Ford boss Jim Farley predicts a coming price war in the electric car market. Enough to offer much more affordable electric cars, at prices around 25,000 dollars.
One of the biggest obstacles to the mass adoption of the electric car is its price. An electric car costs more to manufacture than a thermal car, mainly because of its battery. The CEO of Ford specified, during a conference, that on the Ford Mustang Mach-E (sold from 44,000 dollars in the United States), the 76 kWh battery costs $18,000 and the charger $3,000. That’s almost half the selling price of the car. The man therefore announced that a price war was being prepared behind the scenes, among car manufacturers, to try to reduce manufacturing costs as much as possible, in order, in particular, to be able to offer more affordable vehicles.
The bar of 25,000 dollars (about 28,000 euros with VAT) is very important in the automotive sector since it is roughly the average price of a new car in Europe. In France, according to the Argus, this was around 27,000 euros in 2020. It is in particular for this reason that Tesla has been planning for several years now the development of an electric car at 25,000 dollars, the hypothetical Tesla Model 2. But it is currently very difficult to offer a car in this price range, unless you cut corners on battery capacity and functionality, as Dacia was able to do in particular with its Spring or Volkswagen with its e-UP. These are two city cars with a limited range and above all a very low margin for manufacturers.
Recipe for a $25,000 car
To manage to offer an electric car around 25,000 dollars, the boss of Ford has put forward some ways to reduce costs. The first is overhaul of the distribution system, by reducing the number of vehicles waiting in dealership parking lots. “Classic” distribution of vehicles would cost $2,000 more per car, compared to Tesla’s model which has no dealerships but only showrooms. Lack of advertising campaigns (like Tesla does) could also save $500 to $600 per vehicle.
The biggest cost reduction will come from the battery, since although the price of batteries could increase slightly this year, a drastic drop is expected for the years to come. Jim Farley specifies all the same that the design has a very great importance in the reduction of the costs, by citing the example ofa grille for pick-ups (we think of the Ford F150 Lightning) allowing to increase the autonomy of 120 kilometers, and therefore potentially using a smaller battery to save $3,000. Indeed, aerodynamics is a key factor in fuel consumption and therefore in the autonomy of cars.
In order to be able to produce $25,000 electric cars, the Ford boss announced that the production lines would be completely reconfigured and that the new platform, still under development, would use far fewer different parts. This is what Tesla managed to do with the rear part of the Model Y which uses two parts instead of the 70 needed for the Model 3.
Not before 2026 at Ford
However, you shouldn’t be in too much of a hurry to consider buying this future $25,000 Ford. Indeed, the next generation of electric cars using this future platform will only be not ready before 2026. The time for the American company to transform its current factories and build 3 battery manufacturing plants. Regarding the model, we can imagine a Ford Puma even if the latest rumors announce it for 2025.
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