Ford's Key to Selling Truck No One Asked For: Keeping Beer Cold

(Bloomberg) -- People who buy F-150s don't much care about fuel economy. It ranks No. 28 on their list of priorities, way below pickup essentials like durability and reliability, even the roominess of the cab.

And yet Ford Motor Co. is plowing ahead anyway with a gasoline-electric version of the crazy-popular truck, the best-selling vehicle in the U.S. since the Reagan administration. To coax devotees into the greener future, the company won't be stressing the benefits of cutting back on carbon-dioxide emissions or the costs of tanking up. Instead, the marketing will go something like this: The battery in the hybrid F-150 not only feeds the electric motor, it's a mobile generator that can keep the beer cool at a tailgate party, charge your miter saw and run the coffee maker on a camping trip.

“It still may be a hard sell,” said Michelle Krebs, an analyst at Autotrader, “but they've got to have this in their lineup.”

That's in part because of tough federal regulations. The hybrid F-150 was greenlighted in 2014, three years after the Obama administration set a target for automakers to achieve an average of 54.5 miles per gallon in their lines eight years from now. The expectation that President Donald Trump will ease regulations hasn't reduced the industry's interest in electrification.

But Ford's playing catch up in the race to put electric vehicles and autonomous technology on the road. Investors have punished the company for lagging electric carmaker Tesla Inc., whose market value is higher, and crosstown rival General Motors Co., which introduced the Chevy Bolt electric for the 2017 model year. Ford is up less than 1 percent so far this year, while Tesla has risen 49 percent and GM has gained 29 percent.

Read More: The future of electric cars -- a QuickTake explainer

So Ford is spending $4.5 billion to field 13 electric and hybrid models by 2020, including a gas-electric Mustang. The company has the most “pricing power” in its best sellers to cover electric propulsion costs, said Hau Thai-Tang, the product-development chief who has led the move to electrify the lineup.

There's risk, of course, in Ford messing with its trucks. The F-Series will bring in about $41 billion in revenue this year -- and the vast majority of the company's profits. But there's no way Ford can meet the federal mandate without boosting the trucks' fuel efficiency.

The most recent data show that about 2,500 of the pickups are purchased in the U.S. every single day. Offering a hybrid version will be “kind of like trying to sell beer to a teetotaler,” said John Wolkonowicz, an auto analyst and former Ford product planner who once worked on the F-Series.

This is where the battery-advantage marketing plan kicks in. The company came up with it after researchers spent a year on an anthropological mission, embedding for thousands of hours with hundreds of F-150 owners. “We immersed ourselves in their lives,” said Nadia Preston, the research team's project leader. “That meant going camping with them, tailgating, going to rodeos, even spending the night.”

They were looking for what Chief Executive Officer Jim Hackett calls “bungee-cord solutions” -- workarounds for tasks the F-150 couldn't perform. They found owners often in need of portable power.

Electric Motivation

“We would see our customers just literally buying generators from Home Depot and strapping them down in their truck beds,” Thai-Tang said.

There was the welder in Texas who lugged his generator in and out of the bed whenever he needed it for work. Then there was the builder in Denver who didn't own one, relying on a jumble of extension cords that he stretched to an outlet to operate his saw. “He told us, ‘Access to power in any shape or form would absolutely help me do my job,' ” Preston said.

Ford won't say how many hybrid F-150s it plans to make, nor how much more expensive they are to build, though analysts estimate adding electric power tacks on at least $5,000 to the cost of a vehicle. In any event, the company will still sell hundreds of thousands of traditional pickups, including the new Super Duty Limited 4X4, which when topped out with all the extras will cost around $100,000.

At this point, “you would need some motivation to invest in an electric pickup,” said Xavier Mosquet, a senior partner at Boston Consulting Group, who just authored a study that found pickups were least likely to be swept up in the electrification trend. “Unless you think the generator itself has value -- which for many customers in this segment, it will.”

The idea at Ford is that hybrid trucks will catch on, following a path similar to turbo-boosted V-6 engines that were first offered on the F-150 seven years ago when anything less than a V-8 was considered wimpy. Today, the smaller engines account for almost two-thirds of sales.

The company has courted F-150 controversy before, when it it outfitted the truck and its larger sibling, the Super Duty, with aluminum body panels that lopped hundreds of pounds off the weight of the rigs -- part of the effort to lower gas consumption. GM responded with attack ads accusing Ford trucks of going soft. But the aluminum F-Series trucks gained market share and are driving profits upward.

“The F-150 is so important to Ford, they have to maintain leadership by offering every powertrain option,” said Krebs, the Autotrader analyst. “I don't expect it initially to be a big percentage of sales, but the timing is right.”

To contact the reporter on this story: Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net.

To contact the editors responsible for this story: Craig Trudell at ctrudell1@bloomberg.net, Anne Reifenberg, Anne Riley Moffat

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