Ford Looks To Take On Tesla To Offer Affordable Electric Vehicles
Ford CEO Jim Farley recently revealed on a fourth-quarter earnings call that his company has secretly been working on a new, more affordable electric vehicle (EV) platform with the hopes of offering less expensive EVs to compete with companies like Tesla and Chinese automakers like BYD.
Consumers Don’t Want Expensive EVs
According to a report from Autocar, Farley said that Ford will be shifting its focus to “smaller EV products.” Regarding his company’s secret project, Farley said, “We developed a super talented skunkworks team to create a low-cost EV platform.” He added, “And they’ve developed a flexible platform that will not only deploy to several types of vehicles but will be a large installed base for software and services that we’re now seeing at [Ford] Pro.” Ford Pro is the automaker’s standalone commercial vehicle operation, responsible for developing models such as the F-150 and the Transit.
Farley also said that post-covid market dynamics and how rapidly the first wave of EV adopters purchased electric cars with premium price tags led to a “temporary spike in supply” because Ford was too optimistic in their interpretation of this “demand signal” from the market. Their (along with the rest of the auto industry’s) misinterpretation of what the market was demanding led to a surplus of expensive EVs that most consumers will not buy. As Farley said, “We learned that as you scale EVs to 5,000-7,000 units a month, the [majority of customers] are not willing to pay a significant premium for EVs.”
EVs, Round Two
While round one of legacy automakers getting into the EV game focused on manufacturing expensive electric cars and overestimating their market demand, round two will concentrate on producing lower-cost EVs at a higher volume. Farley pointed to rival automaker Tesla as the company that “found this out first.” Even though Tesla’s stock was way down at the beginning of this year and their fourth-quarter numbers were underwhelming, their Model Y still made history as the first EV to become the world’s top-selling vehicle.
It also makes sense, given that Ford announced they would be trimming production on their F-150 Lightning a few weeks ago to focus more on producing gas-powered vehicles, such as the Bronco or Ranger, that their subsequent approach to EVs would focus on how to make them less expensive for consumers. For example, a Ford F-150 lightning costs around $50,000, whereas a Tesla Model Y starts at around $36,000.
While Ford has a ways to go before it sells millions of electrified vehicles like companies such as BYD or Tesla, their new strategy of offering a product that most people can afford to buy is a step in the right direction towards achieving that goal.
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