Ford Motor Co.’s F CEO Jim Farley underscored that the company will focus on smaller, affordable electric vehicles even if former President Donald Trump wins the 2024 presidential elections in November.
Future For Ford EVs: During Ford’s second-quarter earnings call, Farley underscored that while combustion engine vehicles where vehicle size is proportional to profit margin, bigger EVs exert more pressure on margins.
“The larger the vehicle, the bigger the battery, the more pressure on margins because customers will not pay a premium for those larger batteries,” Farley said.
Ford’s EV segment recorded an EBIT loss of $1.14 billion in the second quarter owing to industry-wide pricing pressure and lower wholesales despite significant cost reductions in the segment.
The company is aiming to develop EVs priced under $40,000 or even $30,000, the CEO added, placing it in the same price range as China-made low-cost EVs and mass-market offerings from Tesla.
A team, which Farley previously referred to as “skunkworks,” is developing an affordable vehicle platform for the purpose, he added.
“…they have really designed breakthrough EV components with our own design that we think are better and cheaper,” the CEO said about the team’s efforts.
Potential Impact Of A Trump Presidency: Talking about the potential impact of a Trump presidency on the company’s EV strategy in the future, Farley said the company will continue to focus on EVs even if Trump were to remove policies favoring EV adoption.
“We believe that the fitness of the Chinese in EVs will eventually wash over our entire industry in all regions. And so we believe as a company, even if there were short-term adjustments we can make to a compliance-led lower requirement lineup, we’re not going to approach it that way. We really believe what I said, which is that many Americans would find an electric vehicle lowering their cost. Not everyone, but a high percent,” Farley said.
“Even from a compliance standpoint, we can’t really count on administrations changing this way or that way,” the CEO said while adding that Ford will continue to prioritize choice for customers and will attempt to be fully competitive with BYD, Geely, and Changan on EVs.
Why It Matters: In the second quarter, Ford sold 23,957 EVs, making it the second best-selling EV brand in the U.S. after Tesla. Tesla, however, sold 164,264 EVs in the period in the U.S., according to Kelley Blue Book estimates.
Ford said that it reduced costs by about $400 million year-over-year during the second quarter but pricing pressure weighed heavily on the segment’s losses.
For the whole year, Ford expects to incur a loss of $5 billion to $5.5 billion within the EV segment, called Model E.
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Photos courtesy: Ford
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