Demand for 1 EV forces delay in 2 others

DETROIT — Going into 2021, Ford Motor Co. was treading carefully to ensure electric vehicle production didn't get too far ahead of demand.

Now, it's scrambling to figure out how to build enough EVs to keep up with a flood of orders for the Mustang Mach-E and nearly 200,000 reservations for the F-150 Lightning that isn't even on sale yet. The push to churn out more of both nameplates is delaying the next two EVs that Ford planned to follow the Lightning and displacing them from the Mexico factory that was to make them.

It's the latest example of the speed with which automakers are reshaping production schedules and the choices they have to make as the industry collectively pivots toward electrification.

"Flexibility is becoming really important," Katelyn Drake, a senior analyst with LMC Automotive, told Automotive News. "This is a tremendous change for the industry, and it's sometimes hard to predict exactly how things will go."

Ford's decision to dedicate its entire plant in Cuautitlan, Mexico, to the hot-selling Mach-E leaves two key future products — electric variants of the Explorer and Lincoln Aviator — without a home. The automaker now needs to choose whether to build them in the U.S. or Canada, with union contract negotiations set for 2023 in both countries.

Ford has told suppliers to plan for combined annual volume of roughly 100,000 for the Explorer and Aviator EVs, which are moving production from mid-2023 to late 2024. At least three plants — two in the U.S. and one in Canada — now are potentially in the running to get the upgrades needed to build those vehicles.

It's unclear how soon Ford will assign the electric crossovers to a new plant, and analysts say factors such as a potential expansion of federal incentives for EVs made by unionized U.S. workers could play a role.

"It may be yet to be decided because those incentives aren't finalized," Stephanie Brinley, a principal analyst with IHS Markit, said in an interview. "But even those proposed incentives are still fundamentally short term, and this business will have to be able to survive without them. Ford is looking at where can it invest to build a car for longer than that."

Two analysts, LMC's Drake and Sam Fiorani of AutoForecast Solutions, believe Oakville Assembly in suburban Toronto is the most likely landing spot for the Explorer and Aviator EVs.

Oakville currently builds the gasoline-powered Edge and Lincoln Nautilus crossovers, which are expected to be discontinued so the plant can be retooled for EV production in 2024. Ford promised to invest $1.8 billion in Oakville and build five electric models there by 2027 as part of its 2020 contract with Unifor, the Canadian auto workers union.

It would be the easiest fit, Drake said, since it's scheduled to use Ford's next-generation dedicated EV architecture and wouldn't require as much additional investment as other North American plants.

LMC expects Oakville will have capacity for roughly 200,000 EVs a year, allowing the Explorer and Aviator to slot alongside other nameplates.

Fiorani, AutoForecast's vice president of global vehicle forecasting, said concentrating a number of EVs in Oakville also would make sense from a supply chain perspective.

Ford doesn't plan to build the Explorer and Aviator EVs alongside their gasoline-powered counterparts in Chicago because that plant is near capacity with no room for expansion. A new EV assembly plant that will be part of the massive Blue Oval City complex Ford is building in Tennessee will make a next-generation F-Series product and won't come online until 2025.

Ford could consider building the electric crossovers in Ohio, where it previously planned to do so.

Ohio Assembly, west of Cleveland, builds some larger Super Duty trucks and E-Series vans. Ford in its 2019 contract with the UAW promised the plant would receive a $900 million investment (all figures in USD), including a "next-generation product" in 2023, which Automotive News reported were the Explorer and Aviator EVs.

Ford shifted those plans to Mexico in 2019, prompting fiery criticism from then-UAW Vice President Gerald Kariem. The automaker said it would keep its commitment to the Ohio plant by boosting Super Duty production there.

Should Ford flip-flop again, Drake said it would need to spend big to convert the plant for EVs and boost its annual capacity from just 60,000 today. "Those are not insurmountable challenges," she said.

Another U.S. option is the underutilized Mustang plant in Flat Rock, Mich. Ford has capacity to build 260,000 vehicles a year there, LMC says, but runs it on only one daily shift. Michigan politicians are working on legislation to attract major investments after the state failed to make a serious bid for Blue Oval City.

Picking either Flat Rock or Ohio Assembly would let buyers of those vehicles qualify for up to $4,500 in extra government tax credits, should the Biden administration's proposed legislation make it through Congress.

"Losing out on that extra couple of thousand dollars per vehicle could hurt," Drake said. "It's part of the conversation for sure."