Ford deciding to pay for advertising is stupid


Ford CEO Jim Farley said he sees little reason for the automaker to use traditional advertising campaigns for electric vehicles. Considering how many times I see the Ford logo on every screen I’m looking at, this seems to go against everything I’ve been conditioned to accept. However, the company believes its electric vehicles are already practically selling themselves, with the board noting that the Mach-E has been sold out for quite some time.

“I am not convinced that we need public advertising for this [electric vehicles] when we do our job,” Farley said during the Bernstein Strategic Decisions Conference on Wednesday.

First reported by Bloomberg, Blue Oval has chosen to copy Tesla’s playbook and forego traditional advertising. Farley himself noted that the EV brand saves itself a bundle by bypassing the dealer model (something many long-established manufacturers are now trying to do in Europe). Ford believes it can help offset some of the $50 billion it plans to spend developing electric vehicles by 2026 by scaling back its marketing efforts.

The CEO also noted that he envisions the Detroit-based automaker streamlining its relationship with US dealerships to focus on after-sales service. This also mimics the Tesla model and is broadly consistent with some of the sweeping changes the industry is now considering that we outlined in a recent article. But the shortened version is that there will be consolidation/vertical integration – and plenty of it.

“Our dealers can do it, but the standards will be brutal,” Farley said. “Your business is going to change a lot and there will be a lot of winners and losers and, I think, consolidation.”

Out of Bloomberg:

Ford is one of the largest advertisers in the country, spending $3.1 billion advertising its products last year. But Farley wants to emulate Tesla Inc., which controls the US electric vehicle market, though it doesn’t buy traditional advertising. He said Ford doesn’t have to advertise its new F-150 Lightning plug-in pickup and has stopped advertising its electric Mustang Mach-E because “it’s been sold out for two years.”

“We spend $500 to $600 per vehicle on public advertising. Get rid of it all,” Farley said. “If you ever see Ford Motor Co. do a Super Bowl ad for our electric vehicles, sell the stock.”

There are a few ways to look at this. You can either see Ford remark that Tesla doesn’t have a marketing budget and due to its hype on social media and the press, having spent the last few years talking about nothing else, doing well, you can assume it does doesn’t make sense. Spend money promoting vehicles that aren’t currently available, or you can view this as a retreat from the EV space.

I can’t be sure, but something tells me that many older automakers haven’t been as committed to EVs as was originally claimed. The industry has spent billions on “mobility projects” that have helped bring electric vehicles to market. But I would guess that a large chunk of that money went into building data centers, advancing vehicle connectivity, and buying assistive technology companies that manufacturers assumed would skyrocket in value or spearhead the next big breakthrough in self-driving cars. We’ve been promised autonomous vehicles since Firebird II was filmed driving on a fly-by-wire highway in 1956. But any practical application was always “a few years away”. Even today, the technology seems a little too finicky to be reliable, and the legal ramifications are so far-reaching that it would likely take lawyers years just to agree on who ultimately bears the blame if something goes wrong.

But that didn’t stop automakers from commercializing these technologies before they existed. Nor has it stopped them from promoting some of the advanced driver assistance systems that have emerged as a direct result of the research.

Electric cars have a better overall track record and were even commonplace as urban runabouts in the early days of the automobile. They are tangible and can be purchased from a number of brands today. But they have also cost the industry a lot of money and will continue to do so because that is the nature of development. Ford probably understands this better than anyone and has decided to hedge its bets while it doesn’t have the manufacturing capacity to flood the United States with electric vehicles.

From this perspective, a high advertising budget for pure electric vehicles seems like a small blessing.

Though EVs have made some serious strides in certain markets, often with the help of government mandates, the United States is typically at the bottom of the list. Meanwhile, the world is beginning to face a situation where it is expected that obtaining the materials required for battery production will become significantly more difficult and expensive. My guess is that Ford just doesn’t see any benefit in marketing electric vehicles until they have another one on offer and just wanted to make a big deal out of it to garner some Tesla-like media coverage. Successful, I might add.

[Image: Ford Motor Co.]

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