Ford’s CEO predicts a pricing war in the coming years as electric car costs drop and companies sell EVs for approximately $25,000.
Ford CEO Jim Farley says that automakers will be competing to sell EVs in the following years.
During the Bernstein Strategic Decisions Conference on Wednesday, Farley said that EVs would become more accessible with a price tag of $25,000. The materials to build them will cost around $18,000.
“So I believe there will be our industry is definitely heading to a huge price war,” he stated, via USA News.
Farley emphasized that EVs currently cost more to produce than gas-powered cars. A Ford Mustang Mach-E electric SUV with a starting price of $44,000 costs more than the Ford Edge gas SUV. Its battery pack alone costs $18,000, and a charger will add $3,000.
Farley believes that batteries will get significantly cheaper. Ford is also building its next-generation electric vehicle platform, which Farley believes will reduce production costs significantly.
“Half the fixtures, half the work stations, half the welds, 20% less fasteners,” he said. “We designed it, because it’s such a simple product, to radically change the manufacturability.”
Ford is cutting down its distribution and advertising costs in preparation for the more competing market.
There are already EVs that costs less than $25,000, but they are primarily available in China. Some automakers also plan to launch vehicles that cost around $25,000.
Such as Volkswagen’s small e-car ID.Life that will cost around $24,000. General Motors and Honda also partnered up and announced that they would be making affordable EVs. GM also recently announced that it reduced the Bolt EV price, and it now just costs around $26,000.
However, the cost of raw materials used to make EVs are still high, so the price war might not start until later. Analysts predict that the cost of materials will go down in the next few years, and that’s when we might see the changes.
