primarily in Florida nowadays. When we were there this summer, I found out that LG Energy Solution (the company that produces the Mach-E’s batteries) had just jacked up production to ~5000 battery modules a day. “That’s enough for 500 battery packs a day (there are 10 modules in a pack),” I wrote at the time. Without issues, and assuming 15 days off during the year, that would be enough to produce 175,000 Mustang Mach-Es a year! Yet, production capacity for the crossover was 50,000.

It wasn’t until just the other day that more news on this finally came out. That news, as Steve reported, includes big plans to ramp up production of the Mustang Mach-E to 200,000 units a year by 2023 (instead of the previously planned 70,000 a year).

There are 4 big things related to all of this that I want to emphasize or revisit today.

Legacy Automakers Continue To Underestimate Consumer Interest In Good Electric Vehicles

Legacy automakers have underestimated consumer interest in electric vehicles for more than a decade — you might even say for decades. Obviously, much has changed in the past few years, but there are still plenty of signs that automaker after automaker, they are underestimating consumer interest in electric vehicles. There are some fair reasons for that — if a company tries to move too quickly into a new technology and gets ahead of consumer interest, it can lose a lot of money and even go bankrupt. However, the consistency of underestimating consumer demand in this case — in the EV transition — stands out.

When CleanTechnica got the Ford Mustang Mach-E (I think one of the first 4 in the United States) to test out for a week nearly a year ago, I could immediately see this crossover was going to be a huge hit. Teslas are everywhere in my area. I drive one, and almost no one seems to pay attention to it any more. It’s hard to end up at an intersection where there isn’t at least one other Tesla there, often a few. With the Mustang Mach-E, I was like a movie star. There was a lot of gawking, a lot of people coming up and asking about it, and, surprisingly, a several people who knew exactly what it was. Additionally, as a driver, it was the best non-Tesla EV (that is, the best non-Tesla vehicle) I had ever driven. If it wasn’t a big hit, I was going to determine myself crazy, out of touch, or overhyped. But, of course, it was a big hit.

Did Ford not see the same things I saw? Was the company just being cautious still? Well, there are at least a few things at play that we should try to keep in mind, so let’s move onto those.

Oh, first, let’s also recognize that the Mustang Mach-E has been a huge hit in Europe. Most Mustang Mach-Es go to Europe. Perhaps Ford was unsure about its performance there due to it being a relatively large crossover for European markets and due to the much greater EV competition and national-brand loyalty in several European countries. Again, though, a human can appreciate a great vehicle, and Europeans are humans too.

Adding it all up, Ford’s first-year production plans proved to be vastly under-equipped to match consumer interest. That was made painfully clear very quickly when it was discovered that Ford dealers were putting huge dealer markups on the vehicles. Why? Because they could. When you get one vehicle and 10 people want it, you can jack up the price pretty high before the last potential buyer gives up and says that it’s become too expensive. Dealer markups are still a problem (check your local dealer and I’m sure you’ll find that a Ford Mustang Mach-E is priced well above MSRP), and dealer markups will be a problem until Ford produces a lot more Mach-Es and gets supply closer to near-term demand.

This Ain’t The Orange Juice Industry

It takes a long time to develop new models, plan their production, and then eventually update those production plans. The problem with cars is they include hundreds of parts. As Tesla CEO Elon Musk is fond of saying, if you’re missing one part out of hundreds, you can’t ship the vehicle. So, once the Mach-E’s production plans are laid out, supplies for hundreds of different parts should be lined up. If it turns out a lot more people want your car than you anticipated, you can’t just flick a switch and produce a lot more cars. It’s not like orange juice. It takes months or years to build up extra production capacity of all the necessary parts or find replacements for them. The need for battery supplies makes that extra challenging.

Batteries, Batteries, Batteries

While there are hundreds of parts that need to be there, the big standout part of an EV that is critical to secure is the battery supply. Need more doors? No problem. Need more windshields? Super! Need more seats? Sure thing. Need more batteries? Oh, well, sure, but we’ve got a long backlog of demand from automakers R, S, T, U, V, X, Y, and Z. We’ll get you some batteries when we can. You know, it would have been nice if you let us know much earlier that you want these.

Without a doubt, one of Ford’s bigger challenges once seeing how much demand there was for the Mustang Mach-E was increasing the battery orders. Not only does a battery pack need to be installed, but battery modules have to be made, and those modules have to be made of battery cells. Furthermore, getting to the heart of the matter, there are various minerals that have to be mined and then processed in order to make those battery cells.

It makes sense that battery production needs to ramp up several months before any announcements about increasing output are peeped out.

The bigger thing now is thinking about how much demand will grow in the next few years and ordering enough batteries for it all.

Need To Adapt Quickly

All of this together circles around a matter I wrote about earlier today. Automakers need to become quicker in order to survive and thrive in this fast-changing automotive transition to smart electric vehicles. They need to develop models more quickly, update them more quickly, and expand supply chain orders more quickly. I wrote about this because of Volkswagen CEO Herbert Diess’ comments on the last quarterly conference call, but you get the sense Ford CEO Jim Farley is similarly aware that Ford needs to get more flexible and nimble, needs to more quickly roll through a development cycle. There is certainly the pressure being put on Ford to jump onto its toes and seize the day. How much will Ford be able to jump in the next few years?