Ford Americas president talks F-150 Lightning demand, chip crisis, and electric vehicle competition

Kumar Galhotra, Ford's president of the Americas and International Markets Group, joins Yahoo Finance Live to discuss Ford's F-150 electric truck demand and the increasing production of electric vehicles.

Video Transcript

- But Ford stock jumping in the pre-market, and that's after the now electric vehicle maker has announced that they are doubling the production target for the electric F-150 Lightning by mid 2023 to 150,000 vehicles, and that's up from 40,000. Originally you can see the stock is up about three and 1/4% in your TV, in your screen right there.

I just want to bring in Kumar Galhotra. He is a Ford president of the Americas and international markets. And Kumar, there's some excitement and some buzz around here. How deep is the penetration into the core US markets for this truck?

KUMAR GALHOTRA: Oh, it is incredible. As you mentioned, we started taking reservations after we revealed the vehicle and the reservations kept coming in, and we started working on increasing capacity.

In August we announced it would be up to 80,000 lightnings and the demand still was very, very robust. So it's very exciting today to announce that we are taking the capacity up to 150,000 lightnings per year, and we will do that sometime in the middle of 2023.

- Kumar, it's Julie here. That increase in capacity implies not just that you're seeing demand but obviously that you also feel you can increase capacity, which has not been a given over the past couple of years because of various kinds of shortages. So it sounds like it's going to take you a while to ramp up that production. But where do you stand with supply chain? Are you getting chips in and other types of parts that you need in order to make these vehicles?

KUMAR GALHOTRA: Yeah, thanks for that question because the twin crises of the COVID which then caused the chip crisis, and the two of them keep sort of intersecting with each other at all points has been quite a challenge for about the last 18 months. We expect the chip crisis to spill into 2022, maybe a bit into '23 as well. But we are doing everything. We have several levers that we're pulling.

We have a team of engineers that are constantly working to design around the chip crisis so that we can get more flexibility on which chips are used where, we are working up obviously with our supply chain, we have this memo of understanding with global foundry, so all kinds of work happening to mitigate the chip crisis.

But today's announcement is slightly different because we are building a new factory. I'm coming to you from Rouge Electric vehicle center which is part of our very iconic Rouge industrial complex where we're going to build the F-150 Lightnings. For increasing the F-150 Lightning capacity, obviously we need to bring in all the parts that are necessary to build a vehicle, the most important of which are batteries.

We've been working with our battery supplier partners to increase battery capacity and the motor capacity and the inverter capacity, all of those. Some of them are within our supply chain, some are with supplier partners. So we're working with all of them and we're highly confident that we can increase 250,000 Lightnings sometime in 2023. A run rate of 150,000 per year.

- And Kumar, just thinking about the broader EV adoption trends that we've been seeing, just let me give you an example. I was in Texas late last year and people down there love their Ford and other pickup trucks but their internal combustion engine trucks.

And I'm just wondering when this finally rolls out in a big way, do you see the preorders that this is really penetrating some of those core ice markets that have traditionally belonged to that specific type of truck?

KUMAR GALHOTRA: Absolutely because it all comes down to is capability. Truck buyers are all about capability and versatility, and by capability I mean, first and foremost, built Ford tough. F-150, the gas version has had a reputation for and delivers on capability like no other pickup does.

We've been the market leaders for over 40 years and all of those customers truly understand the capability the Lightning will bring. It can deploy-- it can tow more than 10,000 pounds, more than 2000 pounds of payload, and most importantly, it goes through all the same testing for durability and toughness that our internal combustion engines go through, our internal combustion F-150s go through.

So there's that part of the customer base. But what is even more interesting is the customers that are coming into the Ford brand that haven't owned Ford in a very long time. We saw that with Mustang Mach-E and we are seeing that again with F-150 Lightning.

More than 75% of our reservations for F-150 Lightning are from folks who haven't owned a Ford in a while. So that is pure growth for our brand and it just demonstrates if you deliver a compelling battery electric product, there's a whole different market out there that's willing to give you a chance.

- This is really interesting, that sort of combination of conversion and also new customers. Kumar, more I would ask you to how you feel the Lightening sizes up against what is now going to be an increasingly competitive market. Obviously you have Rivian, at some point you're going to have the Cybertruck I guess and other entrants into the market. You know, I know it's very early days but what are your kind of projections for market share here? What role is Ford going to play in this market?

KUMAR GALHOTRA: Well, you know, I would start with our record. The F-series has been not only best selling truck but best selling vehicle in the United States for 40 plus years. So that just shows the kind of iconic product F-series is. And we've been winning in that marketplace for decades, we plan to continue to win.

And it all comes down to is understanding the customers and understanding them really, really well. We have a long standing relationship with pickup customers, we understand them well, we understand their needs well. We also anticipate their needs sometimes they don't know about.

So you put all that together with a very compelling starting price of $39,974 is what's driven this demand. And the fact that we have over 200,000 reservations, the fact that the reservations were coming in at a pace that we actually had to pause taking reservations, I think those numbers speak for themselves.

It look-- competition is always great, we love competition, it makes us all better. And competition, especially in this segment, is better for the world, it's lower CO2 footprint, and we look forward to competing with all the companies that you mentioned. But we plan on winning and we have a record that says that we will win in this segment.

- All right. We have to leave it there but really appreciate you stopping by and sharing that with us. Kumar Galhotra, Ford President of the Americas and international markets.