Here's How Ford Managed To Cut Mustang Mach-E Costs By $1,000

That doesn't necessarily mean the cost reduction will be passed on to the consumer.

By: Dan Mihalascu

Feb 9, 2022 at 11:47am ET

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Ford is taking another page of the Tesla book with the way it is applying updates to the Mustang Mach-E electric crossover.

Rather than waiting for model-year changeovers or mid-cycle updates to implement changes, Ford is now updating the Mach-E on the fly, as soon as an upgrade is ready to be applied. That's an approach Tesla has been using for a long time—the EV maker famously does not do model-year updates, adding improvements as soon as they're ready.

We heard of this change of strategy last week from Ford CEO Jim Farley during the company's fourth-quarter and full-year earnings call, and now we get to learn more about it.

As it turns out, Ford adopted the new approach after Farley got the Mustang Mach-E launch team together again more than a year after the EV went on sale with the goal of reducing costs and improving profit margins.

Farley said the task force already has reduced the electric crossover's bill of materials by $1,000. Darren Palmer, Ford's general manager of battery electric vehicles, told Automotive News how that went down.

"He said, 'Gone. Stop that. Take that away.' We now do continuous improvement. You don't wait for a model year; you just continually drop them in."

The team, consisting of employees from purchasing, manufacturing and engineering, studied competitive products and used social media input and connected-vehicle data to eliminate $1,000 in cost.

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One accomplishment was reducing the number of pieces in the Mach-E's frunk from nine to two. It happened after the team benchmarked the frunk against other vehicles and found less complicated options.

The task force also realized Ford could save money by adding heated seats to the California Route 1 edition that originally lacked them. That happened after Ford monitored social media posts calling for the option and discovered through connected-vehicle data that those who did have heated seats used them often.

"It turns out people love heated seats, and they use them in an EV instead of the heated ventilation, so we standardized the heated seats and took out the other one. We got a better price because we got more volume. It was complexity reduction and building scale, which means we got them much cheaper."

Palmer also said the team made the vehicle's cooling system simpler, eliminating two of four motors and about one-third of the hoses.

Asked whether Ford will pass on the cost savings to customers through lower pricing, Ford's EV boss declined to say.

"Over time, our goal is to make all of our electric vehicles better and better value to get to more and more people. Market conditions also set the prices. At the moment, there's a huge scarcity of products, and that's also setting the prices. We evaluate those every month as to where we are."

Besides the Mach-E, Ford plans to do continuous improvement on the F-150 Lightning, E-Transit and other upcoming EVs as well, Palmer said.