Photo: Ford
The EV market is on an upward trend, but so are the prices paid for the few electric models available today. Despite that and the increased dealer markups, Ford CEO Jim Farley thinks a price war that is about to start will push the prices below the $25,000 mark.
Despite complaining about shortages and production glitches, the car industry enjoys excellent times. The profits have never been so high, even while selling fewer vehicles. Low inventories and strong demand have raised the prices further while at the same time encouraging dealers to place insane markups on the most popular models.
Electric vehicles were no exception, on the contrary. The prices have been “adjusted” upwards many times, with raw materials prices and scarcity cited as the main reasons. The promise of electric vehicles becoming as cheap as ICE cars anytime soon doesn’t seem realistic right now. Even so, the writing is on the wall, and analysts believe that the prices of the battery raw materials are about to fall as early as next year.
Ford CEO Jim Farley also believes the electric vehicle prices will collapse, but for different reasons. During the Bernstein Strategic Decisions Conference on Wednesday, Ford’s CEO said he expects EV prices to go below $25,000 soon. He predicted that carmakers would engage in a price war over EV market control. This would be fueled by the fact that production costs will sink as every car company refines the manufacturing process.
Farley believes that the most important price correction would come from the batteries. The new chemistries that use cheaper and abundantly available materials will drive the prices down. Improving aerodynamics will also negate the need for bigger batteries, saving a significant amount of money.
“The re-engineering for the vehicle to minimize the size of the battery, since it’s so expensive, is going to be a game-changer for these second-generation products,” Farley said.
Then the manufacturing process itself will get better, with radical simplification of the work needed to build the EVs.
“Half the fixtures, half the work stations, half the welds, 20% less fasteners,” Farley told the conference, according to Washington Post. “We designed it, because it’s such a simple product, to radically change the manufacturability.”
All in all, Farley is convinced that cost improvements will see $25,000 erased from the price of the average electric vehicle. This should be enough to push the price low enough for mass-market adoption. The price war is already happening in China, the world’s biggest market for electric vehicles. Farley believes it will spread like fire, even though the prices don’t appear to be peaking right now.
Electric vehicles were no exception, on the contrary. The prices have been “adjusted” upwards many times, with raw materials prices and scarcity cited as the main reasons. The promise of electric vehicles becoming as cheap as ICE cars anytime soon doesn’t seem realistic right now. Even so, the writing is on the wall, and analysts believe that the prices of the battery raw materials are about to fall as early as next year.
Ford CEO Jim Farley also believes the electric vehicle prices will collapse, but for different reasons. During the Bernstein Strategic Decisions Conference on Wednesday, Ford’s CEO said he expects EV prices to go below $25,000 soon. He predicted that carmakers would engage in a price war over EV market control. This would be fueled by the fact that production costs will sink as every car company refines the manufacturing process.
Farley believes that the most important price correction would come from the batteries. The new chemistries that use cheaper and abundantly available materials will drive the prices down. Improving aerodynamics will also negate the need for bigger batteries, saving a significant amount of money.
“The re-engineering for the vehicle to minimize the size of the battery, since it’s so expensive, is going to be a game-changer for these second-generation products,” Farley said.
Then the manufacturing process itself will get better, with radical simplification of the work needed to build the EVs.
“Half the fixtures, half the work stations, half the welds, 20% less fasteners,” Farley told the conference, according to Washington Post. “We designed it, because it’s such a simple product, to radically change the manufacturability.”
All in all, Farley is convinced that cost improvements will see $25,000 erased from the price of the average electric vehicle. This should be enough to push the price low enough for mass-market adoption. The price war is already happening in China, the world’s biggest market for electric vehicles. Farley believes it will spread like fire, even though the prices don’t appear to be peaking right now.
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