The OEMs and the Electric Commercial Vehicle Market

We are often asked if Ford and the other OEMs are getting into the electric commercial vehicle market, and what that might mean for us. Our CEO Tim Reeser responds to these questions in this video.

Video transcript

One of the questions we get a lot at Lightning is, “Is Ford going to do what you’re doing? Is Ford going to have an electric Ford Transit, or an electric E-450 next month or next year, and we’ll just wait for Ford? Are these other companies, is GM or Isuzu going to have their powertrain in the next year and we’ll just wait for them to release it as an OEM?”

I think it’s an important thought, an important concept that we spend a lot of time thinking about. Obviously, we don’t want to make significant investments in building powertrains that we believe will be supplanted by a better OEM, and so I think it’s important that we address these questions head-on. The first one is, let’s talk about the Ford Transit.

Ford released a press release about a month ago, that in 2024 they will have an electric Ford Transit. We at Lightning see that as an important validation that there’s a market and a need for an electric Ford Transit, but it’s important to realize that that’s a long ways away, we’re talking about four years away before they have a product on the road. But it’s also important to realize that when they talk about a Ford Transit, they’re not talking about the entire inclusive line of Ford Transits. They’re talking about Class 1 Ford Transits and Class 2 Ford Transits. Ford has been very succinct and direct with us that they do not have plans on their roadmap today for a Class 3 Ford Transit, or for the Ford Transit cutaway product. So for those customers that are running Class 3 Ford Transits and Class 3 Ford cutaway Transits, Lightning is still the right answer.

But even beyond that, when we look at what Ford’s doing, or any OEM is doing in the electrification space, OEMs have the business of developing a lot of volume, and a one-size-fits-all solution. When we think about medium-duty vehicles, medium-duty vans, medium-duty trucks, medium-duty shuttle buses, there’s a tremendous amount of customization that goes on in these markets; things like wheelchair lifts, or cargo lifts, or we think about shelving, or we think about hydrogen fuel-cell add-ons, or we think about various air-conditioning accessories, each of those require an amount of customization that historically the OEMs have not handled. And that’s why there have been a lot of upfitters in this space, because what Ford makes or what Mercedes makes, or what Chevy makes, or Isuzu will typically be a one-size-fits-all kind of solution, and there will be a need for people like Lightning who develop a custom solution that can support other custom solutions. So today, Lightning solutions on all of our vehicles support things like passenger air-conditioning, they support things like wheelchair lifts, we support thing like air-conditioning and refrigeration systems. All those sorts of after-market solutions that are important to our customers we support out of the box. We know how to provide the custom solutions so that the batteries still work, so that all those features still work in a fully electric environment.

So one of the other things we see in the market is some, maybe what I’ll refer to as naïve perception around what these vehicle are going to cost when an OEM releases a product. We’ve heard many of the OEMs do market studies on, would a customer be willing to pay 10% more, 20% more, $10,000 more, $50,000 more; and many of the OEMs don’t work directly with customers as Lightning does, they don’t really have a direct knowledge of what the market’s willing to pay for a new solution like these electric power trains. And so they’ve come out with some fear, uncertainty and doubt around what the pricing is going to be and how. I think it’s important to note that these OEMs don’t have high volumes of electric powertrains today in the market, so their pricing is not going to be what has typically been an OEM pricing. When Ford releases a Ford Transit today, they sell 100,000 of those units. When they release an engine on a Ford Transit, they can take the capital costs of developing, building and tooling up for that engine over 100,000 units. When we or they think about electric vehicles today, the volume isn’t that high yet, so they – like us – will not have a super inexpensive or cheap product. If and when they build a really nice product that is compelling and high quality, it will also have a high price when they enter the market, because of the low-volume aspect. So I think it’s important to note that although the OEMs are entering, although they’re committed to it, they price out of the gate is not going to be cheap, it’s not going to be inexpensive. In order for them to have good quality product, they will have a similar price, we believe, to what Lightning has today.

So despite the fact that the OEMs have come out and said that they’re going to eventually produce an electric vehicle, I think it’s important to note Lightning has them available today. Our powertrains are available for customers today, we make an impact today, and we’re getting miles on today. We have analytics and telematics today that show what our vehicles are doing and give us deep information about how these vehicles are getting used, where they’re getting used, and what is important to our customers. In addition, we’ve already done the customization work to make sure that these solutions, that our electric powertrains work for customers who have all of these bespoke and custom needs; and we’ve produced that in a way that today is viable, warranted, working well with the OEM partners to provide a really elegant solution on their platforms.