How can Ford’s new F-150 pickup truck save billions of gallons of gas in the future? Creative ideas. Risk taking. Investing in the future. Meeting challenges.
I have been reading Abundance, The Future is Better Than You Think, by Peter Diamandis. The book focuses on how some of the world’s major problems may be solved over the next 20-30 years. He writes about major gains, exponential gains. Not marginal small strides. It is an outstanding book and I’ll write more about it in the near future.
The concept of achieving major gains in fuel economy is taking a next step toward reality. I had heard about Ford’s new 2015 aluminum based Ford F-15- pickup truck. But I did not realize the impact that this vehicle can have on our country, individuals and companies.
Then I read Dan Neil’s Wall Street Journal article on Saturday. He explained the huge impact that this vehicle can have. I took his figures, did some additional research and realized the startling accomplishment that Ford’s engineers have made.
Ford has reduced the weight of the 2015 F-150 pickup by 700 pounds. Neil states this a “staggering figure…(which is) of immediate and national consequence.” The weight reduction and engine innovations result in an estimated increase of 3 miles per gallon (mpg). That may seem marginal, but it is a 20% improvement in mpg. From 2014 to estimated 2015 figures, that is a gain from 15 to 18 mpg in city driving and 19-23 to 21-27 mpg for highway.
Diamandis’ book focuses on exponential accomplishments, not on small gains. The “big multiplier,” as Neil wrote, is that the Ford F-150 series sold 763,000 vehicles in 2013 (I found statistics of 793,000 sales). He feels this is “the single biggest real-world advance in fuel economy in any vehicle since the Arab oil embargo (in the 1970s).” Gains from hybrid and electric cars are important but the huge sales volume of Ford pickups is what makes this exponentially important. The Ford F series of pickups is the bestselling vehicle for 32 years in a row, and the 2nd place seller is 480,000 units.
Assume 15,000 miles are driven per vehicle (and that may be low), 167 gallons would be saved per year, per vehicle. If 800,000 pickups are sold in a year, 133 million gallons of gasoline would be saved. Now let’s think longer term. Over 5 years, assuming 800,000 vehicles are sold each year, almost 2 billion gallons of gas would be saved.
The implications of these statistics and the accomplishments are incredibly important. We have written that companies are resilient and that societal problems can be resolved. While we cannot specifically identify individual stock market winners and cannot predict the future, we are generally positive about the future. This is another real world example.
If these vehicles are successful, the benefits will be wide ranging. Companies large and small will save on fuel costs. Individuals will save money as well. Our reliance on foreign oil will lessen. Reduced demand for gas should cause the price of gas to decline or at least moderate upward pressure. All of these results are positive for our economic future.
Neil made a profound statement in his column. He wrote: “Ford Chief Executive Alan Mulally (should) receive the Presidential Medal of Freedom…Ford’s investment in aluminum construction on such titanic scales is costly and risky. ..(He) made the hard and right choice for their company and embraced the future. It also happened to be right for the country.” The more I researched this, the more I agree with him.
What do you think?
Note: This article is not a recommendation or commentary on Ford stock as an investment. The estimated mpg figures are based on Ford press releases and are ranges, as the vehicle types and engine sizes will vary.