BUSINESS + ECONOMY

Ford: Gas cars are a growth business for us

Sep 22, 2022, 8:00 AM
Ford just unveiled a new Mustang coupe that, notably, is not electric or even hybrid. The new two-d...
Ford just unveiled a new Mustang coupe that, notably, is not electric or even hybrid. The new two-door Ford Mustang was able to remain all-gas-powered. Photo credit: Ford.

 (CNN) — When Ford chief executive Jim Farley split the company’s passenger vehicle business into two parts — one for electric cars, the other for gasoline-powered vehicles — Farley put himself in charge of the electric car business, a division called Model e. The assumption among a lot of industry observers was that the person running the gasoline vehicle businesses, then, was there to nurse that dying technology through its final years.

Except it’s not dying, said Kumar Galhotra, president of Ford Blue, Ford’s internal combustion vehicle division. On the contrary, he said, it’s booming.

“For someone who might be nursing, I’m spending a lot of my time and investment expanding [production] capacity for all of our Ford Blue vehicles,” told CNN Business. “So, to me, Ford Blue is a growth story.”

Basically, by keeping a foot firmly in the internal combustion world, Ford is benefiting from customers who are losing access to gas-powered vehicles from other automakers even while Ford, itself, rolls out new EV models.

]Ford just unveiled a new Mustang coupe that, notably, is not electric or even hybrid. The new two-door Ford Mustang was able to remain all-gas-powered, Ford executives said, because the company is meeting its emissions goals with the help of electric vehicles, like the Mustang Mach-E SUV, and plug-in hybrids like the Ford Escape PHEV. (Hybrids are also included in Galhotra’s Ford Blue division.)

But there remains a market for internal combustion-powered performance, and Ford decided to serve the customers who still want that, Galhotra said. Meanwhile, Stellantis has announced it will stop production of the Dodge Challenger coupe and the closely related Dodge Charger in 2023.

“In this particular segment, in Mustang, even though the segment may shrink, there’s a lot of speculation that our competitors may leave this segment,” he said. “So even though the segment in the industry is shrinking, we can grow.”

Unlike GM, which has stated publicly that it plans to sell only zero-emission vehicles by 2035, Ford has not set an end date for making and selling gas-powered vehicles. While Ford has had some success with electric vehicles such as the Mustang Mach-E and F-150 Lightning, they sell alongside gas-powered models in the same market segments. And Ford also sells hybrid and plug-in hybrid models, while GM has said it will jump straight to EVs.

Ford is concentrating its gas-based vehicles in three broad areas that encompass all the models Ford sells, Galhotra said. These are enthusiast vehicles like Mustang and Bronco off-road SUVS, general-purpose SUVs like the Ford Escape and Explorer and, of course, trucks such as the F-series and Maverick. Within these areas, he said, Ford is still finding new niches to explore, as with Bronco and Maverick, a small truck with engineering similar to a car’s . Both are recently introduced models in segments Ford wasn’t competing in before and they’re doing well.

“We can’t make enough Mavericks,” Galhotra said. “We’re completely sold out.”

A majority of customers for both the Bronco and the smaller Bronco Sport are new to Ford, he said. About 60% of Ford Bronco buyers have not recently owned a Ford. That’s close to so-called “conquest rates” for Ford’s electric vehicles like the Mustang Mach-E and Ford F-150 Lightning electric truck. But Ford has sold over 75,000 Broncos and over 71,000 Bronco Sports in the first eight months of 2022 compared to about 26,000 Mustang Mach-Es. Similarly, Ford has sold almost 50,000 Mavericks and a majority of buyers for that small truck also new to Ford.

To keep sales growing, Galhotra said Ford can keep expending and stretching its various model lines. Bronco is already a family of models, including the full-sized Bronco SUV and smaller Bronco Sport. Each also has a variety of special editions like Heritage models. Ford has successfully used a similar strategy with Mustang, creating seemingly endless variants, from the $27,000 4-cylinder Ecoboost Mustang to the $80,000 760-horsepower Shelby GT 500.

“I see the potential for Maverick to, someday, become a family,” he said wha.

Clearly, at some point, gasoline-powered vehicles will be phased out, Galhotra allowed. But it’s not all clear when that will be and, as other automakers shift towards only offering electric vehicles, Ford has the chance to pick up sales from drivers not ready to make the switch, Galhotra said. At the same time, of course, Ford will also offer electric vehicle options for those who are ready, he said.

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Ford: Gas cars are a growth business for us