Ford Motor Co F CEO Jim Farley on Thursday brought down the company’s EV targets following increased loss forecasts.
What Happened: The company now aims to touch 600,000 EV production run-rate in 2024 instead of this year. Though it was previously targeting a two million EV production run rate by 2026, the company no longer has a deadline for the target.
“We are optimizing for the long-term value creation,” Farley said. “We are disciplined as we grow, and we won’t bear an unlimited cost to acquire those (EV) customers and build our install base,” he added.
The company now sees the EV segment bringing a loss of $4.5 billion this year instead of the previous guidance of $3 billion.
However, as per Farley, the new guidance is not because of lower demand. “There are plenty of consumers. The issue is price to pay has come down,” Farley said. The price premium of EVs as compared to internal combustion engines fell more than $3,000 in the second quarter, he added.
Further, the CEO sees the EV market continuing to be volatile “until the winners and losers shake out.”
“We are confident from our brand, incredible product strategy, software, scale and cost position, we will be one of the winners long term,” he said.
Company CFO John Lawler explained this further and said that the price premium on EVs normalized more quickly than Ford expected, thereby impacting profitability. “It’s sooner than we had thought. And it might be a little bit deeper than we had thought.” Lawler said.
Why It Matters: Farley’s comments on EV pricing are along the lines of Tesla Inc TSLA CEO Elon Musk. During his company’s earnings call last week, Musk warned of further price cuts on its vehicles saying that interest payments have been increasing the price of cars, putting the onus of cutting prices on the company.
"If the market condition is stable, I think prices will be stable. If they’re not stable, then we would have lower prices. Yes," Musk said.
However, unlike Tesla which is cutting price on its current vehicles, Ford is looking to develop a second-generation of vehicles for which it is working on the right value equation.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
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