Ford (NYSE:F) is betting a huge amount on its new F-150 pickup — like more than it usually would with any given new model. The decision to convert to an aluminum alloy-clad vehicle was made knowing that the production lines and repair facilities would have to be subjected to some really intense re-tooling that will cost a lot — but how much exactly, no one is really sure yet.
However, we got a better idea of how much on Tuesday when Ford said it was prepared to sacrifice the production of 90,000 Ford F-150 units in order to retool the facilities in order to start the production of the 2015 model. Assuming the starting price of the 2014 F-150 of $25,000 (though it’s likely the 2015 will cost a little more), Ford is looking at a minimum of $2.25 billion in lost revenue. That doesn’t include the revenue from higher-end models, and represents the loss of production associated with shutting the plants down in order to overhaul them with the new aluminum worthy setup.
To minimize disruption to supply, Ford is building up inventory of the F-Series currently and still expects the truck to be the best selling vehicle line in the U.S. this year, according to comments cited by Bloomberg and made by Ford’s president of the Americas Joe Hinrichs said. That’s a title that Ford has held onto for 32 years.
“It’s a one-time hit that we have to deal with on the production side to convert [the factories],” he said at the company’s product development center at its Dearborn, Michigan headquarters. “Remember, we get paid on wholesales and revenue — 90,000 F-150s — I won’t tell you what that really means, but it’s a lot.”