A small team within Ford has spent the last two years developing a low-cost platform for smaller electric vehicles, CEO Jim Farley said on Tuesday.
“We made a bet in silence two years ago,” Farley told investors during the company’s fourth-quarter and full-year earnings call, describing the creation of a “super-talented skunkworks team” that operated outside of the “Ford mothership.”
“They’ve developed a flexible platform that will not only deploy to several types of vehicles but will be a large install base for software and services,” Farley said. He added that Ford is adjusting its spending to focus more on smaller electric vehicles.
Affordability is one of the key barriers keeping people from buying more electric cars—and keeping automakers from selling them in larger numbers. Today, most battery-powered cars carry premium price tags, and budget-conscious buyers have few options to choose from that cost less than $30,000.
None of Ford’s current electric offerings are what one might consider “cheap.” The Mustang Mach-E SUV starts at roughly $43,000, while the base F-150 Lightning pickup goes for over $55,000. More range and lusher appointments will cost you even more. Even so, Ford’s EV business is far from profitable in these early days. (Its Model e division, dedicated to electric vehicles and related technologies, posted a $4.7 billion loss for 2023.)
The low-cost segment is an emerging battleground in the EV space. For years, Tesla has floated plans for a $25,000 vehicle. In January, Tesla CEO Elon Musk said that the firm’s cheaper-to-build, next-generation vehicle platform will enter production in 2025. Farley said on Tuesday that cutting costs will be crucial for competing both with Tesla’s upcoming cars and with Chinese manufacturers, which are beginning to export EVs worldwide and may come for the U.S. market next.
“All of our EV teams are ruthlessly focused on cost, and efficiency, in our EV products,” he said. “Because the ultimate competition is going to be the affordable Tesla and the Chinese OEMs.”