For months now, all we have heard is how expensive the new aluminum 2015 Ford F-150 is to build. Sure, it costs billions to transform production plants, but what is the real cost on each truck? Try a measly $500.
A recent Forbes story breaks down the cost increase per truck after talking with a variety of automotive, aluminum industry and financial experts. The conclusion is that each truck uses less aluminum on a pound basis than the old steel trucks. And, while this aluminum costs more, by recycling the scrap back into the production process, Ford cuts real-world costs.
Here is how the Forbes math works. A 2015 Ford F-150 uses 855 pounds of aluminum sheeting for each truck. This replaces 1,455 pounds of steel. Looking at current pricing, the total cost for aluminum is $2.19 per pound versus about 55 cents per pound for steel. This means a net savings of 400 pounds on a Ford costs $725 per truck. Note: Ford claims the maximum savings is 700 pounds on the larger crew cab versions.
How do we get to just $500 more? Recycling. When you stamp body panels about one-third of the panel is scrapped. The genius of Alan Mullaly was to show Ford how to recycle the scrap, sell it back to the aluminum manufacturer and return the scrap back in the pipeline. With every truck, Ford sells back aluminum at about $1 per pound. This results in a savings of $280 per truck. In other words, each new truck costs about $500.
Now, it may seem like Ford is losing the $500 on every 2015 Ford F-150. Yet, that simply isn’t the case. Ford has done two things to hedge it bet. First, a new 2015 Ford F-150 XL model is priced at $26,615 which is about $400 more than the 2014 model it replaced. This slight increase covers most of the aluminum increase.
Second, the truth is the marketplace has changed and the average truck transaction is more than $40,000. These trucks are loaded with profit and $500 represents a small chunk of change. If the current truck climate stays the same, the $500 or less difference will be marginalized even more.
Lastly, Ford sells a lot of trucks. The billions it spent renovating the production plants will be quickly recouped once the 2015 Ford F-150 hits the dealer’s lots.