Ford Will Build Profitable, Affordable Sub-$30,000 EVs

Ford isn't making money selling EVs, but it's learning that consumers want cheap EVs. Ford promises to deliver them.

Mack Hogan

By: Mack Hogan

Apr 24, 2024 at 6:02pm ET

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Ford reported falling electric vehicle revenue on Wednesday, but executives seemed optimistic in the earnings call. CEO Jim Farley affirmed that what the market wants is affordable EVs, and Ford is well-positioned to offer them in the next generation of products. They'll be profitable, he promised, and in the meantime Ford is adding capacity for its well-established hybrids, like the F-150 PowerBoost and Maverick Hybrid.

It was an optimistic call for a brand that has struggled to woo investors. The company is one of the cheapest in the world when it comes to its share price versus its earnings, a sign that investors have little confidence in the core business. But Ford's deeply rooted fleet business is massive, its hybrid portfolio is solid and in-demand and its Mach-E EV is the second-best-selling EV SUV in America, behind the Tesla Model Y.

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Ford's Revised EV Plan

Ford had to dial back its expectations for EV adoption. But the company thinks it is now on the right track, with a fleet of solid hybrid options and the popular Mustang Mach-E. The hard step will be not just selling EVs, but doing so profitably.

The Mach-E has seen a rapid sales increase since Ford cut prices by 17 percent. Farley said that affordability is the number one concern, as evidenced by that sales increase. He promised that the next generation of Ford EVs will be affordable and profitable. This focus comes as Tesla has reportedly lost interest in its rumored "Model 2" affordable EV, which may have been abandoned in favor of Musk's promised Robotaxi.

Either way, Ford says the Maverick, F-150, F-250 and Ranger are all selling fast, and that it is on track to build up a profitable EV business as the ICE business continues to generate cashflow. To keep the business relevant and reduce emissions, Farley says Ford will have hybrids in every segment. The trick is keeping prices under control as consumers fight higher interest rates, which make it far more expensive to borrow on expensive cars and trucks.

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But again, Ford's goal is to have a strategic advantage in affordable EVs. General Motors is trying to make the same play with the Chevy Equinox EV, and Tesla with the Model Y. It's not clear who will win the race to offer a long-range EV that is affordable for young and less affluent buyers, but I'm happy that more companies are chasing that market.

"What's really exciting for us is we see an opening in the market," Farley said. "We believe we can be profitable at $25,000 or $30,000."

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