Photo: Ford
Ford has changed its strategy and wants to enter the affordable EV segment with a $25,000 compact model that will start deliveries by the end of 2026. This puts it on a collision course with Tesla, which is working on a similar project that might launch around the same time.
During the Q4 2023 earnings call in February, Ford CEO Jim Farley talked about the company's Gen-2 EV platform. To everyone's surprise, Farley revealed that the project was not developed by the Ford Model e EV division. Instead, it was outsourced to a "super-talented skunkworks team" that worked separately from the "Ford mothership." The project aims to produce a flexible EV architecture allowing low-cost EVs to compete with Tesla and Chinese EV carmakers.
This marked a departure from Ford's previous strategy, centered around large EVs like the F-150 Lightning and the upcoming Bronco Lightning. The Blue Oval realized that the market shifted to more affordable EV models at the worst possible moment when most carmakers can't produce their EVs at cost. The Gen-2 EV models, on the other hand, should allow Ford to leverage economies of scale to make the compact EVs profitable within one year from the production start.
A Bloomberg report claims that Ford will use the new platform to build a compact SUV, a small pickup truck, and another EV model that could eventually be used as a robotaxi. The first vehicles are expected to arrive in 2026 with a starting price of around $25,000. These plans mirror what Tesla wants to do with its next-generation EV platform sans the electric pickup model. However, Tesla should be well ahead of Ford, with the production of the $25,000 EV model expected to begin as soon as next year.
If Ford succeeds in selling a compact SUV for $25,000 by 2026, it will be an amazing achievement. However, selling it profitably by the end of 2027 would be nothing short of a miracle. So far, Tesla is the undisputable champion of production costs and probably the only one making a profit from selling EVs. On the other hand, Ford reported a massive $4.7 billion loss in 2023 and projected a $5.5 billion loss in 2024.
Ford's commitment to building an affordable but profitable EV is demonstrated by the fact that Jim Farley created a parallel team of engineers outside the company. Current information indicates that the team comprises fewer than 100 automotive engineers based in Irvine, California. Several come from Tesla, including the team leader Alan Clarke, who previously led Tesla Model Y engineering.
Ford relies on lithium iron phosphate (LFP) batteries to lower the prices of the upcoming EVs. LFP cells are up to 30 percent cheaper than nickel-based battery cells. Ford already has experience using them for the base variants of the Mustang Mach-E and F-150 Lightning. Additionally, the team explores other battery chemistries that could reduce costs further.
This marked a departure from Ford's previous strategy, centered around large EVs like the F-150 Lightning and the upcoming Bronco Lightning. The Blue Oval realized that the market shifted to more affordable EV models at the worst possible moment when most carmakers can't produce their EVs at cost. The Gen-2 EV models, on the other hand, should allow Ford to leverage economies of scale to make the compact EVs profitable within one year from the production start.
A Bloomberg report claims that Ford will use the new platform to build a compact SUV, a small pickup truck, and another EV model that could eventually be used as a robotaxi. The first vehicles are expected to arrive in 2026 with a starting price of around $25,000. These plans mirror what Tesla wants to do with its next-generation EV platform sans the electric pickup model. However, Tesla should be well ahead of Ford, with the production of the $25,000 EV model expected to begin as soon as next year.
If Ford succeeds in selling a compact SUV for $25,000 by 2026, it will be an amazing achievement. However, selling it profitably by the end of 2027 would be nothing short of a miracle. So far, Tesla is the undisputable champion of production costs and probably the only one making a profit from selling EVs. On the other hand, Ford reported a massive $4.7 billion loss in 2023 and projected a $5.5 billion loss in 2024.
Ford's commitment to building an affordable but profitable EV is demonstrated by the fact that Jim Farley created a parallel team of engineers outside the company. Current information indicates that the team comprises fewer than 100 automotive engineers based in Irvine, California. Several come from Tesla, including the team leader Alan Clarke, who previously led Tesla Model Y engineering.
Ford relies on lithium iron phosphate (LFP) batteries to lower the prices of the upcoming EVs. LFP cells are up to 30 percent cheaper than nickel-based battery cells. Ford already has experience using them for the base variants of the Mustang Mach-E and F-150 Lightning. Additionally, the team explores other battery chemistries that could reduce costs further.
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