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DETROIT (Reuters) – Ford Motor Co (N:F) next week will show the next generation of its brawny F-150 pickup truck that offers a new sleeper-seat feature and over-the-air software updates in a machine Ford is counting on to help pay off coronavirus-related debts.
The new F-150, part of the best-selling vehicle line in the United States, accounts for $50 billion in annual revenue, and a significant share of Ford’s annual profit. While Tesla Inc (O:TSLA) and General Motors Co (N:GM) have moved faster on over-the-air software upgrades and high-speed in-vehicle data networks, the new F-150 will bring such technology squarely into the mainstream.
The new truck, expected to launch later this year, is a critical plank in Chief Operating Officer Jim Farley’s plan to slash $5 billion in warranty costs, speed Ford’s push into vehicle connectivity and add to the No. 2 U.S. automaker’s already-strong position in the North American commercial vehicle market.
Ford has borrowed more than $20 billion to ride out the economic shock from the coronavirus pandemic. Profit from the new F-150 will be key to paying that money back.
Ford is not taking big risks with the exterior look of the new truck given its sales dominance, instead focusing on improving the interior, according to those who have seen it. Ford is scheduled to publicly show for the first time the new F-150 online on June 25.
“It’s really about technology and productivity,” Farley said at a Deutsche Bank (DE:DBKGn) conference on June 10.
One prominent feature will be the lay-flat passenger seat like those seen in first-class cabins on some planes, said a person familiar with the plans who asked not to be identified. “You can basically live in the truck,” the person said.
Ford’s nicer interior, including a larger display screen, follows a similar move by Fiat Chrysler Automobiles NV (MI:FCHA) (N:FCAU) with its new Ram truck, which received enthusiastic reviews for its stylish interior and optional 12-inch display screen.
“Ram taught everybody a little bit of a lesson,” said Rhett Ricart, owner of Ricart Ford in Columbus, Ohio. “The old 5-inch screen for your navigation and radio controls is gone. They’re all going to be 10-, 12-, 15-inch screens. That was started by Tesla.”
The F-150’s new electrical architecture will allow Ford to provide over-the-air updates to key modules controlling the vehicle, replacing trips to the dealership.
The new truck’s connectivity also will help Ford boost sales to commercial customers, and reduce warranty costs, Farley told investors.
The F-Series truck has been around since 1948, while the F-150 debuted in 1975. Sales of the current version have remained strong despite its age, and the new model could help Ford hold or even build its position in the segment, said Sandy Munro, chief executive of Michigan-based consulting firm Munro & Associates.
“If they add the same stuff as what Ram did and if they can add more stuff like Tesla’s doing, there’ll be a gigantic gap between Ford, and Ram and Chevy,” he said.
The key for Ford will be to avoid the kinds of costly production problems that hobbled the launch of the new Explorer SUV last year. Ford acknowledged it erred in trying to launch the Explorer and Lincoln Aviator simultaneously while breaking in a new assembly line at its 95-year-old plant in Chicago.
Farley has been visiting the plants in Dearborn, Michigan, and Kansas City, Missouri, that will build the new F-150. Despite delays related to the virus, he said the launch is in “really good shape.”
