By the mid-decade, Ford Motor identifies measures that could cost a disadvantage of up to $ 8 billion against competitors to secure 8% margins. All the efforts are to secure margins on its next-generation electric vehicles. Furthermore, it is said that the automaker can save up to $2.5 billion this year with better manage production schedules and a drop in commodity prices. It was stated by the company’s chief financial officer, John Lawler at an auto conference.
Longer term, the company aims to reduce dealer inventories and drive more transactions online, among other measures, according to Chief Executive Jim Farley. The company has “locked down” the designs of its new electric trucks and SUVs and aims to lower battery cell costs to less than $70 per kilowatt-hour as it phases in cheaper lithium iron phosphate chemistry, Farley said.
The automaker posted dismal quarterly results earlier this month and blamed chip shortages, supply chain disruptions, and production “instabilities” for adding to its costs. Lawler has said Ford faces $5 billion in higher costs this year and that the company will be “very aggressive” in reducing expenses in its manufacturing, supply chain, and distribution operations.
EV sales
In order to boost profitability on its second-generation EVs, Farley said Ford plans to shift to large underbody castings to reduce parts count and simplify manufacturing – a process pioneered by global EV leader Tesla. Other gains will be made by introducing more efficient battery chemistries and reducing pack sizes while shifting to more aerodynamic vehicle designs, the executives said.
Making an EV more aerodynamic can save “thousands of dollars in battery costs,” Farley said. “Why do you think we are doing Formula One? Because they have the best aero people in the world.” He said Ford is still fighting entrenched mindsets in design and engineering – one of the reasons he created a separate organization, Ford Model e, to oversee the development, manufacturing, and distribution of the automaker’s future electric vehicles. “We have a bracket group,” Farley said. “We have hundreds of engineers who make brackets. If you want to make 8% margins in EVs … There’s no bracket group.”
In recent times, the fight to capture the market is getting tougher. Especially as Tesla changes the prices of its vehicles for a brief time. And later increased the price as some of its vehicles were available for the EV tax credit in the US. The auto industry started adopting lower prices before the final price of Tesla vehicles was fixed. While this scenario was not expected, more such uncertainty is expected to prevail.
