Ford CEO sees EV price war as costs fall
Ford’s chief executive says the global auto industry is headed for a huge price war in the coming years as electric vehicle costs drop and multiple companies sell EVs priced around $25,000 (U.S.).
CEO Jim Farley told the Bernstein Strategic Decisions Conference that the $25,000 electric vehicle will democratize EVs. Materials to build that vehicle will cost around $18,000.
It currently costs much more to build an EV than it does one powered by a gas engine, Farley noted. The company’s Mustang Mach-E electric SUV, with a starting price around $44,000 but can run much higher, costs about $25,000 more than a comparable Ford Edge gas SUV.
The battery cost alone is $18,000, and the charger adds another $3,000.
But big cost reductions are coming with new battery chemistries that use fewer expensive and scarce precious metals such as nickel and cobalt, he said. Plus, EVs will take less time and labour to build, saving more money.
Ford also plans to cut distribution costs, which amount to $2,000 per vehicle more than Tesla, the world’s electric vehicle sales leader, Farley said. That can be done largely by cutting the expense of keeping a large supply on dealer lots, and cutting advertising costs.
Ford, like Tesla, may not have to buy advertising to sell EVs, which now amounts to $500 to $600 per vehicle, Farley said.
Ford is designing the next generation of EVs for “radical simplification” of the labour it takes to put them together, he said.
“Half the fixtures, half the work stations, half the welds, 20 per cent less fasteners,” he told the conference. “We designed it, because it’s such a simple product, to radically change the manufacturability.”
New EVs, he said, also will be designed for optimal aerodynamics so they can use the smallest possible battery to get more range.
Redesigning the body of an electric full-size pickup truck for lower wind resistance can add 120 kilometres of range from the same size battery. The additional range, cuts another $3,000 from the battery cost.
It currently costs much more to build an EV than it does one powered by a gas engine. The battery cost alone is $18,000, and the charger adds another $3,000