Ford said on Monday it plans to launch a new line of affordable electric vehicles in 2027, including a midsize pickup truck with a target starting price of $30,000. The company hopes to achieve the cost-effectiveness levels of its Chinese competitors. The new four-door midsize pickup truck will be assembled at the automaker's plant in Louisville, Kentucky.
Ford said in a statement that it will invest nearly $2 billion in the plant, which currently builds the Escape and Lincoln Corsair models, and the investment will preserve at least 2,200 jobs.
Chinese automakers such as BYD have streamlined supply chains and production systems to produce electric vehicles at a fraction of the cost of Western automakers. Although these vehicles have not yet entered the U.S. market, Ford CEO Jim Farley said they set a new standard that companies like Ford must meet.
"We've all experienced too many 'serious attempts' by Detroit automakers to make affordable cars, only to end up with idled factories, layoffs and uncertainty. So this must be a strong, sustainable and profitable business," Farley said in a release Monday.
Ford has been developing affordable electric vehicles through its so-called "Skunk Works" team, which brings together talent from EV rivals Tesla and Rivian. The California-based team, led by former Tesla executive Alan Clark, was so far removed from Ford's larger hierarchy that, for a while, Farley said, even his badge wouldn't let him into the team's building.
J.D. The average selling price of an electric vehicle in June was about $47,000, according to Power. Many Chinese models sell for between $10,000 and $25,000.
Auto industry executives say affordability is one of the top concerns among electric car buyers, and the race to launch cheaper electric models is heating up around the world.
Slate, an electric vehicle startup backed by Amazon CEO Jeff Bezos, is targeting a starting price of about $25,000 for its electric pickup truck. Tesla also previewed a cheaper model and will ramp up production later this year. Rivian and Lucid also plan to introduce lower-priced models in their lineups, though in the $40,000 to $50,000 price range.
Ford launched a major push into electric vehicles earlier this decade, but has backed off as losses piled up. It scaled back many of its electric vehicle goals, canceled an electric three-row SUV and ended a project to develop a more advanced electrical architecture for future models.
Ford announced last year that it would begin production of a midsize truck developed by the "Skunk Works" team in 2027.
The automaker estimated earlier this year that its electric vehicle and software divisions would lose up to $5.5 billion. Combined, these businesses will lose nearly $10 billion from 2023 to 2024.
Reducing the cost of battery-powered models has been one of Farley's main goals, and he said he expected the new range of electric vehicles to be profitable within a year.
Ford sells three electric vehicles in the U.S.: the Mustang Mach-E SUV, the E-Transit van and the F-150 Lightning pickup truck. Sales of these vehicles fell 12% in the first half of the year compared with the same period last year. At the same time, interest in hybrids has surged, with sales rising 27% over the same period. Ford recently delayed production of its next-generation F-150 Lightning and E-Transit until 2028.
The elimination of the $7,500 consumer tax credit, relaxed emissions regulations and reduced funding for charging infrastructure are expected to further dampen demand.
All of this makes it even more important for automakers to pick the right areas, Farley said.
"In our view, the market for pure electric vehicles in the U.S. is very clear: small vehicles for commuting and use around town," Farley told analysts on an earnings call last month.
By contrast, crosstown rival General Motors has electrified its entire lineup, from the massive Hummer to the smaller Equinox SUV. GM spent more time in advance building an all-new platform as the basis for its electric vehicle models.
Meanwhile, Ford has retrofitted many of its popular gasoline-powered vehicles with battery cells to bring them to market faster, delaying the development and rollout of a unified electric vehicle platform, details of which were revealed on Monday.
Farley said being the first to launch electric vehicles over the past two years has exposed it to more fluctuations in demand, but has also given it a greater understanding of the market.
Ford will use lithium iron phosphate batteries (LFP batteries) for this upcoming range of electric vehicles. The batteries, produced in Marshall, Mich., use technology from Chinese EV battery maker CATL, which helps lower the sticker price of electric vehicles.