rewrite this title Ford’s Second Model T Moment

When Henry Ford introduced the Model T in 1908, he started a manufacturing revolution.

The moving assembly line cut production time on the automobile from 12 hours to only 90 minutes. It slashed costs and made cars affordable for everyday Americans.

This single innovation turned Ford into the largest automaker on earth, and it made Detroit the industrial capital of the world.

It also made mass production the engine of the modern economy.

Today, Ford (NYSE: F) is attempting another manufacturing revolution. But this time, the stakes are even higher.

You see, Henry Ford was competing against an old technology in the horse and buggy.

But the modern Ford company is preparing to survive the coming flood of cheap Chinese EVs.

A Modular Bet

Last week, Ford revealed it has developed a new “universal EV platform.”

This modular system could be just as revolutionary as the assembly line was over a century ago.

Instead of bolting together thousands of unique parts in one continuous line, Ford will build the front, middle and rear sections of a vehicle separately, then fuse them all together.

By the company’s own estimates, this will cut assembly time by 40%. It will also reduce parts by 20% and cut fasteners by nearly a third.

And in an industry where margins are razor thin, those numbers are simply astounding.

The first vehicle to roll off this system will be a midsize electric pickup, slated for 2027.

And from the specs I’ve seen, it looks like a modern technological marvel.

The truck’s floor is a lithium-iron-phosphate battery pack that doubles as the vehicle’s structural base. That design saves weight, lowers costs and opens up more cabin space.

And just like the Model T, it will be affordable to the workers who make it.

Right now, its starting price is pegged at around $30,000, which should come as a surprise for anyone who has priced a midsize truck lately.

Especially since it’s an EV.

But there’s no mistaking the motivation behind Ford’s radical shift to this new modular system.

We’ve talked before about BYD, China’s EV juggernaut. It’s already selling electric cars in Europe for under €20,000, which is less than half the price of most U.S. EVs.

Last year, BYD overtook Tesla as the world’s largest EV maker. But unlike American rivals Ford and GM, BYD’s profit margins are incredible.

Some estimates put its per-car profit in Europe at $14,000. And if those economics can make it to the U.S., Detroit will be in real trouble.

That’s why Ford is betting on a second manufacturing revolution.

If this modular system works, it could mark the first time an American automaker can sell an EV at a mass-market price and still make money on it.

After all, Ford’s EV division has been bleeding red ink.

Last quarter alone it posted a $1.3 billion loss. That works out to roughly $22,000 lost on every EV the company sold.

Since 2023, Ford has hit $12 billion in cumulative losses.

And Wall Street is well aware of this. That’s why Ford’s stock barely budged after the announcement.

Analysts are still split on whether this modular pivot is a stroke of genius or a desperate move to stop the bleeding.

Of course, Ford isn’t the only U.S. company with the plan to go modular.

Startups like Slate — which raised $111 million from 16 investors, including Jeff Bezos, in its initial funding round  — are pushing modular concepts of their own.

Slate’s pitch is a bare-bones pickup in the mid-$20,000 range, designed to be wrapped and customized like a blank canvas.

Source: slate.auto/en

Buyers don’t get paint. They don’t even get power windows.

But they do get affordability and flexibility.

Then there’s REE Automotive, which is focusing on a modular chassis for commercial EV fleets.

And you can be sure GM and Stellantis (formerly Dodge/Chrysler) are working on their own scalable architectures behind the scenes.

But Ford might have the biggest advantage. It just spent $2 billion retooling its plant in Louisville to accommodate this new modular system.

Now it comes down to execution.

In 1908, Ford gained an edge by building cars faster and cheaper than anyone else.

In 2027, the modern Ford company could gain an edge by being able to build its EVs profitably when its U.S. rivals can’t.

That makes this story about more than just auto manufacturing.

I noted how Musk’s recent $16.5 billion bet on chipmaking capacity is part of an American industrial reset.

Ford’s move is another clear example of this reset.

The common thread is that U.S. companies know they can’t cede core technologies to China without risking their future.

So they’re making big, bold moves to ensure that doesn’t happen.

Here’s My Take

The modern Ford company is trying to do with modular EVs what Henry Ford did with the assembly line…

Use a manufacturing innovation to change the economics of an entire industry.

Frankly, I think it’s a bold move. If this modular system actually delivers, Ford won’t need tariffs or subsidies to compete.

It could sell a $30,000 truck in America and actually turn a profit. And that’s something no U.S. automaker has done yet in EVs.

Which is part of the reason U.S. investors have largely written off the EV trade.

I believe that’s a mistake.

Our Strategic Fortunes and Extreme Fortunes model portfolios hold a number of companies with EV exposure. These stocks are trading near cycle lows, and I believe they’ll come back into the spotlight as the price of EVs continues to drop.

There’s also the robotics angle on each of these companies because robots use similar power and sensing chips.

But we’ll leave that for another discussion.

By 2027, we should have a good idea of whether Ford’s gamble will pay off.

If the company can deliver a mid-size electric truck that turns a profit, it probably won’t level the playing field with BYD…

But it might help kickstart a new manufacturing revolution here in the U.S.

Regards,

Ian KingChief Strategist, Banyan Hill Publishing

Editor’s Note: We’d love to hear from you!

If you want to share your thoughts or suggestions about the Daily Disruptor, or if there are any specific topics you’d like us to cover, just send an email to dailydisruptor@banyanhill.com.

Don’t worry, we won’t reveal your full name in the event we publish a response. So feel free to comment away!