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Ford Developing a Low-Cost EV Platform

Published 8 February 2024

Amidst the bustling announcements and earnings calls of Ford Motor Company, CEO Jim Farley dropped a bombshell for the automotive industry: Ford has been quietly brewing a game-changing project, a “skunkworks” dedicated to crafting a low-cost EV platform. This revelation comes hot on the heels of Ford’s Q4 and full-year 2023 earnings results, where Farley outlined a strategic shift towards smaller EVs, echoing the sentiments of many competitors who have also set their sights on affordable electric mobility.

 

The Birth of Ford’s Low-Cost EV Platform

Farley’s unveiling of this clandestine endeavour sheds light on a two-year silent bet Ford made to crack the code of affordable electric vehicles. As he articulated during the earnings call, Ford assembled a crack team of some of the world’s foremost EV engineers, operating independently from the main body of Ford’s operations. This initiative, dubbed a “start-up” within the company, has birthed a flexible platform capable of accommodating various vehicle types, while also serving as a fertile ground for software and services innovation, particularly in Ford’s Pro division.

 

Addressing the Affordability Barrier in Electric Vehicles

The rationale behind Ford’s foray into affordable EVs is clear: customers are increasingly unwilling to fork out hefty premiums for electric vehicles. This realization dawned on Ford as it grappled with a temporary glut in supply amid the semi-conductor chip crisis and shifting consumer demands post-COVID. Despite the initial enthusiasm among early adopters of EVs, the mainstream market proved to be more discerning, emphasizing the need for affordability as a key driver of adoption.

 

Expanding Ford’s Electric Line-up: Accessible Offerings for All

While Ford has made strides in the electric vehicle arena with models like the Mach-E and the F-150 Lightning, it recognizes the imperative to expand its electric line-up with more accessible offerings. In the UK, Ford’s electric presence is set to grow with the upcoming Explorer, Capri, and the electric Puma (now christened Gen-E). Similarly, in the US, alongside the F-150 Lightning and Mach-E, Ford is poised to introduce more electrified options to cater to a broader audience.

 

Strategic Realignment: Prioritizing Cost-Effective EVs

This pivot towards affordability doesn’t signal a complete departure from larger EVs for Ford. Instead, it reflects a strategic realignment of capital towards smaller, more cost-effective EVs, with an eye on profitability within the first 12 months of market entry. Ford’s decision to dial back on capital spending for larger EVs like the F-150 Lightning underscores a pragmatic approach to market dynamics, recognizing the current viability of hybrid and plug-in hybrid powertrains for bigger consumer trucks.

 

Overcoming Challenges: Navigating Towards Sustainable Profitability

The journey towards profitability in the electric vehicle sector hasn’t been without its challenges for Ford. The Model e electric vehicle business incurred a hefty $4.7 billion loss in the previous year, attributed to intense pricing competition and substantial investments in next-gen electric models. Nevertheless, Ford remains undeterred, banking on its newfound focus on affordability and the innovative prowess of its skunkworks team to chart a course towards sustainable profitability in the EV market.

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