Temporarily shift reductions at the plant in Detrioit, as Ford reduce F-150 Lightning production. Indicating a potential decline in demand for the highly praised EV.
The shift reduction at the Rouge Electric Vehicle Center is due to various factors: Including supply chain restrictions and the need to process and deliver vehicles held for quality checks after restarting production in August.
According to a statement from Ford. The company stated that 700 jobs would be affected by this cut, but clarified that it was not related to the ongoing UAW stand-up strikes.
However, there seems to be more to this story. The Wall Street Journal reported last Friday that Ford was considering cutting a shift at its Rouge electric vehicle plant, citing a memo from a concerned UAW official about the demand for the Lightning. The memo allegedly stated, “It doesn’t take a rocket scientist to figure out that our sales for the Lightning have tanked.”
This may also explain Ford’s recent decision to introduce significant price cuts for the current 2023 F-150 Lightning EV. Prior to this, Ford had already reduced prices on certain Lightning trims in July.
CFRA analyst Garrett Nelson commented on Ford’s shift cut, stating, “We think Ford’s announcement is representative of the challenges traditional automakers face when ramping up EV production, as well as the discrepancy between what automakers are trying to sell and what consumers want to buy in terms of robust reservation counts for certain new models.” Nelson emphasized that there is a growing mismatch between supply and demand for EVs.
Dealer Stock Levels Rising:
Ford’s production shift reduction follows reports that the company recently canceled dealer stock orders for the Lightning in the past month. Dealer stock orders are inventory that dealers keep on hand for customers who want to purchase directly from the lot, as opposed to special orders. Ford clarified that this action was not due to any specific issue but was part of their preparations for the model year changeover. They also stated that no customer orders were canceled.
The combination of shift cuts, pricing incentives, and cancellation of dealer stock orders suggests a potential decline in F-150 Lightning demand, just as Ford plans to increase production of its traditional gas and hybrid F-150 models. In Q3, Ford reported a 46% year-over-year drop in Lightning sales, with 3,503 vehicles sold.
CFRA’s Nelson mentioned that Ford and other automakers are reevaluating their EV growth strategies, shifting towards plug-in hybrids and internal combustion engines.
As Ford reduce F-150 Lightning production, Investors will be eager to learn more about the overall EV demand when Ford reports its earnings after the market closes on Tuesday, Oct. 26.