Ford CEO Jim Farley has revealed new details about the automaker’s shift in its approach to the electric vehicle (EV) market. This shift comes as the automaker seeks to align its battery production capacity and technology with market demand, while also exploring new battery chemistries and adjusting its approach to vertical integration.
According to new comments made by Farley during the company’s earnings call on Tuesday, the heart of Ford’s revised strategy is the recognition that the mass-market adoption of EVs is contingent upon making them cost-competitive with traditional internal combustion engine (ICE) vehicles. Farley pointed out that the current premium attached to their EVs is a significant barrier to their widespread acceptance.
This is illustrated by the financial performance of Ford’s Model e division, dedicated to EVs, which reported a loss of $4.7 billion last year. This loss contrasts with the profitable segments of Ford’s fleet and traditional vehicle units, highlighting the challenges for legacy automakers transitioning to a predominantly electric lineup.
To address these challenges, Ford is not only reassessing its production capacities and technological bets but is also introducing a low-cost EV platform aimed at making electric vehicles more accessible. This initiative, led by a “skunkworks team” within the company, according to Farley, is focused on developing a flexible platform that will cater to various vehicle types and incorporate a significant base for software and services. (via InsideEVs)
This move is aimed at competing more effectively with lower-priced offerings from Tesla and Chinese EV manufacturers.
Moreover, the company is leveraging software and services as key components of its EV strategy, recognizing the high-profit potential of subscriptions for features like Ford’s BlueCruise hands-free driving system and Ford Pro’s fleet management solutions. This approach not only aims to enhance the ownership experience but also to establish new revenue streams that can help offset the initial costs of electric vehicles.
Ford has already announced it is delaying $12 billion in spending previously earmarked for electric vehicles.
