American legacy automaker Ford is aiming at low-cost China-made electric vehicles with the development of its compact models using Chinese batteries in the United States.
Ford aims to undercut Chinese rivals with compact EVs using CATL batteries
Ford leverages its partnership with Chinese battery giant CATL to deliver its promised affordable compact electric vehicle offerings in the US market, according to Autoweek.
“We believe smaller, more affordable vehicles are the way to go for EV in volume. Why? Because the math is completely different than ICE. In ICE, the business we’ve been in for 120 years, the bigger the vehicle, the higher the margin. But it’s essentially the opposite for EVs. The larger the vehicle, the bigger the battery, the more pressure on margin because customers will not pay a premium for those larger batteries.”
Ford Chief Executive Jim Farley
Ford Chief Executive Jim Farley told Wall Street analysts during the Q2 2024 Earnings Call on Wednesday that the Ford Model e team is “getting much more scrappy” at reducing costs on the next-gen electric vehicles.
Ford’s $3.5-billion electric vehicle factory in Marshall, Michigan, will utilize cutting-edge technology and services from CATL. Ford plans to formally kick off the facility’s operations in 2026, generating about 2,500 job prospects.
The Ford boss also asserted that the company is benchmarking Chinese players and its closest American rival, Tesla, when it comes to pricing.
“We clearly see China and Tesla as the cost benchmark.”
Ford Chief Executive Jim Farley
Model e’s Q2 2024 performance
Ford’s move to utilize CATL-made electric vehicle batteries is a crucial part of its strategy to improve the sales performance of Model e – its EV business unit.
As per the report, the Model e’s volume dropped by a whopping 23% in the second quarter of the year. As a result, revenue also declined 37% in the said period.
Ford Model e’s $1.1 billion loss in Q2 2024 is reportedly similar to its loss for Q2 2023. In addition, its electric vehicle sales dropped from the first quarter.
Nonetheless, Ford managed to defend its top 2 position in the US market, trailing only behind Tesla.
Overall, Ford Motor recorded a revenue of $47.8 billion, net income of $1.8 billion, and adjusted EBIT of $2.8 billion in the second quarter of the year.
