Ford embraces affordable EVs as Apple drops development
March 4, 2024 | News
This article was published by The Energy Mix on March 1, 2024.
As Ford pivots from making trucks and SUVs to “the next big thing”, a small, affordable electric vehicle that competes with Chinese-made models, Apple has abandoned its own EV project, citing lagging consumer interest.
“Ford Motor Co. sees low-cost Chinese EVs as a ‘colossal strategic threat’ that will ultimately arrive on United States shores, adding to the challenges for an automaker already confronting shaky consumer demand for plug-in cars,” reports Bloomberg.
U.S. President Joe Biden is also looking at EVs from China as a different kind of security threat, ordering a Commerce Department investigation into cars that could pose “risks to national security because their operating systems could send sensitive information to Beijing,” the New York Times writes.
So CEO Jim Farley “revealed last week that Ford is working on low-cost EVs to take on Chinese competition and an affordable model that Tesla Inc. says it has coming,” Bloomberg says.
Farley is being forced to change the course set by previous CEO Jim Hackett, who had focused the company to almost exclusively make high-profit margin trucks and SUVs, writes Patrick George, editor in chief of Inside EVs. Hackett’s old approach “doesn’t track with what’s coming in the EV race for a lot of reasons,” he adds.
“The world of 2024 is somehow a radically different one than it was in 2018,” George says. Farley must navigate that world “by trying to achieve what’s probably the next big thing in the electric world: a small, affordable, and profitable EV.”
A longstanding reality in the North American auto sector is that trucks and SUVs are profitable because they cost roughly the same as smaller cars to produce, but sell for a much higher price. But now, higher interest rates are discouraging people from buying pricey cars and big trucks, and “American automakers are increasingly realizing that trying to win with size—big, expensive EVs with big, expensive batteries—won’t be sustainable for anyone involved here.”
Bearing that in mind, Ford has had a small team working for the last two years to develop a low-cost platform for smaller EVs. Part of that push comes from the threat of Chinese EV manufacturers that have focused on smaller, more affordable options while U.S. consumers balked at high price tags for larger EVs that exceed their fossil-fuelled counterparts, George says.
“What the customer has now said to us is, if you have [an EV] larger than Escape, it better be really functional or a work vehicle,” Farley said. “But if you do the economics for a vehicle, let’s say the Escape or smaller, it’s totally different, it completely works.”
Meanwhile, Apple has thrown in the towel on an ambitious, decades-long EV project of its own, citing a likely temporary dip in consumer interest. The car, which was envisioned to be self-driving and without a steering wheel or pedal, could have cost upwards of $100,000, which had the Apple board concerned about achieving sufficient profit margins, reports Bloomberg. EV producer Tesla is also projecting slower growth this year due to the cooling market.